Press Conference Gas Supply to Domestic Market. Gasification of Russian Regions June 7, 2016 MODERATOR: Hello, colleagues. We are glad to see you here. We continue the series of Press Conferences in the lead-up to the annual General Shareholders Meeting. Today, we will discuss gas supplies to the domestic market and the Russian Regions Gasification Program. Attending the Press Conference is Kirill Seleznev, Management Committee Member, Department Head at Gazprom, and Director General of Gazprom Mezhregiongaz. I give the floor to Mr. Seleznev, and the Q&A session will follow. KIRILL SELEZNEV: Good morning, esteemed colleagues. We’ve been meeting here for quite a number of years. Let’s proceed as usual: I will update you on the situation with gas supplies to the domestic market, the progress of the Gasification Program, the existing debt for the gas supplied, and other challenges. Then I will be ready to answer your questions. (Slide 1) This slide shows Gazprom Group’s key operating results with regard to gas sales in the domestic market along with the reasons for supply reduction. The main factors that caused the reduction include abnormally warm weather throughout the whole last year and industrial sector slowdown across the country, which resulted in lower gas demand. Despite the fact that independent producers didn’t ramp up their gas supplies to the domestic market in 2015, the existing regulatory environment still contributes to their high competitiveness. Today, Gazprom continues cooperating with the federal authorities to improve the pricing system and develop stock trading practices. (Slide 2) In this slide, you can see the key operating results of Gazprom Mezhregiongaz Group as regards ensuring reliable gas supplies to Russian consumers in 2015. As you know, Gazprom is the leader in today’s domestic gas industry. The Company takes efforts aimed at increasing gas consumption in the domestic market by means of utility connections. The annual gas consumption will grow by 13 billion cubic meters upon the implementation of all specifications issued to consumers in 2015. Due to the insufficient throughput of the existing networks or absence thereof, last year Gazprom Mezhregiongaz Group’s gas distribution organizations alone didn’t meet the requests of potential consumers accounting for over 1.4 billion cubic meters of gas in annual consumption. Gazprom Mezhregiongaz systematically works to eliminate technological limitations and create other opportunities for connecting consumers to gas supply systems. Our main efforts in this area are part of the Russian Regions Gasification Program. The Program’s main results for 2015 are presented here. As you can see in the slide, the total length of the constructed gas pipelines is around 1,275 kilometers. We also created the conditions for the gasification of some 42,000 households and 263 boiler houses. Moreover, we delivered a pilot project for autonomous LNG gasification in the Perm Territory involving some population centers in remote areas where it would be economically inefficient to build a conventional gas supply system. (Slide 3) This slide provides the key highlights of the Gasification Program starting from 2005. More than RUB 270 billion has been invested into the Program since then. The average level of gasification across as of early 2016 was estimated at 66.2 per cent, including 70.4 per cent in cities and towns and 56.1 per cent in rural areas. Initially, the investments in the 2015 Gasification Program were supposed to be at the level of 2014. But then, due to the usual problems, namely, regional authorities failing to fulfill their obligations to prepare consumers for gas supplies, it was adjusted downward to RUB 27.6 billion. As the regional authorities defaulted on their obligations, natural gas didn’t reach some 140,000 households and apartments in 2015. Over 1,000 boiler houses remained unsupplied with gas. 1

(Slide 4) As you already know, the non-fulfillment of obligations by regional administrations, non-payment, and consumer debt for gas supplies are among the main bottlenecks to the Russian Regions Gasification Program. In 2015, out of 34 regions where Gazprom Mezhregiongaz built inter-settlement gas pipelines, as few as nine performed their obligations under work synchronization plans. Just like in the two previous years, the Gasification Program for 2016 included 67 regions, but, owing to poor financial discipline and regional administrations failing to prepare consumers, the amount of investment was considerably reduced for nine regions down to RUB 5 million – the amount required to continue the works already in progress or to proceed with engineering. As usual, we analyze the results of the Gasification Program sometime in August, looking at how regions fulfill their obligations. If we see that some regions have accelerated their efforts and reduced their debt for the gas supplied, we may revise the amount of investments for them. (Slide 5) We are currently drawing up gas supply and gasification programs for 2016–2020. If regional authorities fulfill all of their obligations, we will supply gas to around 670 households and apartments, as well as 3,000 boiler houses and industrial, public utility and agro-industrial facilities in 3,500 population centers. Unfortunately, non-payment by consumers for the gas supplied and debt accumulation in the last few years continue to be an urgent problem. (Slide 6) The debt keeps growing as a result of incomplete payments for the ongoing natural gas supplies. The main non-payers are heat supply companies, the population and a number of power generating companies. Most of our industrial consumers are responsible payers. (Slide 7) As I have already mentioned, non-payment is a common problem for heat supply companies and some heat generating companies and budget-financed entities, namely, Defense Ministry subdivisions, including Maintenance and Repair Directorate, Slavyanka and Main Directorate for Housing & Utilities. This slide demonstrates the main reasons for the accumulation of debt from such consumers. These issues are rendered systemic by the inadequacies of the tariff-setting mechanisms and the gaps in the existing legislation. The deficiencies remaining in the regulatory framework leave room for violations by unscrupulous consumers. This mainly concerns managing companies. A little later, I will dwell on what we’re doing to improve the legislation. (Slide 8) Here you can see that, unfortunately, 80 per cent of the population’s debt in Russia is owed by the North Caucasus Federal District. In the first quarter of 2016 alone, the region’s population paid for as little as 43.4 per cent of gas supplied. This undoubtedly hurts the statistics for Russia as a whole. Besides, the established rates for the services of companies selling gas to gas distribution organizations in North Caucasian republics are not economically justified, which also causes losses to those organizations. The same problem applies to other Russian regions as well, but it’s especially glaring in the Republic of Dagestan. (Slide 9) The non-payment problem in the North Caucasus has a complex variety of reasons that are federal and, of course, local in nature. These regions’ gas markets are traditionally fraught with criminal activity, and the problem itself is twofold: it’s about non-payment for gas supplies and gas losses, including those from illegal connections and poor condition of gas facilities, and about the use of inappropriate or obsolete and uncertified equipment. (Slide 10) This slide provides examples of illegal and sporadic construction activities, which have been taking place in the North Caucasus for years now and, which, undoubtedly, lead to an increase in unauthorized gas consumption. (Slide 11) Here is an example: we identified cases of missing street names and house numbers in 407 population centers in Dagestan, 14 population centers in Ingushetia, and one population center in North Ossetia – Alania. (Slides 12, 13) In addition to the arrears in payment, unauthorized connections to gas supply systems undoubtedly pose a great danger to human life and health. The technical condition of

2 gas equipment used by many consumers is often unsatisfactory, as you can see here. (Slide 14) It’s worth mentioning the positive developments in the Chechen Republic. With the support of the regional government, we managed to achieve significant growth in payments from the population. In 2015, as compared to 2006, payments rose by a factor of 23 from RUB 114 million to over RUB 2.6 billion. Today, we are taking a number of comprehensive measures aimed at strengthening the financial discipline in the North Caucasus. For example, between 2013 and 2015 we made an inventory of nearly 1.2 million customers. The results of our efforts are given in the slide. The inventorying of gas distribution systems helped us identify 2,604 kilometers of ownerless networks and 198 gas distribution points. (Slide 15) During our operations in Dagestan, we found out that 37 per cent of gas distribution networks and around 40 per cent of gas pressure reduction stations required either full overhaul or reconstruction. In addition, actions are being taken to limit or completely cut off gas supplies to unscrupulous consumers. In the last three years, around 9,500 legal entities and almost 40,000 individuals were shut off from the gas supply system every year. (Slide 16) At the same time, we are advancing our client-oriented methods and enhancing our possibilities in terms of simplifying gas payment procedures through both remote payments via the Internet and collection of gas payments by outreach teams of authorized banks. Between 2013 and 2015, we conducted over 4,000 raids in cooperation with law enforcement agencies to detect violations in gas consumption. As you can see from this slide, over 30,500 petitions were filed to law enforcement agencies as a result. This accounts for over 80 per cent of today’s Russian total. Overall, 199 criminal cases and more than 18,000 administrative proceedings were initiated. (Slide 17) This slide provides some statistics on our cooperation with law enforcement agencies and our claim-related activities throughout the Russian Federation. The existing deficiencies in the legislation hinder timely debt recovery. The enforcement procedure may take from two or four weeks to as long as several months owing to, for instance, the lack of funds on the debtor’s current accounts. At present, to our great regret, regional regulatory and judicial authorities discourage and prohibit gas supply companies from limiting or cutting off gas supplies to energy distribution facilities that service the population even if there is significant and long-term debt for the gas consumed. As you well know, our main leverage in recovering debt is to disconnect consumers from gas supplies. In order to strengthen the financial discipline, we actively and constantly work to streamline laws and the regulatory framework. (Slide 18) Last year, as you know, Federal Law No. 307-FZ was adopted on November 3, 2015, to increase the liability of defaulters in the energy sector. However, judging by the first quarter of 2016, there has been no drastic improvement after this law entered into force. There is a need to adopt a number of regulatory acts and further improve the national legislation. The next two slides are focused on this issue. The Russian Government is currently developing a number of draft resolutions in pursuance of Law No. 307-FZ. They will set the criteria for imposing an obligation on the consumer to provide the supplier with a payment guarantee for gas deliveries. Moreover, the rules of gas supply and offtake limitation are being updated. In order to ensure the transparency of settlements between end consumers and heat supply companies and to exclude managing companies from the payment process, efforts are being taken to introduce a settlement system for utility services – so that the population could make payments at unified settlement centers using a single payment document – as well as to ensure payments from the population are transferred immediately to the resource supplier upon the indication of the fuel component in the heating bill. The proposed legislative changes will also enable the consumers of utility

3 services to enter into direct contracts with energy suppliers. We believe that this approach will be very helpful in preventing heat supply companies from accumulating debt for the resources supplied. Moreover, Federal Law No. 307 has considerably tightened the sanctions under Article 7.19 of the Code of Administrative Offences with regard to unauthorized connection to oil, petroleum product and gas pipelines. However, even a RUB 15,000 penalty doesn’t stop citizens, especially in the North Caucasus, from making illegal tie-ins to gas pipelines. In this context, we consider it necessary to increase the liability and introduce criminal sanctions for repeated unauthorized connections to the gas distribution system. Our proposals on the amendments to the Criminal Code have been submitted for consideration to the Supreme Court of the Russian Federation. (Slides 19, 20) As of today, the principle of encouraging the population to install metering devices, which was set out in Law No. 261-FZ, has been regrettably underperformed. As you know, on January 1, 2015, the obligation to install metering devices in residential houses shifted from homeowners to gas distribution organizations, which were given a year to complete that process. Over the course of 2015, 185,000 gas metering devices were installed in residential houses within the areas of operation of Gazprom Group’s gas distribution organizations. However, over 800,000 houses have yet to be equipped with metering devices. The problem, as you know, is compounded by consumers refusing to allow professionals from gas distribution organizations to perform the required work. In 2015 alone, we registered more than 45,000 cases of our representatives not being admitted into households. We are currently working to extend the installation deadlines to 2019 and introduce administrative sanctions for denying gas professionals access to gas powered equipment. That’s all I wanted to say. I’m ready to answer your questions. QUESTION: Maxim Ivanov, Tver Information Portal. You said two years ago that you were ready to halt gas supplies to the Tver Region. Little has changed since then: the debt exceeds RUB 10 billion, and your key client, Enel, has left. What can you say about your strategy today? KIRILL SELEZNEV: The problem with gas supply to the Tver Region can be attributed to several factors: unscrupulous behavior by the consumer, namely, Tver Generation Company, which was set up by TGC-2, the unsatisfactory condition of the heat supply system, and the tariffs established in the Tver Region. A criminal case has been initiated against the CEO of TGC-2; he has been detained in Romania. We hope that this criminal case will be investigated. The problem regarding the condition of the heat supply system in the Tver Region hasn’t been resolved either. We are working with the regional authorities. Indeed, there is still debt. We are addressing this issue. For now, we’ll keep supplying gas to the region. MAXIM IVANOV: So, if I’m getting it right, you’re not planning to sell your trading subdivision in the Tver Region yet. To Rosneft, for instance. KIRILL SELEZNEV: No, we don’t have such plans for the Tver Region, but we are ready to consider them. QUESTION: Elena Voskanyan, Energetika I Promyshlennost Rossii. My question is as follows: what are Gazprom’s current priorities for heat generation? Are social issues still on the agenda or do you consider economic efficiency more important? And a related question: what are the criteria for selecting regions for heat generation investment projects – where are you going to expand your presence and where to reduce it? Thank you. KIRILL SELEZNEV: As you know, Gazprom Mezhregiongaz entered the heat generation industry aiming to deal with the debt of heat supply companies, as the situation had been catastrophic. As you have correctly pointed out, the main criterion for participation in heat generation programs today is the economic expediency and efficiency of those projects. We 4 operate in many regions, and some of our programs are subsidized by regional authorities. We have a number of proposals and plan to expand our presence in the Krasnodar Territory and Leningrad Region. We have come to an understanding and will expand our presence in the heat generation market of the Moscow Region. So our work is advancing. The situation in the Region is complicated: they have a heavy debt. We held negotiations with the regional authorities recently. We’re looking into the possibility of taking part in a heat generation concession in the Vologda Region. We haven’t made a decision yet. There are too many challenges, mainly in terms of economic expediency and efficiency. QUESTION: Pavel Gromov, Vologda TV-7. I have two questions. The first one is about TGC and you have already touched upon it. Is our debt situation really unprecedented? There has been no water in the central district of our regional capital for almost a week and a half. My second question is about the areas covered by the Lipin Bor – Kirillov – project. The locals dream of their own gas pipeline. Will there be any investments for that? KIRILL SELEZNEV: As far as TGC-2 is concerned, I’ve already covered that. Unfortunately, a number of regions, together with their population, have become victims of the circumstances. As I’ve already said, a number of criminal cases have been initiated. So we try to influence the management of the company any way we can. I’m sorry to say that, for the time being, people will have to live without hot water there. As for gasification, the investments for 2016 make up RUB 400 million, so the regional gasification keeps going. The investments we allocated between 2005 and 2016 amount to nearly RUB 2 billion, or RUB 1.960 billion to be more exact. But the overdue receivables leave much to be desired, totaling RUB 1.243 billion as of May 1, 2016. That’s why we hope the regional authorities will do the utmost to reduce this debt, the Gasification Program will continue, and the regions you’ve mentioned will receive natural gas. QUESTION: Natalia Amshukova, Kabardino-Balkarskaya Pravda. I would like to ask two questions about the North Caucasus Federal District. You noted in your speech that losses, the so-called imbalance, pose a major problem for gas suppliers in the North Caucasus. Is it possible to adopt a program for installing clusters of gas metering units at the entrances to regional population centers in order to eliminate this problem, so that you could control the volumes of gas supplied to consumers and customers separately for each population center? And a second question if you please. It’s about heat generating companies. In a number of North Caucasian republics, bankruptcy of heat generating companies has become a convenient way of evading debt for the energy supplied. What are you going to undertake in order to prevent it and to guarantee the delivered gas is paid for? KIRILL SELEZNEV: Regarding the metering program: as you know, the gas metering program is rather capital-intensive, rather costly. Still, thanks to installing gas metering units across Kabardino-Balkaria we expect to collect full data on gas consumption in the region by late 2016. Actually, Kabardino-Balkaria will be one of the first North Caucasian republics to provide us with full information on gas consumption and unauthorized gas offtake. As for the heat generation industry, indeed, bankruptcy and debt evasion are an issue not only in the North Caucasus, but also in central Russia. As I’ve already mentioned in my speech, the existing legislation is imperfect. However, we are developing a number of regulatory acts requiring the consumer to provide an up to six-month bank guarantee of payment for gas supplies. One will have to furnish the tenant with a guarantee if the heat generating assets are leased to a legal entity. Hopefully, the regulations will also fix the minimum amount of equity capital for companies wishing to lease such property. We think these measures will increase the efficiency of gas sales and minimize the number of such cases. QUESTION: Vladimir Soldatkin, Reuters. What is your forecast for Gazprom’s share in the domestic market? 5

KIRILL SELEZNEV: As regards supplies, the volume of gas supplied by independent producers – as we can see from 2015 and the first quarter of 2016 – hasn’t grown compared to the previous periods. Meanwhile, the share and amount of Gazprom’s supplies has increased this year. Plus, as I have already mentioned, there is considerable potential for measures that could result in connecting new consumers. This is why we expect and forecast a ramp-up of Gazprom’s supplies in the domestic gas market. Still, in today’s economic situation the ramp- up is not as great as we would like it to be. QUESTION: Pyotr Slizevich, Volzhskaya Kommuna, Samara. Mr. Seleznev, my question is as follows. Samara is one of the host cities of the 2018 FIFA World Cup, so we are highly invested in such issues as the relocation and reconstruction of the city’s gas networks and the increase of throughput capacity in gas pipelines in the northern part of the city, I mean Vintai – Samara. With the first phase of reconstruction over and the second one in progress, I would like to know about the prospects of both this project and the region’s gasification projects for 2016 in light of the debt. How do you see the regional authorities fulfilling their obligations to Gazprom and how will it affect the investment projects in our region? Thank you. KIRILL SELEZNEV: Let’s start with the second part of your question. Samara ranks 36th in terms of outstanding debt and 33rd in terms of payments for the gas supplied. As of April 1, 2016, the region’s total debt was around RUB 4 billion. The debt amount hasn’t really changed since last year. But, as you can imagine, it’s not very encouraging in the context of our cooperation with the Samara Region’s authorities on the gasification and reconstruction of the gas supply system. For 2016, we allocated RUB 500 million in investments to build an inter-settlement gas pipeline. Besides, design and survey works are currently underway for three gas laterals and a gas distribution pipeline for delivering gas to the CHPP of the plant. We are currently developing a gasification program for 2016–2020, which will certainly take into account the progress with gas payments in this region. We’re still working there, but the scope of our work could be significantly reduced. MODERATOR: We also have questions from online users. A question from McKinsey: do you see any possibilities for developing gas trading on stock exchanges other than the St. Petersburg International Mercantile Exchange? KIRILL SELEZNEV: The answer is simple: we don’t see any obstacles to advancing this line of business on other stock exchanges. We are open to all possibilities, we are working. As soon as we obtain definite results, we’ll let you know. QUESTION: Anna Kharitonova, Yaroslavia TV and radio company. My question is this: the gasification programs and the Gazprom for Children program have been inactive in the Yaroslavl Region for three years now. Is there any chance for the regional authorities to reach an understanding with Gazprom in terms of collecting the existing debt or is that impossible unless the debt is fully repaid? KIRILL SELEZNEV: Of course, it’s possible for the Yaroslavl Region – and any region where Gazprom isn’t actively working on gasification and the Gazprom for Children program – to reach an understanding and improve our joint efforts. What’s essential here is debt repayment. The debt owed by the Yaroslavl Region more than doubled in 2015. Imagine that: it grew not by 10 or 20 per cent, but more than twofold. As of January 1, 2016, it exceeded RUB 4.3 billion. That’s why we have allocated an appropriate amount of investments for the gasification program: just RUB 5 million to continue the design and survey works we had started earlier. We negotiated with the regional authorities to settle the debt by buying the networks. But this work hasn’t been completed yet, while the debt is growing at an impressive pace: as I’ve already said, it more than doubled last year. QUESTION: Rita Dolzhenkova, Komsomolskaya Pravda, Tyumen. The One-Stop Shop pilot

6 project is successfully running in the Tyumen Region, giving the population access to gas in a short amount of time. With that in mind, I would like to ask: will this project be launched in other regions after showing good results in Tyumen? KIRILL SELEZNEV: Yes, indeed, the One-Stop Shop service makes it possible to not only provide consumers with gas in a quick and efficient manner, but also streamline all gasification-related procedures for them, like installing new equipment and settling payments for the gas supplied. Today, the project is running in as many as 11 regions besides Tyumen, including the Bryansk, Leningrad, Nizhny Novgorod, Rostov and Smolensk Regions. Later on, after studying the experience and identifying possible shortcomings in these 11 regions, we will expand our efforts all across Russia. QUESTION: Elena Fyodorova, IA-Federatsiya, Stavropol Territory. As you have said, heat supply companies incur millions in debt for gas. The most efficient corrective measure, as you have noted in your speech, is to limit or cut off gas supply. But it’s difficult to put into practice because the regional entities of the Federal Antimonopoly Service immediately claim it’s a violation of the antimonopoly law. Do you plan to change the limitation procedure through law-making and how do you think this problem can be addressed? KIRILL SELEZNEV: As I’ve already mentioned, thanks to the adoption of Federal Law No. 307 on strengthening the financial discipline we have an opportunity to considerably improve our efforts by developing and issuing a number of regulatory acts. Indeed, the regional offices of the Federal Antimonopoly Service, prosecutor’s offices, authorities – they all remove themselves from the process and keep us from limiting gas supplies. We plan to develop a regulatory act on the rules for gas supply limitation. It will be focused on this issue. So, we hope that with the support of the Government, it will be adopted before the year’s end, allowing us to respond more promptly to consumer debt growth. QUESTION: Vyacheslav Sukhanov, Kommersant-Prikamye. My question is: how would you evaluate the results of the Agreement between the Perm Territory and Gazprom signed back in 2013, considering the ever-increasing gas debt owed by, among others, budget-financed entities? And the second question: has T Plus reduced its gas purchases from the Company’s subsidiaries, including the Perm-based subsidiary, since early 2016 after it signed an agreement with NOVATEK? KIRILL SELEZNEV: You can probably give your own assessment of the progress with the Agreement of Cooperation and it will be similar to ours, considering that the gas debt is growing. That’s why we think the results are undoubtedly negative. The outstanding debt of the Perm Territory’s consumers currently exceeds RUB 3.5 billion. If we look at the overall trend, it has risen by more than RUB 700 million. So instead of dwindling, it keeps growing. As such, we’re sad to say that the Agreement of Cooperation is not being implemented properly. Nonetheless, in 2016 alone Gazprom allocated RUB 380 million for gasification, although the funds are intended for the completion of facilities already under construction, in order to keep our capital investments from ‘dying.’ Next year, following the example of other regions with growing or existing debt, we will keep the investments in gasification at a level of RUB 5 million or reduce them all the way to zero like in the Tver Region. As for the purchases by T Plus, you know, in the first quarter of 2016 we sold 12 per cent less gas than usual to T Plus. But we think it’s not because they buy gas from NOVATEK, at least in the Perm Territory. We think it’s because of the decline in gas consumption across Russia. According to our data, T Plus is rather actively buying gas on stock exchanges, which also contributes to its lower purchases from Gazprom Mezhregiongaz. We have no information on any supply contracts concluded between T Plus and NOVATEK. QUESTION: Evgenia Sokolova, TASS information agency. How much gas is Rosneft going to buy from you for its consumers this year? And, if I may, how much gas did they buy last year? 7

KIRILL SELEZNEV: As regards gas purchases by Rosneft, all I can say is that we haven’t supplied gas to Rosneft either this year or last year. We have ramped up gas supplies and reached new consumers, such as Bashkir Generation Company – this year’s supplies total around 3.5 billion cubic meters – and the Avtozavodskaya CHPP in Nizhny Novgorod, along with a number of new minor consumers that might have been working with Rosneft. We also supply a considerable amount to the Sverdlovsk Region. Gazprom doesn’t sell or supply gas directly to Rosneft. QUESTION: Alexander Zyuzyaev, Komsomolskaya Pravda, Omsk. My question is about environmental improvement in cities with a million-plus population. Does Gazprom Mezhregiongaz run or intend to launch a program for cooperation with the management of coal-fired CHPPs, including the ones based in Omsk, with a view to converting them to natural gas? Omsk, for instance, has three operational CHPPs that are fired by, among other things, coal with high ash content (around 60 per cent). They are located almost in the center of the city. KIRILL SELEZNEV: You know, we don’t have a program for converting all coal-fired CHPPs to natural gas. The initiative should come from the consumer, from the regional authorities. The program should probably be economically expedient. We can say from experience that we approached a number of CHPPs and offered them help in converting from coal to natural gas, but they refused – it’s what happened in the Irkutsk Region. I think the situation is roughly the same in the Omsk Region: it’s probably more cost effective to use coal at those CHPPs than to convert them to natural gas. The thing is that the Ekibastuz coal basin is located nearby and that coal is rather cheap. This is why you should ask the regional authorities about that. If they approach us about it, including under the Gasification Program, we will readily consider it and estimate the potential capital investments and economic viability of converting those CHPPs from coal to gas. QUESTION: Alyona Makhneva, Vedomosti newspaper. What gas volumes does the Company plan to sell through stock trading this year? Have you settled the differences with the trader you couldn’t agree with on billing issues? KIRILL SELEZNEV: It’s hard to tell how much gas we are going to sell. It all depends on the demand on the stock exchange, which will be determined by weather. All in all, our plans for cooperation with the stock exchange are rather extensive: we definitely plan to sell gas, but it’s hard to tell how much. As for the trader, that situation did take place. It wasn’t a conflict between us and the trader; it was a conflict between the trader and the consumer when the consumer refused to purchase certain gas volumes and, in order to resolve the dispute, we had to take the side of the trader to document those volumes and draw up a balance sheet. That said, we believe that this conflict is a borderline case concerning the relationship between the consumer and the supplier. At present, there are no regulatory acts governing billing for gas delivered to one consumer from several suppliers. Nor do we have any acts obligating the consumer to document gas volumes. It’s hard to say why the consumer refused to buy those gas volumes and what really happened, but, in response to your question, I can say that the dispute has been settled. QUESTION: Pavel Gromov, Vologda TV-7. I’d like to go back to Lipin Bor. You said that RUB 400 million had been allocated under the Program. Is that amount earmarked for all facilities? Also, when will construction start and when are you going to complete it? KIRILL SELEZNEV: I can’t tell you whether it’s earmarked for all facilities or not. Construction is in progress; it’s taking place this very year. It’s slated for completion by the 2016–2017 heating season. As for our next steps under the Gasification Program, it all depends on the situation with receivables and regional administrations fulfilling their obligations to prepare consumers.

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QUESTION: Vitaly Sokolov, Energy Intelligence. I have a clarifying question. You said that you had expanded your supply portfolio in the domestic market by reaching the clients who might have been the clients of Rosneft in the past. You mentioned the volume for Bashkir Generation Company. Could you please tell us the volumes for the other such clients – how much gas do you supply to them? And what is the contract period? Did you sign the contract for this year only? If you did, will you renew it for the next year? KIRILL SELEZNEV: I’ve already told you the volumes for Bashkir Generation Company – 3.5 billion cubic meters. Around 4.8 billion cubic meters are slated for the Sverdlovsk Region. The Avtozavodskaya CHPP in Nizhny Novgorod will receive some 140 million cubic meters, if memory serves me right. Other minor consumers will get a total of slightly less than 10 billion cubic meters. We have agreed with Bashkir Generation Company to extend the contract; those are all one-year contracts. We have also reached an agreement with some of our consumers, like Bashkir Generation Company, to conclude a contract for the same amount of gas to be delivered in 2017. As for the other consumers, perhaps we will go back to that when the negotiating campaign gets closer – in September and October 2016. QUESTION: Are those 10 billion cubic meters meant to be additional supplies to new consumers from 2016? KIRILL SELEZNEV: Yes, it’s intended for consumers that joined us in 2016. QUESTION: Ilshat Kashapov, Respublika Bashkortostan newspaper. You have already pointed out that heat supply companies were the main debtors. The heat tariff set by the region’s State Tariff Committee doesn’t seem viable for the majority of consumers there. Around 70 per cent of regional heat supply companies end up with debts to gas companies. Do you have any plans for negotiating the tariffs with the authorities? KIRILL SELEZNEV: Of course we do. The Republic of Bashkortostan is not alone in this. There are many regions where heat supply companies only receive about 70 per cent of their potential revenue from the tariffs. Clearly, that’s not enough for heat supply companies to operate normally. Deputy Prime Minister Arkady Dvorkovich held a meeting on this issue in December 2015. The Administration of the Federal Antimonopoly Service was tasked to audit heat tariffs and analyze the regions where the tariff level is most critical. Work is underway and we are taking active part in it. We hope that as soon as it’s over the heat tariffs will be economically expedient not only in Bashkortostan, but in other regions as well. QUESTION: Varvara Kulaeva, Interfax agency. Mr. Seleznev, could you please tell us if, after selling Chelyabinskregiongaz, Gazprom intends to sell some other regional gas companies to independent producers, for example in Kostroma or Lipetsk? KIRILL SELEZNEV: We have no such plans right now, although we are indeed working on that in Kostroma. We have reached the agreements. We have no plans for Lipetsk yet. As of now, around 50 per cent of the region’s gas consumption is secured by Novolipetsk Steel that from 2016 onward switched to gas supplies from independent producers, namely NOVATEK. But the remaining part – over 2.5 billion cubic meters – comes from our regional company. So, we have no such plans yet, but we’ll see: it all depends on economic efficiency. If the company turns out to be unprofitable and the tariff rate doesn’t allow us to keep it at the break-even level, we will certainly address that issue. QUESTION: Sofia Dvornik, RIA Novosti. Mr. Seleznev, could you please say how much gas you are planning to supply for the gasification of the Far Eastern regions directly via the Power of Siberia gas pipeline? KIRILL SELEZNEV: First of all, thank you for your question. You know, the balance for the Far East hasn’t been drawn up yet. On July 9, Yuzhno-Sakhalinsk will host a meeting under the direction of the Energy Ministry. It will be about extending Gazprom’s royalties for natural gas from Sakhalin. All this will be reflected in the balance. It’s only when we settle all 9 the issues regarding gas supply to and gasification of the Far East that I will be able to answer your question. MODERATOR: Colleagues, thank you very much. The Press Conference is over.

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