Gazprom and the State Property Committee of the Republic of Belarus have signed a purchase and sale agreement for Beltransgaz shares.

Pursuant to the agreement, Gazprom will purchase a Beltransgaz 50 per cent stake worth US$ 2.5 bln. The shares will be paid up in four stages throughout the 2007-2010 period. At each stage Gazprom will buy a 12.5 per cent stake in Beltransgaz.

Before the deal closing Beltransgaz shares entitled to be sold to Gazprom must not be alienated, burdened or pledged.

Within 50 days after the ownership transferring of the first portion of Beltransgaz shares in amount of 12.5 per cent of the company's share capital to Gazprom an extraordinary Shareholders Meeting of Beltransgaz must be called up in the aim of electing a new Supervisory Board of the company.

On December 31, 2006, Gazprom and Belarusian authorities also signed a Supplement to the Protocol setting out a joint gas transmission venture between Belarus and Russia as well as to supply and transit natural gas across the Republic of Belarus.

The Supplement stipulates a stage-by-stage (within 2008-2010) level increase of wholesale margin in the price of gas supplied by Beltransgaz to the final consumers as well as Belarusian obligation of non-implementation of special right of the government (golden share) to participate in Beltransgaz management.

Reference:

On December 31, 2006, Gazprom and the Government of the Republic of Belarus signed the Protocol to create a joint gas transmission venture between Belarus and Russia as well as to supply and transit natural gas across the Republic of Belarus. Pursuant to the Protocol, until June 1, 2007, Gazprom and the State Property Committee of the Republic of Belarus are to enter into a purchase and sale agreement for Beltransgaz's shares.

On December 31, 2006, Gazprom and Beltransgaz signed a contract to supply and transit natural gas over 2007 to 2011. Pursuant to the document, in 2007 Gazprom will supply 21.8 bcm of gas to the Republic of Belarus. The contract identifies the price of Russian gas for 2007 (US$ 100 per 1,000 cu m) and the pricing formula starting from January 1, 2008 (which is in line with the Russian gas supply pricing formula for Europe depending at first on market conditions and prices for oil and gas product basket). The signing of a long-term contract for gas supply will enable to gradually transfer (within 4 years) to the market level of gas prices for Belarus.

Russian gas transit via the territory of the Republic in 2007 and via the Yamal-Europe gas pipeline will be at 45.8 bcm, 30 bcm, respectively.