Precaspian Area: new supra salt prospect

1 August 2011

VOLGA GAS PLC

Precaspian Area: new supra salt prospect

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 announce that the State Committee for Resources has approved new C3 prospective resource estimates for a new supra-salt prospect in the Company's Precaspian Licence Area. The new resources add approximately 58 million barrels of oil equivalent to the Company's Russian C3 resources.

On 29 July 2011, the Company received notification that a well passport has been approved for a new exploration well, called Mirnaya, in the Precaspian Licence Area.

The C3 prospective resources in Mirnaya comprise two separate horizons of Jurassic and Triassic age which contain cumulatively unrisked resources of 7.4 million tonnes (54 mmbbl) of recoverable oil plus 0.7 billion cubic metres (26 bcf) of associated gas. These resources are within a depth of 1,220 metres.

Volga Gas has commenced the process of planning for an exploration well to test these potential resources and drilling operations are expected to commence before the end of 2011. An exploration well to test these C3 resources is estimated to cost approximately $1.5 million.

Mikhail Ivanov, Chief Executive of Volga Gas commented:

"We are delighted to have established a further meaningful exploration target within our portfolio which can be tested at low cost. This prospect will also fulfill a licence obligation which will enable Volga Gas to maintain the material deep sub-salt potential which remains evident in the licence area. The costs of this year's exploration activity will be comfortably covered by operating cash flow which in recent months has been in excess of $2 million per month."

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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 four 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 March 2006. 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.