Gazprom Board of Directors Addresses Issue of Exchange Gas Trade Development in Russia

The Gazprom Board of Directors took notice of the information about the development of the exchange gas trading system. The Management Committee was tasked to proceed with this activity.

It was pointed out that in 2014 well-coordinated gas trading was launched at the St. Petersburg International Mercantile Exchange (SPIMEX). This is an important step for the Russian gas market development. An increase in the volume of exchange trade will provide for introducing market pricing principles as well as shaping up adequate price indicators for gas sold in the domestic market.

In addition, the existing Rules for gas trading at SPIMEX suggest that every trader should conclude a service contract for gas transportation with an authorized company Gazprom Mezhregiongaz Postavka. As a result, Gazprom has to purchase gas transportation services, which actually the Company provides itself, creating the tax risks related to the costs on gas transportation and compensating the input VAT.

Therefore, early this year Gazprom had to suspend its participation in gas trading until the situation is resolved. By now, Gazprom has introduced some changes into the system of interaction among the Group’s organizations, mitigating the Company’s tax risks. At present, Gazprom has resumed gas trading at SPIMEX.

Gazprom will continue further improving the regulatory framework governing the operation of the Russian gas market. This includes the issue of amending the Rules for gas trading with a view to fully eliminate all the tax risks for the Company.