Today, at Gazprom’s Headquarters, Alexey Miller, Gazprom’s Management Committee Chairman and Valentina Matviyenko, St. Petersburg’s Governor have sealed a Pact on Cooperation for 2006.

Under the Pact, St. Petersburg’s Government will provide timely and full cash payments for gas deliveries to budget-financed bodies and will determine the amount of special additions included in gas shipping tariffs and intended for financing gas supply to St. Petersburg.

The Government will also assist companies engaged in heat generation infrastructure engineering, construction and operation in obtaining loan, tax or other benefits. While the heat generation facilities of the Kurortniy and Petrogradskiy districts will be passed over as long-term leaseholds to Peterburgteploenergo, St. Petersburg’s gas infrastructure will be leased out to PeterburgGaz.

The Pacts binds St. Petersburg’s Government to fix for Peterburgteploenergo an economically viable thermal energy tariff allowing to make returns on investment within eight years with a 12 per cent/y yield.

On its part, Gazprom will supply St. Petersburg with 10.85 bcm of gas as well as will consider its potential involvement in the construction of a CHP for the supply of the Vasilyevskiy Island, Rzhevka-Porokhoviye boiler and Southwest CHP of St. Petersburg.

In accordance with the Pact the parties will complete design documents for the construction of the Kolpino-2 gas distribution station with a whole set of offshoots as well as will prepare a draft program for the construction of St. Petersburg’s gas infrastructure between 2006 and 2010.

Over 2006 Gazprom will earmark RUR 500 mln for prospecting purposes and construction of gas facilities in the city, with some RUR 1.8 bln to be committed for building and upgrading the heat generation facilities of the Kurortniy and Petrogradskiy districts.

Alexey Miller and Valentina Matviyenko specifically underscored that signing the Pact was another indication of mutually beneficial, long-term and strategic cooperation between Gazprom and St. Petersburg.

Reference:

Gazprom and St. Petersburg’s Government entered into a five-year Cooperation Agreement on 25 January 2003.

St. Petersburg’s natural gas infrastructure is developed by 65 per cent, as compared to the Russia-average parameter of 51.7 per cent.

In 2004 Gazprom provided St. Petersburg with 10.7 bcm of gas and roughly the same amount is slated for this year.

Gas deliveries over 2005 have been paid up at 97.7 per cent.

Between 2004 and 2005 Gazprom channeled RUR 560 mln to construct and upgrade thermal power facilities in St. Petersburg. In 2004 Peterburgteploenergo upgraded seven heat supply zones. Over the 2004-05 period the parties reconstructed a total of 19 boilers supplying heat to 219 various-type buildings including 177 apartment houses with over 17,000 tenants.

Founded in April 2004 to upgrade and manage St. Petersburg’s heat and power supply network, Peterburgteploenergo is a 100 per cent subsidiary of Mezhregionteploenergo owned by Mezhregiongaz’s regional gas trading business units and Gazprombank (59 and 41 per cent of shares, respectively).

Founded in 2004, the PeterburgGaz gas distribution company is owned by St. Petersburg’s Government (51 per cent) and Peterburgregiongaz (49 per cent). Since April 2004 PeterburgGaz is the only gas distribution company of St. Petersburg.