VGAS.L Regulatory News (VGAS)

13 November 2013

VOLGA GAS PLC

Gas plant authorisation received

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 its operating subsidiary, OOO Gaznefteservice ("GNS"), has received regulatory approval for the upgrade works on the Dobrinskoye Gas Processing Plant.

Construction of the main processing stream is complete and has been tested operationally at rates of over 400,000 cubic metres per day (14.1 million cubic feet per day) of gas and 120 tonnes per day (1050 barrels per day) of condensate. Following the installation of certain additional minor modules, as required by the state construction agency, Gosstroi, final approval of the completed upgrade will be granted, which will allow GNS to utilise the plant at full passport capacity of 1.05 million cubic metres per day (37 million cubic feet per day). Pending this, the Company will be able to operate at test rates utilising the full current well capacity.

GNS has already commenced increasing the output from wells on the Vostochny Makarovskoye ("VM") and Dobrinskoye gas fields and expects by the end of December to reach production rates of up to 500,000 cubic metres (17.7 million cubic feet per day) of gas and approximately 1,315 barrels per day of condensate, a total of over 4,200 barrels of oil equivalent per day.

Mikhail Ivanov, Chief Executive of Volga Gas, commented:

"We are delighted to have gained this approval, which will enable Volga Gas to significantly increase production by making full use of its current well production capacity. Early in 2014, further development drilling on the VM field will commence. It is our intention, with this and further new wells, to increase production capacity and fully utilise the ultimate plant capacity.

With increasing throughput, combined with the improvements we have achieved in the processing stream, we expect to see the unit costs of production for our gas and condensate fall substantially. These events are expected to lead to a period of strong growth in revenues and cash flow for Volga Gas."

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.