Today, at Gazprom’s Headquarters, Alexey Miller, Chairman of Gazprom’s Management Committee and Georgy Boos, Governor of the Kaliningrad Region have signed a network schedule for gas supply infrastructure construction in the Kaliningrad Region.

The network schedule is aimed at securing the timely preparation of Regional consumers for gas deliveries by Gazprom’s pipelines undergoing large-scale construction as stipulated by the Program on gas supply to RF regions over 2005 to 2007.

“The Kaliningrad Region has become the third Russian constituent signing with Gazprom a network schedule for gas supply. The Regional authorities are fully aware of the socioeconomic significance of gas supply and are committed to achieving all the targets set.

Successful implementation of the Program on gas supply largely depends on the precise and fast fulfillment of the network schedule signed today at the regional level. The Governors should focus on synchronizing gas deliveries to the population and industrial customers with the completion of pipeline construction by Gazprom” said Alexey Miller.

“Expanding gas supply to the Kaliningrad Region is extremely important for us. We are set therefore to do our best to prepare consumers for gas deliveries. Some RUR 360 mln will be committed for said purposes” underlined Georgy Boos.

Alexey Miller and Georgy Boos discussed issues surrounding the implementation of the existing Agreement on cooperation.

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The network schedule identifies an activity list and implementation date for gas infrastructure between 2006 and 2007, and is aimed at providing gas connections to consumers immediately upon pipeline completion. To connect consumers, regional authorities are to construct local and household networks, build new or convert to gas existing boilers, install household gas appliances, etc.

Network schedules are signed for the implementation of Gazprom’s Program on gas supply to RF regions over 2005 to 2007, which is funded with RUR 35 bln, of which RUR 5.2 bln was already committed in 2005 and not less than RUR 17.6 bln and RUR 12.2 bln is slated for 2006 and 2007, respectively. Extra RUR 1.1 bln will be allocated for the reconstruction and modernization of existing gas distribution pipelines.

The present-day Russia-averaged level of natural gas supply accounts for 53 per cent including 60 per cent in cities & towns and 34 per cent in rural area.

Implementing the Program on gas supply over 2005 to 2007 will help boost gas supply to Russian regions to a 60 per cent average by 2008 already, including to 66 per cent in cities & towns and 42 per cent in rural area.

To achieve said targets, Gazprom will deliver gas to a further 3,851 thousand apartments & households including 2,673 thousand in cities & towns and 1,178 thousand in rural area.

The Program will enable Gazprom to convert to natural gas about 20 thousand new residential facilities (hospitals, kindergartens, schools, etc.), over 5,000 heating boilers in villages & settlements and more than 500 agricultural companies, with an excess of 12,000 km of pipelines to be laid and some 11 mln citizens of 53 Russian regions to be serviced.

Gazprom’s investment priorities for regional gas supply will be determined based on the following criteria: full payments for gas deliveries; repayment of gas debts; economic viability of projected gas infrastructure; customers’ readiness to receive gas; actual loading of gas laterals and distribution stations; assistance of RF regional authorities in promoting the use of compressed and liquefied natural gas as motor fuel.

Gazprom and the Kaliningrad Region entered into a five-year Agreement on cooperation in March 2005.

The natural gas supply infrastructure of the Kaliningrad Region is developed by 42.9 per cent of maximum gas demand, including by 53.1 per cent in cities, towns and urban settlements and 4.4 per cent in rural area.

Between 2003 and 2005 Gazprom has built 26.8 km of pipeline branches and distribution grids in the Kaliningrad Region. Under the 2006 Program on gas supply to RF regions, the Company plans to initiate the construction of five local 124.5-km-long pipelines to be operational in 2007.

Gas deliveries to the Kaliningrad Region over 2006 have been paid up at 99.7 per cent. As of March 1, 2006, the Region had no gas debt, with advance payments accounting for RUR 85.5 mln.