From left to right: Alexey Chernyshev, Governor of the Orenburg Region and Alexey Miller, Chairman of Gazprom’s Management Committee

Today, at Gazprom’s Headquarters, Alexey Miller, Chairman of Gazprom’s Management Committee and Alexey Chernyshev, Governor of the Orenburg Region have signed an Agreement on cooperation as well as a network schedule for the gasification of the Orenburg Region.

In compliance with the network schedule the parties will perform in the Region a whole range of activities aimed at preparing consumers for gas deliveries by Gazprom’s gas pipelines currently undergoing large-scale construction as stipulated by the gasification program for RF regions over 2005 to 2007.

“Gazprom is interested in seeing the entire gasification process not simply limited to the construction of branch pipelines. We understand that a gasification program is 100% implemented when gas reaches houses and apartments. And this depends on the ability of regional authorities to synchronize the preparation of consumers for gas deliveries with branch pipeline construction by Gazprom. The document signed today is targeted at contributing to it,” said Alexey Miller.

“The gasification program being currently implemented by Gazprom is very important both for the population and industrial sector of the Orenburg Region. And we are therefore committed to fulfilling the network schedule at maximum. Between 2006 and 2007 the Regional authorities plan to lay a total of 164.5 km of in-settlement gas pipelines, convert to natural gas 59 heating plants and prepare more than six thousand households for gas supply, with around RUR 2 bln to be committed for said purposes,” said Alexey Chernyshev.

Alexey Miller and Alexey Chernyshev also discussed issues surrounding the implementation of the Agreement on cooperation between Gazprom and the Orenburg Region.

Reference:

Gazprom and the Orenburg Region’s authorities sealed a further Agreement on cooperation due to the expiry of the previous Agreement inked in August 2000. The newly signed Agreement stipulates:

• mutual interest in promoting gasification of and securing gas supply to Regional population centers;
• implementing joint investment projects for oil & gas condensate field development and hydrocarbon processing infrastructure construction;
• setting reasonable retail gas prices, consumption standards and supply & sale charges;
• sweeping measures aimed at optimizing the energy balance, introducing power conservation technologies and expanding the use of gas as motor fuel;
• regulating within existing legislation land tenure relations to the benefit of Gazprom.

The network schedule of gasification identifies an activity list and implementation date for gas infrastructure between 2006 and 2007, and is aimed at providing gas connections to consumers immediately upon pipeline completion. To connect consumers, regional authorities are to construct local and household networks, build new or convert to gas existing heating plants, install household gas appliances, etc.

Network schedules are signed for the implementation of Gazprom’s gasification program for RF regions over 2005 to 2007, which is funded with RUR 35 bln. Of this amount, RUR 5.2 bln was already committed in 2005 and not less than RUR 17.6 bln and RUR 12.2 bln is slated for 2006 and 2007, respectively. Extra RUR 1.1 bln will be allocated for the reconstruction and modernization of existing gas distribution pipelines.

At present the Russia-averaged level of gasification makes up 53 per cent including 60 per cent in cities & towns and 34 per cent in rural area.

Implementing the gasification program over 2005 to 2007 will help boost gas supply to Russian regions to a 60 per cent average by 2008 already, including to 66 per cent in cities & towns and 42 per cent in rural area.

To achieve said targets, Gazprom will provide gasification of a further 3,851 thousand apartments & households including 2,673 thousand in cities & towns and 1,178 thousand in rural area.

The Program will enable Gazprom to convert to natural gas about 20 thousand new residential facilities (hospitals, kindergartens, schools, etc.), over 5 thousand heating plants in villages & settlements and more than 500 agricultural companies, with an excess of 12 thousand km of pipelines to be laid and some 11 mln citizens of 53 Russian regions to be serviced.

Gazprom’s investment priorities for regional gasification are determined based on the following criteria: full payments for gas deliveries; repayment of gas debts; economic viability of projected gas infrastructure; customers’ readiness to receive gas; actual loading of gas laterals and distribution stations; assistance of RF regional authorities in promoting the use of compressed and liquefied natural gas as motor fuel.

The Orenburg Region is currently gasified by 84.9 per cent including by 90 per cent in cities, towns & urban settlements and 74.2 per cent in rural area.

Under its gasification program for RF regions over 2006 Gazprom plans to bring on stream three local gas pipelines having a total length of 124 km, continue the construction of five pipeline branches with 146 km in overall length and initiate the construction of seven branch pipelines having 159 km of overall length.

Over 2005 Gazprom provided the Orenburg Region with more than 8.5 bcm of gas and roughly the same amount is slated for this year. The Orenburg Region’s gas demand is centered on power generation (38 per cent), Gazprom’s affiliates (23.1 per cent) and residential consumers (12.6 per cent).

The Regional debt to Gazprom for gas shipments over 2005 has decreased some RUR 108 mln to RUR 636 mln as of March 1, 2006.