Ilia Murashkovsky Head of Department for structural analysis and regulation documents development

1. Ilia Murashkovsky Head of Department for structural analysis and regulation documents development Shtokman Development AG Developing Shtokman field – a unique international energy project (current status) V International conference Energy dialogue: Russia-EU. Gas aspect May 2010, Berlin

2. General Information About Project • Shtokman is gas and condensate field on the Russian sector of the Barents sea • Discovered in 1988 • Reserves: 3800 Bcm of gas • sea depth 340m • 600 km offshore • Integrated development in 3 phases (3x23,7Bcma) • Phase 1: 7,5 MTPA of LNG, the rest – pipeline gas Barents sea Shtokman field Shtokman Barents Sea LNG LNG North sea North Sea Teriberka Teriberka Gas pipe Gas pipeline Vyborg Vyborg Russia Russia Greisfald Greifswald

3. Shtokman Phase 1 Partners Framework Agreement for Cooperation in the Development of the First Phase of Shtokman Gas Condensate Field with Total signed July 13, 2007 51% Framework Agreement for Cooperation in the Development of the First Phase of Shtokman Gas Condensate Field with Statoil signed October 25, 2007 OAO Gazprom 25 % (Total Shtokman B.V.) 24 % (Statoil Holding Netherlands B.V.) SPV «Shtokman Development AG» (SDAG) – February 15, 2008 (Shtokman Phase 1)

4. Taking the FID • Currently, Shtokman Phase 1 project is at the stage of preparing for the Final Investment Decision (FID) • Prior to taking the FID the following steps are to be taken: • FEED and Project documentation (TEO) are to be finalized • tender proposals from EPC contractors are to be received • main project agreements are to be signed • ecological and State expertise approvals of Project documentation are to be received • construction permit is to be received

5. Base Business Model - Conditions of Foreign Partners Participation in Shtokman Project, Phase I • No access to the license • Marketing of produced hydrocarbons by Gazprom Group • The partners are minority shareholders • The partners participate only in Phase I and cooperation period is limited to 25 years • The partners provide technologies and assume their share of project risks • The partners provide their share of capital investments

6. Base Business Model – Roles of the Participants • Shtokman Development AG (SDAG) • FEED development • Borrower (bank loans) • Financing, design, construction and operation of Phase I of Shtokman project • Design and construction of the General Purpose Infrastructure • SDAG Branches in Russia • Conduct business activities in Russia • Tax and customs payments to Russian budget • Gazprom - SDAG Russian shareholder • Finances its share of SDAG, receives dividend from SDAG • Provides personnel, project management expertise, technologies • Owner and investor of General Purpose Infrastructure • Foreign shareholders of SDAG • Finance their share of SDAG, receive dividends from SDAG • Provide personnel, project management expertise, technologies • OOO Gazprom neft shelf (OOO Gazprom dobycha shelf) • Shtokman gas and condensate field license holder • Implements Phases 2 and 3 • GPI operator • OOO Gazprom Export • Transportation and marketing of production

7. Concept for Two-Stage FID Stage 1 - taking decision (FID-1) to develop Phase 1 at 23,7 Bcma (minus fuel gas) of pipeline gas supplies and condensate by tanker shipment Start-up complex: • Off-shore – in accordance with base technical scheme • SPS, technological platform, subsea trunkline • On-shore – does not include facilities for LNG production • gas receiving and treatment facilities, condensate stabilization, storage and offloading (per base technical concept) Stage 2 - taking decision (FID-2) to develop 7,5 MTPA of LNG with concurrent reduction of pipeline gas volumes Conditions for FID-2: • Positive outlook on LNG market • Good results of work value exercise (optimization) based on application of international design standards

8. Schedule for Two-Stage FID Stage 1. Pipeline gas • FID-1:March 2011 • Start-up of pipeline gas supplies: • Per Gazprom gas balance • According to schedule - 2016 Stage 2. LNG • FID-2: • Target date:December 2011 • Start-up of LNG supplies: 2017 • If FID-2 is taken in December 2011

9. Reasons for Two-Stage FID • Uncertainties with respect to LNG market outlook • Additional time to maximize Russian content • Work value exercise to reduce costs for LNG plant construction

10. Change of LNG Market Outlook • Considering Shtokman field size, Shtokman LNG has been targeted at the North American large and liquid market • In 2008-2009 USA has drastically increase production of shale gas • Concurrently, large LNG capacity was commissioned in Qatar • Shale gas is the factor, which creates uncertainty with respect of LNG price in US • Economic crisis is another global uncertainty factor

11. Russian Content (1/2) • Subsea production system (SPS) • Share from 30 to 50%, including • Obtaining modern technologies for design and construction of templates for off-shore fields • Construction of a third pair of templates in Russian shipyards • FPU technological platform • Phase 1 • Cooperation with international consortium for joint design and construction of FPU with maximum utilization of capacities of Russian yards • Transfer of technologies for design and construction with increasing share of works performed in Russian yards as required capacities are being created • Subsequent phases • Complete construction of hull, construction of a substantial share of topsides and integration of hull and topsides for second FPU in Russian yards • Complete design and construction of the third FPU in Russian yards

12. Russian Content (2/2) • Subsea trunkline • High-diameter pipelines – Russian supplies from 50 to 100% • Pipe coating – only Russian contractors • Onshore objects for pipeline gas supplies • All design and construction works, as well as supplies of facilities and materials – only Russian design institutes and contractors • Production and logistical bases, supply and services bases • Only Russian suppliers and contractors • Supply vessels (8 units) • Only Russian suppliers and contractors

13. Current Status • FEED based on international standards and design based on Russian standards is practically complete • In October 2010 the shareholders will receive the documents packet based on tender proposals for taking FID-1 with respect of Start-up complex • Work value exercise is under way to optimize LNG plant costs

14. Project Economic Potential • Total volume of Shtokman Phase 1 gas production • during project life – over 900 Bcm • yearly - 23,7 Bcm • Direct foreign investments – 49% of total owners’ equity • plus bonus payment if FID is taken • Start-up complex • our estimates indicate that implementation of Start-up complex will provide for shareholders attain an acceptable ROE at $60/Bbl • Profitability of LNG production will depend on • North American market outlook • results of work value exercise for LNG plant construction • Tax and customs payments during Start-up complex project life may amount to around $90 Bn (in constant 2010 prices)

15. Legislation – Key Questions • Provide for companies and their contractors to recover “input” VAT on costs incurred for carrying out activities on Russian continental shelf • SDAG’s customs VAT and VAT of SDAG contractors (included in contractors’ costs) is estimated at $1,5 Bn. • Clarifying customs status of infrastructure on Russian continental shelf, and of hydrocarbons produced on the Russian continental shelf • only artificial islands, facilities and structures are recognized as Russian customs territory on Russian continental shelf • transportation of hydrocarbons produced on Russian continental shelf can thus be viewed as export and subsequent import when received on Russian soil • uncertainty of customs status of Russian continental shelf, islands and structures located on it in light of establishment of Customs Union • Provide for companies, not being licenseholders, to construct and operate facilities on the Russian continental shelf, as well as own them for exploration and production of hydrocarbons • all rights, connected with activities on Russian continental shelf for exploration and production of hydrocarbons, are included in the license • SDAG’s construction and ownership of productive infrastructure on the Russian continental shelf, as well as acceptance of risks, may thus be compromised • some criteria for enlarging the list of entitled entities: • no less than 50% in capital should be owned by the Russian side • an agreement with the license holder should be signed

16. Long-term effect from Project Implementation • Formation of a new resource base for the long-term • Commencement of industrial development of hydrocarbon resources on Russian Arctic shelf • Transfer to Russia of modern technologies for management, design and production of facilities for development of off-shore hydrocarbon fields and LNG production • Utilization of existing capacities and development of national industry (primarily, ship building) and applied science • Diversification of routes for gaining access for Russian gas/LNG to traditional and new markets • Allocation of risks, attraction of capital and innovative technologies from foreign partners based on the business model, which would allow retain control over license, production and project implementation

17. Thank you!