Operational Update

11 April 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 well #30 on its Vostochny Makarovskoye ("VM") field and on the Yuzhny Romanovskaya #1 exploration well on the Urozhainoye-2 licence.

Vostochny Makarovskoye well #30

The VM #30 well, which was drilled by a previous licencee as an exploration well, and tested at commercial flow rates on an open hole in the Bobrikovskiy sandstone formation, has been re-completed as a production well by Volga Gas. The well has been perforated at two intervals, both in the Bobrikovskiy sandstone formation at depths of approximately 1,600 metres.

A higher than expected proportion of condensate was found in samples taken from the well, which is expected to enhance the production economics. A new production test is to be carried out shortly, after connecting the well to test separators on the field site.

On completion of the test, application is to be made to the regulatory authorities to commence full time production from well #30. This process is expected to take approximately two months.

The Bobrikovskiy sandstone formation is a secondary reservoir in the VM field, lying above the main Evlano-Livensky carbonate reservoir. No C1 recoverable reserves are currently attributed to this reservoir, although the potential reserve additions are expected to be modest. However, the workover of the #30 well provides Volga Gas with a low cost addition to production capacity when full time production from VM commences, expected during Q3 2012.

Yuzhny-Romanovskaya #1 exploration well

Yuzhny Romanovskaya #1 (YR-1) exploration well on the Urozhainoye-2 licence reached a total vertical depth of 4,093 metres. No apparent hydrocarbons were encountered in the target layer and the well is expected to be plugged and abandoned on completion of current logging operations.

Mikhail Ivanov, Chief Executive of Volga Gas commented:

"We are pleased to have successfully completed the workover of well #30 which will add to the gas production in Q3 2012. The presence of a significant proportion condensate in the gas was not anticipated before we undertook this operation and it materially enhances the value of the production that will be derived from the well. While this well does not represent a significant increase in the reserve potential of the VM field, it will be capable of delivering a useful short term increment to the group's production and cash flow.

"Clearly the result of the exploration drilling on the YR-1 well is disappointing as this was considered to be a relatively low risk target. However, the resource potential in this licence was not significant and was not included in C3 resources previously disclosed by Volga Gas.

"We look forward to bringing the VM field into full time production on completion of the ongoing upgrade to the gas plant, expected to occur in Q3 2012."

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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.