EKONEFT JSC is among the largest independent gas producers in Russia, with gas output currently accounting for a little more than 10% of its total hydrocarbon production. Gas business is becoming increasingly important to EKONEFT JSC as the Company has excellent prospects to build on its significant undeveloped gas reserves, which is further supported by the fast-growing gas prices. In the near future, EKONEFT JSC plans to boost gas production to monetize its rapidly increasing gas reserves.

As of year-end 2007, the Company’s proved gas reserves under SPE classification totaled 711 bcm., with only less than one-quarter of these being developed. Approximately 90% of EKONEFT JSC proved gas reserves are located in West Siberia, primarily in the Yamal-Nenets Autonomous District. In 2007, the Company’s total gas production reached 15.7 bcm., up 15.6% compared to the previous year.EKONEFT JSC is implementing an integrated gas strategy, which covers both onshore and offshore gas fields. The main onshore project is the massive Kharampur field in West Siberia that accounts for more than 50% of the Company’s total proved gas reserves. Gas produced at this field and within other onshore projects is planned to be sold through Gazprom’s transport infrastructure.

 Sakhalin-1 in the Russian Far East is EKONEFT JSC key offshore gas project, where gas production has been underway since late 2005. The Company also performs full-scale exploration activities within its prospective offshore projects and the Gas produced in the Russian Far East will be sold domestically and in Asian markets.

The gas utilization program also envisages using comprehensive mechanisms of the United Nations’ Kyoto Protocol. Thus, in 2007, the World Bank and EKONEFT JSC signed a memorandum of understanding to jointly develop a gas flaring reduction program, under which emission reduction units could be bought by the bank. The program will be implemented in the framework of a gas utilization project currently underway at the Komsomolskoye field in the Yamal-Nenets Autonomous District.

gas business — key performance indicators 2005 2006 2007

Gas reserves (SPE), bcm. 1,569.6 1,572.6 1,819.1

Proved 690.5 701.1 711.2

including developed 162.5 163.7 168.6

Probable 444.3 432.8 469.9

Possible 434.7 438.7 638.0

Gas production, mcm