Ukraine Offers Germany Partnership in the Reconstruction of the Ukrainian Gas Transit System

KYIV, Ukraine, August 30, 2010 - Today the President of Ukraine Viktor Yanukovych offered
Angela Merkel, the German Federal Chancellor, that Germany takes part in the
reconstruction of Ukraine's gas transit system.

"We see Germany as a future partner in the reconstruction of
the Ukrainian GTS and I have put forward today the relevant proposal," said
V. Yanukovych after meeting with the Federal Chancellor of Germany, Angela
Merkel.

On her part, A. Merkel stated that Germany is ready to invest
in the modernization of the Ukrainian gas market.

The gas consumers from the European Union have been concerned
about the state of the Ukrainian gas transport system, which is currently in
urgent need of modernization. On March 23, 2009, Ukraine and the European
Union signed the Declaration on the modernization of Ukraine's gas transit
system. The Declaration was also signed by the representatives of some of the
European banks, giving impetus to the negotiations process on providing
Ukraine loans to finance the modernization.

The last meeting between the Ukrainian Prime Minister Mykola
Azarov and the Vice President of the European Commission Catherine Ashton,
held on June 15 this year, resulted in a mutual agreement that a joint plan
on Ukraine's gas transit system modernization should be developed and
presented in autumn 2010.

Simultaneously, Ukraine is holding similar negotiations with
Russia. Russia is also ready to invest funds into the project, but puts
forward the merger of the oil and gas assets of the two countries into one
company as a condition to finance the modernization of Ukraine's gas transit
system.

The gas transit system of Ukraine is the second largest in
Europe and one of the largest in the world. Its overall length is 37.6
thousand kilometers. It includes gas main pipeline, gas service pipes, gas
storage facilities, compressor stations and gas-measuring stations. The
transit capacity is 288 billion cubic meters on the border with the Russian
Federation, and 178.5 billion cubic meters on the borders with Poland,
Romania, Belorus and Moldova, which includes 142.5 billion cubic meters with
the EU.

For more information, call Worldwide News Ukriane (WNU) at +38-(044)-492-7599 or e-mail Viktor Sytnyk at vs at cfc.com.ua