21 April, 1997 - Vagit Alekperov, the president of the joint-stock company LUKOIL, and Valentin Fyodorov, the prime minister of the Republic of Sakha (Yakutia), today signed an agreement on cooperation.

Under the agreement, the partners will broaden cooperation in oil supplies to the republic's Arctic regions. The Sakha government has put the state enterprise Yakutnefteprodukt in charge of the "northern supplies" project. LUKOIL will get finance for supplies through Yakutnefteprodukt.

LUKOIL is planning to supply oil products to the republic's Arctic regions via the Northern Sea route. The company is urgently building ice tankers. At the initial stage, ten tankers of this kind will be built: five with a displacement of 20,000 tonnes in St.Petersburg's Admiralty Yard, and the other five, with a displacement of 16,000 tonnes, in Wiesmar (Germany). The first tanker will be commissioned in December 1997.

The government of the Republic of Sakha (Yakutia), in turn, will allot LUKOIL plots of land for building tank farms and a network of modern gas filling stations. In addition to this, the Yakut side will urge the Russian Ministry for Fuel and Energy to authorize LUKOIL to run oil exports reserved by the Russian government as state support for the supplies of oil products to the Arctic regions of the Republic of Sakha. LUKOIL will use the money earned from these exports to supply oil products to the Republic of Sakha.

The Republic of Sakha annually needs 1.5 million tonnes of oil products. By agreement between the partners , 200,000 tonnes of this amount will be supplied by LUKOIL.

"I'm convinced that by cooperating with LUKOIL we shall solve the problem of oil products supplies," Fyodorov said. "LUKOIL, which owns oil refineries and is building ice tankers, can supply fuel to the Arctic regions on its own, which is particularly important, given the short period of Arctic navigation. This will have a positive impact on the local economy as a whole," he said.

"I think that the establishment of direct agreement-based relations with the government of the Republic of Sakha will help our company to tackle the problem of delivering oil products to the Arctic regions more efficiently, as we shall deal directly with the recipient, bypassing intermediaries," Alekperov said.

Earlier, LUKOIL signed agreements on cooperation with the authorities of St. Petersburg, of the Nizhny Novgorod, Kaliningrad, Astrakhan, Perm, Chelyabinsk, Vologda, Volgograd and Sverdlovsk regions, the Chukot autonomous district and the republics of Tatarstan, Mari El and Ingushetia.

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