Background

Gazprom and Petrovietnam are engaged in exploration, production and marketing of hydrocarbons in block No.112 of Vietnam's continental shelf through the Vietgazprom joint operating company. As a result of the geological exploration performed in 2007, the Bao Vang gas and condensate field was discovered in the block. In 2009 natural gas reserves were also discovered in the adjacent Bao Den area.

A long-term Oil and Gas Contract is currently in force between Gazprom and Petrovietnam for blocks No.129, 130, 131 and 132 on the continental shelf of the Republic of Vietnam. The document stipulates hydrocarbon exploration, development and production in these blocks. The Contract will be implemented on the PSA terms. Vietgazprom acts as the project operator.

On December 15, 2009 Gazprom and Petrovietnam entered into the Agreement on Strategic Partnership. In line with the document, the parties will continue the joint operations in the Vietnamese offshore blocks as contemplated by previously signed oil and gas contracts. They will also study further prospects for cooperation between the companies in vacant Vietnamese licensed blocks. The Agreement also contemplates pro-active interaction between Gazprom and Petrovietnam in oil and gas projects across Russia, Vietnam and third countries within Gazpromviet. The Nagumanovskoye oil, gas and condensate field in the Orenburg Region as well as the Severo-Purovskoye gas and condensate field in the Yamal-Nenets Autonomous Area were defined as the major objects of the companies' cooperation in Russia.

In April 2012 Gazprom Group and Petrovietnam signed the Agreement on Gazprom's involvement in joint development projects for licensed blocks 05.2 and 05.3 offshore Vietnam. Blocks 05.3 and 05.2 are located in the southeastern part of the Vietnamese shelf, in the Nam Con Son oil- and gas-bearing basin, 300 kilometers away from Vung Tau. Two gas and condensate fields – Moc Tinh and Hai Thach – were discovered within the blocks. The recoverable reserves of these fields amount to 35.9 billion cubic meters of gas and 15.2 million tons of gas condensate.

In July 2012 Gazprom Marketing & Trading Singapore and Petrovietnam Gas Joint Stock Corporation signed a Memorandum of Understanding with regard to cooperation in the LNG supply sector.

On May 14, 2013 Gazprom and Petrovietnam signed a Memorandum of Understanding to cooperate in natural gas production and use as a vehicle fuel in the Socialist Republic of Vietnam.

Gazprom considers the NGV market as a promising area of the Company's activities targeted at increasing the economic efficiency of Russian gas sales abroad.

The Joint Coordinating Committee between Gazprom and Petrovietnam Oil and Gas Group is engaged in activities aimed at expanding the interaction between the companies and exploring possibilities for cooperation in the natural gas vehicles area.

For the purpose of improving the efficiency of the NGV market development strategy Gazprom set up a special-purpose company – Gazprom Gazomotornoye Toplivo – consolidating the Company's relevant assets.