ITALIA E RUSSIA – FORO DI DIALOGO

Vekselberg V.

Marzo

2007

B

y 2030 net gas imports may account for two thirds of total consumption.

Natural gas consumption in OECD Europe, reference case

bcm 900 600 300 0 2004

Source: IEA

2010 2015 2030 • Natural gas is expected to be the fastest growing fuel source in OECD Europe (power generation sector) • The bulk of European gas demand growth is provided by just three countries: Italy, Spain and Turkey • Net gas imports to OECD Europe expected to grow by 120-150 bcm in next 10 years, which is two thirds of European gas consumption.

• Average market share of Gazprom in EU countries is 27%

Gazprom’s exports to Europe outlook

bcm 205 200 189 154 150 110 118 125 100 55 69 4.2% 50 1.3% 7.2% 0 212 0.6% 215 219 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 Base Blue Stream-2 2

Source: Gazprom

Call on Independents to Increase Sharply

Gas Demand

• Increasing domestic Russian demand fueled by increase in economic growth and electricity consumption • Growing European and FSU demand

Gazprom Supply

• New production from incremental developments will match decline in 3 major fields • Significant capex required to keep supply flat. 2005-2015 1% CAGR supply growth • Assumes 70 bcma Central Asian supply in 2015

bcm 900 Forecast of gas demand and supply by sources 400 300 200 100 800 700 600 500 Opportunity for Independents

• Supply opportunity from independents increase from 105 bcma in 2006 to over 200 bcma in 2015

2005 Russia Demand Europe Demand FSU Demand 2010 Gazprom Supply Imports Central Asia Independents 2015

3 Source: IEA, TNK-BP

The Rise of Russian Independent Gas

Russian Gas Production Breakdown (Bcm)

800,0 600,0 400,0 200,0 0,0 1990 1994 1998 2002 2006 Russia total Gazprom Independent total • Total non-Gazprom production up by over 100% during the past 10 years (to 106 Bcm in 2006) • Free gas production up by ~50 BCM since 1997 • Associated gas production by Russian oil companies back up to 1990 levels

Independents’ Gas Production Forecast (Bcm/Year)

250 200 150 100 50 0 2005 2010 2015 Russian Energy Strategy to 2020 High Scenario (2003) Independents Own Forecasts 2006 (unconstrained) 4 Source: Ministry of Industry and Energy; UBS

Independents can deliver 140 Bcm/y additional production capacity from existing reserves by 2015!

World’s Leading Gas Producers (BCMA)

Gazprom USA Canada Russian independent producers UK Iran 550 526 186 105 88 87

5

BACKUP SLIDE

Gas demand in Italy is expected to grow by 25 bcma to 2015; Gazprom will compete for Italian market with Algeria’s Sonatrach

Italian gas consumption dynamics

Source: OIES

Past and projected Gazprom’s exports to Italy

bcm 30 22.0

26.3

20 20 13.6

14.3

10 6.6

6.3

28.1

• • • • Italy is the second largest gas market in continental Europe with consumption of 85 bcm in 2005.

Italy is the second largest European market for Gazprom, representing 14% of its exports to Europe. Gazprom provided 24% of Italian gas demand in 2005.

OIES predicts that gas demand in Italy should increase by 18 bcm to 2010 and by 25 bcm to 2015.

Algeria has two pipeline expansion projects which will allow to increase its exports to Italy by about 10 bcma.

If Gazprom were to preserve its market share, it should increase gas deliveries to Italy by more than 6 bcma by 2015.

0 1980 1985 1990 1995 2000 2005 2010 2015 6

Source: Gazprm, EIA, SNBD estimates