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September 23, 2006

Gazprom signs LNG transportation MOU

Russia's state-owned gas monopoly, Gazprom, has signed a memorandum of understanding with Japan's ITOCHU Corporation and Mitsui O.S.K. Lines (MOL) for a joint study on LNG transportation from the Shtokman gas field.

The Shtokman gas field in the Barents Sea is located 550 km offshore from Murmansk and has proven resrves of 3.2 trillion cbm.

Gazprom plans to start exporting Shtokman LNG to Europe and North America by 2010.

ITOCHU and MOL approached Gazprom some years ago and submitted a private study report. Under the just signed memorandum, ITOCHU and MOL will now start a joint study with Gazprom on LNG transportation from Russia.

Earlier this month, Alexey Miller, Gazprom's Management Committee Chairman announced a short-list of companies that are potential partners of Gazprom in executing the first phase of the Shtokman field development project, including the construction of a natural gas liquefaction plant.

In the past two years, Gazprom has signed a string of memoranda relating to Shtokman with prominent energy firms setting out technical and commercial support packages for the project, development options, proposals on potential swaps of assets being of interest for Gazprom and expected share of the project. All the packages submitted fitted with the requirements set out by Gazprom.

After performing an analysis of the suggested project timing, preliminary commercial packages and biddersÕ track record of similar projects, Gazprom has come up with a short-list of companies to be invited for intense commercial talks:

Statoil (Norway);

Total (France);

Chevron (USA);

Hydro (Norway);

ConocoPhillips (USA).

In the first quarter of 2006, Gazprom plans to select two or three companies that will form a consortium for the Shtokman project implementation.