Today in Saint-Petersburg Alexey Miller, Chairman of the Gazprom Management Committee and Valentina Matvienko, Governor of Saint-Petersburg signed a Cooperation Agreement and Accord for 2009.

The Cooperation Agreement defines a set of priority cooperation directions between the parties:

- gasification of Gazprom’s suburban areas;

- expansion of capacities for the utilization of natural gas as motor fuel;

- creation of a unified automated system for natural gas flow metering and properties identification;

- development and introduction of gas saving technologies;

- maintenance of environmental safety and reasonable nature management;

- implementation of target programs and projects in the city.

The parties will proceed with the Gas Supply Program of Saint-Petersburg during 2007-2015 with a perspective to prolong the Program till 2025. They will define and hold joint activities aimed at performing the General Scheme for gas supply to the city over the said period with due regard to developing gas and energy supply to the Leningrad Oblast and other regions of the North-West Federal District.

The Government of Saint-Petersburg will fully pay for the gas delivered to budget consumers, timely review and approve, at the economically feasible level, the regulated retail prices for the natural gas supplied to the population, taking into account changes in the wholesale prices regulated by the Government, as well as the tariffs for natural gas transportation via the networks owned by gas distribution companies (GDC).

The Government will identify the amount of special mark-ups in tariffs for gas transportation included on approval by GDC via the gas distribution networks and intended for financing the Saint-Petersburg Gasification Program.

The Government will ensure the allocation of subsidies from the city budget to execute target programs related to gasification.

Gazprom and its subsidiaries will be assisted in installation of gas metering equipment and taking measures to enhance gas consumption discipline, as well as in concluding lease agreements for the land plots located within the city.

In its turn, Gazprom will provide reliable gas supply to Saint-Petersburg, continue gasification of its suburban areas and reconstruction of heat supply systems.

The company will address the feasibility of constructing UGS facilities and natural gas liquefaction plants in order to secure a reliable gas supply to Saint-Petersburg consumers during peak load periods.

The Agreement is effective for an indefinite period.

Pursuant to the Cooperation Accord for 2009, Gazprom will allocate funds for design and exploration works and project appraisal of the following facilities:

- the Shosseinaya-2, Vostochnaya and Lagolovo gas distribution stations (GDS);

- the girth between the Belousovo-Leningrad and Kokhtla-Yave-Leningrad gas trunklines;

- the gas lateral to Kolpino including the Kolpino-2 GDS with the gas distribution network;

- reconstruction of the Osinovaya Roscha and Sestroretsk GDS.

Additionally, Gazprom will further construct and reconstruct heat supply systems in the Petrograd and Kurortny districts of Saint-Petersburg.

The parties will also implement gas motor fuel in buses owned by the public municipal companies.

In 2009 natural gas supply to Saint-Petersburg is projected in the volume of 11.9 bcm.

Background:

The Agreement of Cooperation between Gazprom and the Government of Saint-Petersburg was signed due to the expiration of the previous five-year Agreement signed in December 2003. In December 2006 Gazprom and the Government of Saint-Petersburg adopted the Gas Supply Program of Saint-Petersburg during 2007-2015 with a perspective to prolong the Program till 2025.

In 2008 Gazprom supplied some 10 bcm of gas to consumers of Saint-Petersburg (as of 1 December).

Saint-Petersburg’s consumers do not have the indebtedness to Gazprom for delivered gas. As of December 1, 2008 its advancement payments accounted for some RUB 1 bln.

In 2008 Gazprom invested RUB 1.3 bln in the gasification of Saint-Petersburg.

These funds were used to construct ten gas pipelines with the total length of 96.6 km. In 2009 Gazprom is planning to allocate additional RUB 1.3 bln to gasify the suburbs of Saint-Petersburg.

Between 2004 and 2008 Gazprom committed RUB 10.67 bln for the reconstruction of heat supply facilities of the Petrograd, Kurortny and Petrodvortsovy districts of Saint-Petersburg. Over this period, a total of 169 boiling rooms were constructed and reconstructed, 642.1 km of heat pipelines were constructed, and 247 thousand people in 2,201 houses were supplied with heat in Saint-Petersburg under the financial support of Gazprom. 390 schools, kindergartens, medical facilities and over 1,000 of administration facilities were connected to new heat sources.

In 2009 Gazprom is planning to allocate RUB 3,072 bln for furthering the reconstruction of heat supply facilities in the Kurortny and Petrodvortsovy districts of Saint-Petersburg.