Open Joint Stock Company Gazprom

major natural gas distributor in eastern Germany (of which ZGG owns approximately 5%) and BASF.Wingas' gas sales are to municipal undertakings, gas utilities and major industrial consumers. Gazpromhas concluded two long-term natural gas supply contracts with Wingas for a total annual volume of 5.8bcm. In 2001, Gazprom supplied 13.5 bcm of natural gas to Wingas and WIEH for sale in Germany andsome other Western European countries. Overall, Gazprom supplied 111.1 bcm of natural gas to WIEHand Wingas between 1991 and 2001. During the same period, Gazprom supplied 30.0 bcm of naturalgas to WIEH for resale in Bulgaria and Romania.At the end of 1998, the 294 km long WEDAL pipeline became operational, linking the Wingaspipe-line network with the Belgian pipeline system and the Interconnector pipeline which links the UKgas transportation system to the continent. Gazprom has acquired a 10% interest in the Interconnectorpipeline. Initially, the WEDAL pipeline was designed to transport UK gas under contracts betweenWingas, British Gas and Conoco and provides Wingas with the security of supply from diversetransportation sources. Gas sup-plies from Continental Europe to the UK may also be carried throughthe Interconnector pipeline.At the end of 1999, a 340 km pipeline, known as the YAGAL pipeline, with a capacity of 26.0 bcmper year was put into operation. This pipeline connects the Yamal-Europe pipeline with the STEGALpipeline. The completion of this pipeline enabled Gazprom to expand its supplies of natural gas toEuropean countries and improved the reliability and flexibility of supplies of Russian natural gas toGermany.Under the strategic alliance agreement between Gazprom and BASF, a feasibility study for thejoint development of the Achimovsk formations of the Urengoyskoye field was jointly prepared andcoordinated by Gazprom and Wintershall. The terms and conditions of the joint venture are currentlybeing negotiated.WintershallGazprom has announced plans to establish a joint venture with Wintershall to develop gasdeposits in Western Siberia with the aim of producing around 10 bcm of natural gas per year.Wintershall has indicated that it plans to provide all of the initial capital expenditure required to developsuch gas deposits.Transbalkan Pipeline ProjectGazprom is evaluating the possibility of increasing and diversifying its gas transportation routesto the Balkan states and Turkey. In order to increase natural gas supplies to the these states, Gazprom,in association with various national companies, is working on the expansion and modernisation of theexisting pipeline network in the Ukraine, Romania and Bulgaria (the Transbalkan Pipeline Project).Expansion of transit capacities within the Ukraine is being gradually implemented. A compressorstation, Tarutino, was put into operation in 2001 within the operating transit gas pipeline Ananiev-Tiraspol-Izmail. At present the next phase of the project, the construction of loopings within the gaspipeline Annaniev-Tiraspol-Izmail, is being introduced. The construction and expansion of transitcapacities in Bulgaria and Romania has been, as at the date of this Offering Circular, largely completed.South ParsOn 28 September 1997, Total (now TotalFinaElf), signed an agreement with the National IranianOil Company for the development of the second and third phases of the South Pars field. Gazprom,Petrolian Nacional Berhad (Petronas), the Malaysian state oil company and Total signed a partnershipagreement for the development of this project, with a total anticipated project cost of approximatelyU.S.$2 billion. Pursuant to the terms of the agreement, Gazprom obtained a 30% interest.The construction of two production platforms, two off-shore pipelines and an on-shore gascomplex has been completed. Production of natural gas and gas condensate and oil started in March2002 and the export of gas condensate started in April 2002. The gas processing plant is expected tobe operating at full capacity by the end of 2002.52