Today the Gazprom Headquarters hosted a working meeting between Alexey Miller, Chairman of the Company’s Management Committee and Oleg Dubina, Chairman of the Board of NAK Naftogaz Ukrainy.

According to the agreements reached during the negotiations between the Prime Ministers of Russia and Ukraine, addenda to the Natural Gas Purchase and Sale Contract dated January 19, 2009 were signed. Pursuant to the addenda, the annual gas quantity contracted for 2010 makes up 33.75 billion cubic meters. In addition, the signed documents stipulate no penal sanctions related to the amount of gas consumption by NAK Naftogaz Ukrainy in 2009.

Background:

On January 19, 2009 Gazprom and NAK Naftogaz Ukrainy singed two separate contracts:

- the purchase and sale contract for the period from 2009 through to 2019;

- the contract on volumes, terms and conditions of natural gas transit across Ukraine for the period from 2009 through to 2019.

Under the contracts, starting from January 1, 2010 Gazprom and NAK Naftogaz Ukrainy will calculate the gas price and the gas transit rate in full compliance with European standards.

The parties agreed that in 2009 the Ukrainian partners would get a 20 per cent discount of the natural gas purchase price based on the European formula. Every quarter the price is recalculated according to the formula taking into account fuel oil and gas oil price indices.

In turn, the Ukrainian party agreed to retain in 2009 the rate for natural gas transit through its territory on the level of 2008 that is USD 1.7 for the transportation of 1,000 cubic meters per 100 kilometers.

Pursuant to the contract, 80 per cent of gas is annually supplied on the take or pay basis.

However, the financial and economic crisis stipulated a gas consumption drop in Ukraine. Over 10 months of 2009, as much as 18.85 billion cubic meters of gas were purchased versus the contractual obligations amounting to 31.7 billion cubic meters.