Operational update - Dobrinskoye gas field & plant

6 December 2012

VOLGA GAS PLC

Operational update - Dobrinskoye gas field and plant

Volga Gas plc ("Volga Gas" or the "Company"), the oil and gas exploration and production group operating in the Volga Region of Russia, is pleased to provide an update on development of its Dobrinskoye gas and condensate field and to update on related operations.

Dobrinskoye well #26 sidetrack

The Dobrinskoye well #26 has been successfully sidetracked and tested.

The sidetrack encountered the upper section of the producing Evlansko-Livenskiy carbonate reservoir as expected at a total vertical depth of 2342 metres, four meters higher than at the original vertical hole. The well was completed with a fourteen metre deviated open hole section (eight meters vertical) in the producing interval.

The well has been tested with a 10 mm choke and produced at a stabilized rate of 136,500 cubic metres (4.8 million cubic feet) of gas per day and 62.8 cubic metres (395 barrels) per day of condensate (a total of approximately 1,195 boepd). The condensate ratio is 460 cm3/m3 (82.3 barrels per million cubic feet).

Volga Gas plans to operate the well with an 8mm choke and expects production of approximately 100,000 m3/d (3.5 mmcf/d) of gas and 45 m3/d (280 b/d) of condensate (close to 900 boepd in total).

Dobrinskoye gas plant

As announced on 1 October 2012, the gas plant at the Dobrinskoye field site, which is used to process gas and condensate from both the Dobrinskoye and the Company's Vostochny Makarovskoye field, is currently operating with a capacity of 250,000 m3/d (8.8 mmcf/d). Completion of the ongoing third phase of the plant upgrade, including regulatory approval, is expected in mid-2013 and should quadruple the current plant capacity.

The production capacity of existing wells is in excess of the current gas plant capacity.

Vostochny Makarovskoye ("VM") field

The VM field is currently being produced from two wells, VM#1 and VM#2, while a third well on the field, well #30, is to be tied in for production early in 2013.

Management is currently evaluating matrix acid treatment on the producing wells with the aim of improving production rates prior to commencing full scale production.

Further development of the VM field includes drilling of wells VM#3 and VM#5 in 2013 and 2014. The drilling will be financed from retained cash flow.

Gas sales contract

The current gas sales arrangements have been extended through 2013 with an 11.65% increase in the sales price, net of VAT, to over US$90 per thousand cubic metres (US$ 2.55 per mcf).

Mikhail Ivanov, Chief Executive of Volga Gas, commented:

"We are pleased to have successfully completed the sidetrack to the Dobrinskoye well #26, which brings back into production a key well on the field.

"We look forward to bringing the VM field into full scale production on completion of the ongoing final stage of the gas plant upgrade and completion of further development drilling. This would enable Volga Gas to unlock the potential cash flow from its existing assets and provide a platform for future growth."

For additional information please contact:

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.