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MASTER PLAN Ukrainian Gas Transmission System (UGTS) Priority Objects Modernisation and Reconstruction Gas Transmission System of

Belarus R Kobrin u ss Mozyr ia Chernigov Sudja d n la o Pysarivka P Valuiky

Drozdovychi Bilche Volytsko- Khmelnytskyi Sokhranovka Ugersk Uzhgorod Ivano-Frankivsk Vinnytsya

Bogorodchany Lugansk Dnipropetrovsk Beregove Khust Kirovograd Tekove Zaporishya Platovo Ananyiv Satu-Mare M o ld o v a Mykolayiv

Orlovka

Black Sea

1 Parameters of Ukrainian Gas Transmission System

Parameters Units Total

Length of gas pipelines, total 37.0 including: - gas mains thsd. km 22.2 - pipeline branches 14.8 Throughput capacity of GTS: - input 288 - output bcm/year 178 including European countries 142 Number of compressor stations (compressor shops) item 72(110) Number of gas compressor units item 702 Capacity of compressor stations МW 5442.9 Number of underground gas storage facilities (UGSF) item 12 Total working volume of UGSF bcm 31

Number of gas distribution stations (GDS) item 1437

2 Gas Supply and Transit via Ukrainian Entry/Exit Points during 2004-2008 (bcm) Intake in Ukraine: 288.0 - design capacity 5.5 28.9 191.4 - 2004 6.0 0.0 R 3.9 2.7 0.0 u 189.9 - 2005 4.3 0.0 s 3.8 107.5 s 184.3 - 2006 3.4 3.1 0.0 109.3 ia 168.9 – 2007 0.0 6.8 Kobrin 4.6 107.8 168.6 - 2008 6.9 4.7 104.3 98.2 13.0 25.5 Mozyr 101.2 4.1 48.7 10.2 2.9 Chernigiv 11.0 34.3 5.0 Sudja 0.0 31.1 d 11.2 2.4 n 4.6 11.3 33.3 Lutsk 1.8 la 4.6 11.1 34.5 o 4.5 Rivne 32.6 Sumy Pysarivka P 4.2 Valuiky 4.8 Kyiv Zhytomyr Lviv Kharkiv

Drozdovychi Ternopil 92.6 Bilche Volytsko- Poltava Khmelnytskyi Sokhranovka 82.6 Ugersk Cherkasy Slovakia81.2 Uzhgorod Ivano-Frankivsk 47.9 73.6 23.4 72.2 25.5 75.4 Bogorodchany Lugansk 24.9 Dnipropetrivsk 7.7 Khust Kirovograd Beregove 7.1 Tekove Chernivtsi Donetsk Satu-Mare Hungary 13.2 4.5 Zaporizhyia 11.6 1.2 Platovo M Ananiiv 11.9 1.8 6.0 11.3 2.4 o 1.2 - 10.5 2.1 ld 1.2 2.3 12.1 2.0 o 1.0 1.9 v 1.2 32.5 3.1 a Mykolayiv 14.0 Odessa 1.0 1.9 Romania 11.9 2.2 Kherson 12.1 Sea of Azov 0.3 Transit via Ukraine: Transit to 0.0 178.1 - design capacity European countries: 137.1 - 2004 142.1 – design capacity Orlovka 136.2 - 2005 26.8 120.4 - 2004 20.4 128.2 - 2006 121.5 - 2005 22.0 115.1 – 2007 113.8 - 2006 21.8 Simferopol 119.5 - 2008 112.1 – 2007 23.0 116.8 - 2008 22.5 3 Strategy of UGTS Modernisation and Reconstruction

Purposes are:

• Reliability increase • Efficiency increase • Gas transit routes profitability • Reduction of environmental impact • Reduction of gas delivery risk to European consumers via Ukraine

Priority tasks are:

• Maintenance of main transit pipelines and UGSF design parameters • Implementation of up-to-day, environmentally effective technologies • Implementation of up-to-day control methods of technical state • On-line gas quantity and quality monitoring • Alignment of UGTS with relevant European standards

4 UGTS Priority Objects Modernisation and Reconstruction

• Western transit corridor” - - Urengoy-Pomary-Uzhgorod - Progres • “South transit corridor” - Elets--Kryvyi Rig - Ananiiv -Tyraspil-

• Underground gas storage facilities - Bilche-Volytsko-Ugerske - Bogorodchany

• Gas metering stations (GMS) - Uzhgorod - Beregove - Drozdovychi - Tekove - Orlovka 5 UGTS Priority Objects Modernisation and Reconstruction

Belarus R Kobrin u ss Mozyr ia Chernigiv Sudja d n Lutsk la o Rivne Pysarivka Sumy P Kyiv Valuiky Zhytomyr Lviv od Kharkiv Drozdovychi gor Ternopil y-Uzh Bilche Volytsko- omar Poltava Khmelnytskyioy-P Sokhranovka Ugersk reng Cherkasy Ivano-Frankivsk U Vinnytsyagres il Slovakia Uzhgorod Pro a Soyuz m z Bogorodchany I Lugansk - Dnipropetrivsk Khust Kirovograd v Beregove ii Tekove Chernivtsi n a Donetsk n Hungary A Zaporizhyia Satu-Mare Ananiiv - Platovo M k o u ld ch o n v e a m Mykolayiv Odessae r Kherson -K Romania ts Sea of Azov le E Orlovka

Black Sea Simferopol

6 Main directions:

• Reconstruction of linear part of pipelines with auxiliary objects • Modernisation and reconstruction of compressor stations • Modernisation and reconstruction of telemechanics and communication systems • Modernisation and reconstruction of underground gas storage facilities • Reconstruction and construction of gas metering stations (GMS)

Main trends are determined by the following:

• Required repair of separate linear segments of pipelines • Required updating of telemechanics and communication systems • Expired operational time of gas compressor units on transit pipelines • Adjustment of UGSF main equipment parameters to European standards • Adjustment of existing and new-built Ukrainian GMS to relevant European standards

7 Modernisation and Reconstruction of Soyuz Gas Pipeline

Belarus R Kobrin u Finance expenditure ss Mozyr ia 730.7 mln. USD Chernigiv Sudja d n Lutsk la o Rivne Pysarivka Sumy P Kyiv Valuiky Zhytomyr Period of implementation Lviv Kharkiv

Drozdovychi Ternopil Bilche Volytsko- Poltava • project -5-7 years Khmelnytskyi Sokhranovka Ugersk Cherkasy Slovakia Uzhgorod Ivano-Frankivsk Vinnytsia •separate objects - 3-4 years Soyuz Bogorodchany Lugansk Dnipropetrivsk Beregove KhustTekove Kirovograd Chernivtsi Donetsk Zaporizhyia Hungary Satu-Mare Platovo Expected results Ananiiv M o - enhancement of natural gas ld o v a Mykolayiv transportation reliability; Odessa Kherson - reduction of fuel gas volume; Romania Sea of Azov

-reduction of environmental impact. Orlovka

Black Sea Simferopol

Financing mln. USD 1st year 2nd year 3rd year 4th year 5th year 6th year 7th year Total Linear part 13.1 12.9 14.9 13.3 12.9 13.5 12.5 93.1 Compressor stations 5.0 5.0 81.8 163.7 136.5 122.8 122.8 637.6 Total: 18.1 17.9 96.7 177.0 149.4 136.3 135.3 730.7

9 Modernisation and Reconstruction of Urengoy-Pomary-Uzhgorod Gas Pipeline

Belarus R Kobrin u ss Finance expenditure Mozyr ia Chernigiv Sudja 750.7 mln. USD d n Lutsk la o Rivne Pysarivka Sumy P Kyiv Valuiky Zhytomyr Lviv Period of implementation od Kharkiv Drozdovychi hgor Ternopil ry-Uz Bilche Volytsko- oma Poltava Khmelnytskyigoy-P Sokhranovka project - 5-7 years Ugersk Uren Cherkasy Slovakia Uzhgorod Ivano-Frankivsk Vinnytsia separate objects - 3-4 years Bogorodchany Lugansk Dnipropetrivsk Beregove KhustTekove Kirovograd Chernivtsi Donetsk Zaporizhyia Hungary Satu-Mare Platovo Expected results M Ananiiv o ld - enhancement of natural gas o v a Mykolayiv Odessa transportation reliability; Kherson - reduction of fuel gas volume; Romania Sea of Azov - reduction of environmental Orlovka impact. Black Sea Simferopol

Financing mln. USD 1st year 2nd year 3rd year 4th year 5th year 6th year 7th year Total Linear part 41.0 38.0 37.1 36.9 35.5 36.8 33.2 258. 5 Compressor stations - 5.0 23.2 116.0 116.0 116.0 116.0 492.2 Total: 41.0 43.0 60.3 152.9 151.5 152.8 149.2 750.7

10 Modernisation and Reconstruction of Progres Gas Pipeline

Belarus R Kobrin u ss Mozyr ia Chernigiv Sudja Finance expenditure d n Lutsk la 203.9 mln. USD Rivne Pysarivka Sumy Po Kyiv Valuiky Zhytomyr Lviv Kharkiv

Drozdovychi Ternopil Bilche Volytsko- Progres Poltava Period of implementation Khmelnytskyi Sokhranovka Ugersk Cherkasy Slovakia Uzhgorod Ivano-Frankivsk Vinnytsia project - 5-7 years Bogorodchany Lugansk Dnipropetrivsk Khust Kirovograd Beregove Tekove separate objects - 3-4 years Chernivtsi Donetsk Zaporizhyia Hungary Satu-Mare Platovo M Ananiiv o ld o Expected results v a Mykolayiv Odessa - enhancement of natural gas Kherson Romania Sea of Azov transportation reliability: Orlovka - reduction of fuel gas volume; Black Sea Simferopol - reduction of environmental impact.

Financing mln. USD

1st year 2nd year 3rd year 4th year 5th year 6th year 7th year Total Linear part 17.6 17.4 16.9 21.9 26.5 13.7 13.7 127.7 Compressor stations - 10.2 13.2 13.2 13.2 13.2 13.2 76.2 Total 17.6 27.6 30.1 35.1 39.7 26.9 26.9 203.9

11 Modernisation and Reconstruction of South Transit Corridor Elets-Kremenchuk-Kryvyi Rig / Ananiiv-Tyraspol-Izmail

Belarus R Kobrin u ss Finance expenditure Mozyr ia Chernigiv Sudja 366.3 mln. USD d n Lutsk la Rivne Pysarivka Elets-Kremenchuk-Sumy Po Kyiv Valuiky Zhytomyr Kryvyi Rig Lviv Period of implementation Kharkiv Drozdovychi Ternopil Bilche Volytsko- Poltava Khmelnytskyi Sokhranovka project - 5-7 years Ugersk Cherkasy Ivano-Frankivsk Vinnytsia il Slovakia Uzhgorod a m separate objects - 3-4 years z Bogorodchany I Lugansk - Dnipropetrivsk Khust Kirovograd v Beregove Tekove Kremenchuk-Ananiiv- ii Chernivtsi n a Donetsk Bogorodchany n Hungary A Zaporizhyia Satu-Mare Ananiiv - Platovo M k Expected results u o h ld c - enhancement of natural gas o n v e a m Mykolayiv Odessae transportation reliability; Ananiiv- r Kherson -K Romania Tyraspil- ts Sea of Azov - reduction of fuel gas volume; le Izmail E - reduction of environmental Orlovka impact. Black Sea Simferopol

Financing mln. USD 1st year 2nd year 3rd year 4th year 5th year 6th year 7th year Total Linear part 19.5 19.6 22.0 23.6 20.2 16.3 15.8 137.0 Compressor stations 8.7 52.7 53.8 32.1 32.0 15.6 34.4 229.3 Total: 28.2 72.3 75.8 55.7 52.2 31.9 50.2 366.3

12 Modernisation and Reconstruction of Bilche-Volytsko - Ugerske and Bogorodchany Underground Gas Storage Facilities

Belarus R Kobrin u ss Finance expenditure Mozyr ia Chernigiv Sudja d 455.3 mln. USD n Lutsk la Rivne Pysarivka Sumy Po Kyiv Valuiky Zhytomyr Lviv Bilche Volytsko- Period of implementation Kharkiv Drozdovychi UgerskTernopil Poltava Khmelnytskyi Sokhranovka Cherkasy project -7 years Slovakia Uzhgorod Ivano-Frankivsk Vinnytsia separate objects-2-3 years Lugansk Dnipropetrivsk KhustBogorodchany Kirovograd Beregove Tekove Chernivtsi Donetsk Zaporizhyia Hungary Satu-Mare Platovo Expected results M Ananiiv o ld o - enhancement v a Mykolayiv Odessa of natural gas transportation Kherson reliability; Romania Sea of Azov - reduction of environmental Orlovka impact. Black Sea Simferopol

Financing mln. USD

1st year 2nd year 3rd year 4th year 5th year 6th year 7th year Total Bilche-Volytsko-Ugerske UGS 4.3 25.8 53.6 69.2 97.7 57.4 32.8 340.8 Bogorodchany UGS - 4.9 38.4 37.0 34.2 - - 114.5 Total: 4.3 30.7 92.0 106.2 131.9 57.4 32.8 455.3

13 Modernisation and Reconstruction of GMS at Exit Points of Ukraine

Belarus R Kobrin u ss Finance expenditure Mozyr ia Chernigiv Sudja d 63.6 mln. USD n Lutsk la Rivne Pysarivka Sumy Po Kyiv Valuiky Zhytomyr Lviv Drozdovychi Kharkiv Period of Ternopil Bilche Volytsko- Poltava Khmelnytskyi Sokhranovka Ugersk Cherkasy Vinnytsia implementation SlovakiaUzhgorod Ivano-Frankivsk

Bogorodchany Lugansk Dnipropetrivsk project - 4 years Beregove Khust Kirovograd Chernivtsi Tekove Donetsk Hungary Satu-Mare Zaporizhyia Ananiiv Platovo M o Expected results l d o v - increased exactness of a Mykolayiv Odessa Kherson natural gas quality Romania Sea of Azov measurement ; Orlovka - reduction of Black Sea Simferopol environmental impact.

Financing mln. USD 1st year 2nd year 3rd year 4th year 5th year 6th year 7th year Total GMS at Exit Points of Ukraine, including: Uzhgorod, Beregove, 2.6 23.7 16.2 21.1 - - - 63.6 Drozdovychi, Tekove, Orlovka

14 Construction of Commercial (Backup) GMS at Entry Points of UGTS

Belarus R Finance expenditure Kobrin u ss 448.0 mln. USD Mozyr ia Chernigiv Sudja d n Lutsk la Rivne Pysarivka Sumy Po Kyiv Valuiky Period of Zhytomyr Lviv Drozdovychi Kharkiv implementation Ternopil Bilche Volytsko- Poltava Khmelnytskyi Sokhranovka Ugersk Cherkasy Vinnytsia 5 years SlovakiaUzhgorod Ivano-Frankivsk

Bogorodchany Lugansk Dnipropetrivsk Beregove Khust Kirovograd Chernivtsi Tekove Donetsk Expected results Hungary Satu-Mare Zaporizhyia Ananiiv Platovo M -control of gas volume o ld o and gas quality at v a Mykolayiv Odessa Ukrainian customs Kherson Romania Sea of Azov territory Orlovka Black Sea Simferopol

Financing mln. USD 1st year 2nd year 3rd year 4th year 5th year 6th year 7th year Total GMS at entry points of Ukrainian GTS (9 GMS on Russian Federation boarder, 3.5 36.1 92.6 207.6 108.2 - - 448.0 2 GMS on Belarus boarder)

15 Basics of UGTS Priority Objects Modernisation and Reconstruction

Total investment expenditure required for modernisation and reconstruction during seven years reaches 3018.5 mln. USD, including:

- Linear part - 616.3 mln. USD - Compressor stations - 1435.3 mln. USD - Underground gas storage facilities - 455.3 mln. USD - GMS at exit points of Ukrainian GTS - 63.6 mln. USD - New GMS at entry points of Ukrainian GTS - 448.0 mln. USD

Modernisation and Reconstruction leads to: · Gas pipelines design parameters maintenance · Reliability growth in natural gas supply to domestic consumers · Reduction of environmental impact · Reduction of fuel gas volume

Calculation of initial expenses shows economical preeminence and benefits.

16 Total Investments Volume for UGTS Priority Objects Modernisation and Reconstruction mln. USD

Years st nd rd th th th th Name 1 2 3 4 5 6 7 Total 1. Gas pipelines, total 104.9 160.8 262.9 420.7 392.8 347.9 361.6 2051.6 - linear part 91.2 87.9 90.9 95.7 95.1 80.3 75.2 616.3 - compressor stations 13.7 72.9 172.0 325.0 297.7 267.6 286.4 1435.3 2. Underground gas storage facilities 4.3 30.7 92.0 106.2 131.9 57.4 32.8 455.3 3.Gas metering stations at exit points of UGTS 2.6 23.7 16.2 21.1 63.6 4. New Gas metering stations at entry points of UGTS 3.5 36.1 92.6 207.6 108.2 448.0 Total investments volume 115.3 251.3 463.7 755.6 632.9 405.3 394.4 3018.5

17 Perspective Trends of UGTS Development Novopskov - Uzhgorod, Torzhok - Dolyna

Belarus R Kobrin u ss Finance Expenditure Mozyr ia Chernigiv Sudja d 5.55 bln. USD n Lutsk la Rivne na Pysarivka y Sumy Po ol Valuiky -D Kyiv k Zhytomyr Lviv ho rz Kharkiv Expected results To Drozdovychi Ternopil Bilche Volytsko- Poltava Khmelnytskyi Sokhranovka Ugersk Cherkasy - increase in throughput capacity Ivano-Frankivsk Slovakia Uzhgorod Vinnytsia

at exit points of Ukraine Bogorodchany Lugansk Dnipropetrivsk Khust Kirovograd Bogorodchany-UzhgorodBeregove Tekove Novopskovsk-Uzhgorod by 60 bcm/year Chernivtsi Donetsk Zaporizhyia Hungary Platovo - reduction of Capex comparing Satu-Mare M Ananiiv o ld to new routеs. o v a Mykolayiv Odessa Kherson Romania Sea of Azov

Orlovka

Black Sea Simferopol

Novopskov - Uzhgorod Torzhok - incl. first stage - Total Dolyna Bogorodchany – Uzhgorod Length of pipeline, km 1521 241.4 529 Number of compressor stations 12 - 4 Output, bcm/year 28.6 19 30

Installed capacity of CS, MW 768 - 256 18