Operational update

13 March 2012

VOLGA GAS PLC

Operational update

Volga Gas plc ("Volga Gas" or the "Company"), the oil and gas exploration and production group operating in the Volga Region of Russia, is providing an update on operations on its Uzenskoye oil field and on exploration drilling on the Urozhainoye-2 licence.

Uzenskoye oil field

A sidetrack on the Uzenskoye #9 well on the flank of the Uzenskoye oil field, was drilled and successfully intersected a section of the main Aptian reservoir updip from the original bottom hole location. However, when put on production, the well flowed water, indicating that the oil:water contact in the field has migrated to a higher elevation than had been anticipated on the basis of cumulative production of oil from the field. This higher than anticipated oil:water contact is likely to have implications for the remaining recoverable reserves on the Uzenskoye field which will need to be reassessed with the new data derived from this well.

Meanwhile, production remains steady from the existing producing wells in the field, from which production is currently running at approximately 1,050 barrels of oil per day, in line with expectations.

Urozhainoye-2 licence area

The Yu. Romanovskaya #1 exploration well in the Urozhainoye-2 licence area has reached a depth of 3,835 metres and drilling is continuing to target depth of approximately 4,000 metres. There will be a further announcement once results are available.

Mikhail Ivanov, Chief Executive of Volga Gas commented:

"It is disappointing not to have increased production from the Uzenskoye field and to have a possible reserve downgrade on that field. Nevertheless, Volga Gas has already recouped all of its investment in the Uzenskoye field and it remains a highly profitable asset for the Company. The Uzenskoye field currently represents just 18% of the Group's reserves.

"We have continuing production from the Dobrinskoye gas/condensate field and anticipate commencement of full time production from our larger Vostochny Makarovskoye gas/condensate field in Q3 2012. The combination of these two fields will substantially reduce the significance of the Uzenskoye field to our future revenues and profits."

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Editors' notes:

Volga Gas is an independent oil and gas exploration and production company operating in the Volga region of European Russia. The company has 100% interests in its five licence areas.

The information contained in this announcement has been reviewed and verified by Mr. Mikhail Ivanov, Director and 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. Mikhail Ivanov holds a M.S. Degree in Geophysics from Novosibirsk State University. He also has an MBA degree from Kellogg School of Management (Northwestern University). He is a member of the Society of Petroleum Engineers.