LPG Project Authorisation

29 November 2016

Volga Gas Plc

("Volga Gas" or the "Company") 

LPG Project

Volga Gas Plc, the oil and gas exploration and production group operating in the Volga Region of Russia is pleased to announce that the Board of the Company has given preliminary authorisation to a project based at the Group's Dobrinskoye Gas Processing plant for the capture, storage and sale of liquid petroleum gases (LPGs) from the gas and condensate streams produced from the Vostochny Makarovskoye and Dobrinskoye fields. LPGs, primarily comprising propane and butane, are currently either included in the sales gas stream or flared.

The LPG project will provide an additional product stream which is expected to increase total sales volumes by approximately 10% and to enhance profitability.

The construction of the project is expected, subject to the necessary regulatory approvals, to commence during 2Q 2017 and be completed before the end of 2017. The total capital investment in the project is estimated at US$5.0 million.

The project can be funded from the Group's existing cash resources which currently stand at approximately US$13 million.

For further information, please contact:

Editors' notes:

The information contained in this announcement has been reviewed and verified by Mr. Andrey Zozulya, Chief Executive Officer of Volga Gas plc, for the purposes of the Guidance Note for Mining, Oil and Gas companies issued by the London Stock Exchange in June 2009. Mr. Andrey Zozulya holds a degree in Geophysics and Engineering from the Groznensky Oil & Gas Institute and is a member of the Society of Petroleum Engineers.

This announcement contains inside information as defined in EU Regulation No. 596/2014 and is in accordance with the Company's obligations under Article 17 of that Regulation.