Today, Gazprom’s Management Committee Chairman, Alexey Miller, and St-Petersburg’s Governor, Valentina Matvienko, signed a 5-year Cooperation Agreement as well as the Cooperation Agreement for 2004. Gazprom has to prolong the agreements with S. Petersburg’s authorities on year-to-year basis.

Under the Agreement, St. Petersburg’s Government has to fully pay current gas deliveries to the municipal state-financed bodies as well as to completely compensate for subsidies granted to St. Petersburg’s gas consumers. In annual planning of the municipal budget, St. Petersburg’s Government will envisage for a separate debit item to pay current gas supplies.

The municipal Government will also assist the Gazprom Group in acquiring land permissions for constructing industrial, residential and social facilities.

Gazprom, in its turn, will provide secure gas deliveries to St. Petersburg’s gas consumers in the volumes predetermined in the Agreement, taking into account existing capacities of the United Gas Transportation System, Russia’s annual gas production volumes, forecast demand and the consumers’ solvency.

Gazprom will also annually consider possibilities of increasing gas supply to St. Petersburg’s gas consumers. The Company will pay special attention to build-up gas supply to the civil construction industry and residential sector through application of the state-of-the-art technologies. At the same time, Gazprom will examine the possibility of additional prompt supply of 400 million cubic meters of gas to satisfy St. Petersburg’s citizens’ needs.

Under the Cooperation Agreement, the parties will take initiatives to improve and optimize St. Petersburg’s energy resources balance as well as to widen application alternative energy sources.

At the same time, the Agreement reflects the parties’ willingness to jointly develop and implement the Programs on energy saving and gas utilization, on introducing energy sources based on advanced power units and on applying gas-turbine and gas-piston units at the regional CHP plants.

Gazprom and S. Petersburg’s Government will annually examine the Cooperation Agreement’s fulfillment.

In the 2004 Cooperation Agreement between Gazprom and St. Petersburg’s Government, the parties agreed to comprehensively develop St. Petersburg suburbs’ gas supply system (in the Kurortny, Pavlovsk, Pushkin and other districts).

Under the Agreement, the parties will elaborate the 2004-2007 Investment Programs aimed at:

• Comprehensive gas supply to St. Petersburg’s suburbs
• Comprehensive reconstruction of CHP s in the Petrogradsky district
• Construction of gas boilers in St. Petersburg’s suburbs
• Utilization of compressed and liquefied natural gas as well as oil processing products in the residential sector and in the municipal automobile transport.

To increase the reliability of St. Petersburg’s gas networks, the parties will set up a company responsible for operating and maintaining these networks. St. Petersburg’s Government will transfer the ownership rights to the municipal gas property to the newly established company on rent or other terms not contradicting the present legislation.

Reference:

The gasification level in St. Petersburg amounts to 65% against Russia-averaged of 51.7%.

In the 11 months of the current year, Gazprom delivered almost 9.5 bcm of natural gas to St. Petersburg’s gas consumers.

Under the 2004 Cooperation Agreement between Gazprom and St. Petersburg’s Government, Gazprom will supply some 10.7 bcm of gas to the municipal consumers.

In 2003, Gazprom channeled RR 120 million to the St. Petersburg’s suburbs’ gas supply system development (vs. RR 200 million in 2004).

DIVISION OF RELATIONS WITH MASS MEDIA