Today, at Gazprom’s Headquarters, Alexey Miller, Gazprom’s Management Committee Chairman and Valery Serdyukov, Governor of the Leningrad Region have signed a Cooperation Agreement for 2005.

Pursuant to the Agreement, the parties will keep on consistently developing the Leningrad Region’s gas supply network, taking into consideration the North-European gas pipeline (NEGP) project implementation. The parties agreed to come up with a General Scheme for the Regional gas supply infrastructure expansion between 2005 and 2015, paying attention to the fuel and power balance optimization, energy safety promotion and economically viable expansion of the liquefied natural gas (LNG) and locally produced fuel use. At the same time, Gazprom and the Regional authorities will produce an investment project for the intensification of gas consumption in the Region over 2006.

In accordance with the 2005 Agreement, Gazprom will:

• furnish the Leningrad Region’s consumers with over 4.4 bcm of natural gas;
• channel RUR 250 mln to construct gas supply infrastructure in the Region;
• come up through Promgaz with a reasonable sales price for natural gas as feedstock for LNG production, that would raise interest in expanded LNG deliveries to the population and heat power utilities.

Full gas payments on the part of budget-sponsored customers are a prerequisite for Gazprom to finance the Regional gas supply infrastructure development.

The Leningrad Region’s government, on its part, is committed to:

• assisting Gazprom in promptly agreeing on land acquisitions, stepping up legislation for the designing and construction of the NEGP, gas branches and social & production facilities;
• assisting Gazprom in matters relative to the registration of a land plot for the LNG plant and transshipment terminal building site;
• providing full and timely payments for gas deliveries to municipal utilities;
• producing a gas supply contract to be signed with Peterburgregiongaz;
• funding the development of the General Scheme and investment project for the Leningrad Region’s gas supply infrastructure development over 2005 to 2015 and 2006, respectively;
• registering a string of social and residential facilities as municipal property;
• developing and ratifying before 15 September 2005 the timetables of the Leningrad Region’s companies’ conversion to reserve fuels during cold spells.

Reference:

Being a strategically crucial area for Gazprom, the Leningrad Region is transiting the Company’s gas to St. Petersburg and abroad.

The Region is projected to see the construction of a North-European gas pipeline onshore section and of a liquefied natural gas plant and transshipment terminal (in the vicinity of the town of Ust-Lugi).

At present, Gazprom and the Leningrad Region’s authorities are building cooperation in accordance with the 25 April 2003 Cooperation Agreement.

Last year, Gazprom furnished Regional customers with some 5.5 bcm of gas (122.5% against the target).

The gas supply infrastructure of the Leningrad Region is developed by 51.7% of maximum gas demand, including by 65.9%, in cities and towns and by 26.3%, in rural area (the identical Russia-averaged parameters account for 53%, 60% and 34.7%, respectively).

Last year, Gazprom channeled over RUR 120 mln to intensify gas consumption in the Region, e.g. to construct the Ilyichevo gas distribution station – Leninsky settlement, Michurinskoye settlement – Michurinskoye 2, Siversky settlement – Rozhdestveno – Batovo and B. Izhora – Lebyazhye gas pipelines. Under its 2004 Investment Program, Gazprom upgraded the Slantsy gas distribution station, constructed the Druzhnaya Gorka – Luga gas pipeline and gas branches to the Sovetsky and Kamenka settlements.

The Leningrad Region’s consumers’ gas debt reduced over 2004 by some RUR 99 mln to roughly RUR 35 mln, as of 1 January 2005. Current gas payments average 95%. The Regional authorities have so far allocated sufficient funds to pay for 2005 pipeline gas deliveries to budget-sponsored bodies and to offset Gazprom’s losses when gas is supplied to privileged customers.

DIVISION OF RELATIONS WITH MASS MEDIA