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January 29, 2004

The results of Alexey Miller and Vi?tor Vekselberg’s working meeting

Today, at Gazprom’s Headquarters, Alexey Miller, Gazprom’s Management Committee Chairman held a working meeting with Victor Vekselberg, TNK-BP’s Chief Operating Officer.

The parties discussed development prospects and feasibility study for the Kovytkinskoye gas condensate field project elaborated by the RUSIA Petroleum company jointly with foreign partners.

Miller defined Gazprom’s major project-related objectives:

Priority markets. “Secure gas deliveries to Russian consumers should be a development priority for the East Siberian resource base. This principle, however, was not reflected in the provided feasibility study, which does not include expenses on gas deliveries to the areas adjoining the Kovytkinskoye field, nor envisages for the possibility of developing gas-chemical production at the Irkutsk Region’s fields.”

Price risks. “For the time being, gas prices on the external markets of Asia Pacific remain highly uncertain. Thus, the internal market, turns out to be more attractive as current gas price changes are determined clearly enough by Russia’s energy strategy up to 2020.”

Project cost. “According to our estimates, the project-related costs will considerably exceed the target amounts of USD 6 billion intended for gas production development and of another USD 6 billion to be used for constructing a gas pipeline in Russia. For example, the necessity to recycle helium, not envisaged in the feasibility study as well, will, undoubtedly, be one of the factors for the project cost growth.”

Gazprom’s involvement in the project. “At present, Gazprom has obtained proposals from all the RUSIA Petroleum’s shareholders to participate in the project. However, the Company, due to numerous violations of the licensing agreement on the Kovytkinskoye field development, will consider its participation in the project only after settling all the arguments with the Russian Natural Resources Ministry.”

National interests. “Development of the Kovytkinskoye field under the Production Sharing Agreement terms is not in line with Russia’ strategic interests. At the same time, we should adopt a decision on our priorities in implementing projects on gas production in Eastern Siberia, gas transportation scheme and selection of major sales markets, taking into account the Region’s entire resource base.”

A. Miller pointed out that, at present, economic viability and expediency of the project was still questioned, but expressed his hopes that the parties would continue a sustainable dialogue on the development prospects for the Kovytkinskoye field.


The Kovytkinskoye gas condensate field is located in the Irkutsk Region, 450 km north-east of the city of Irkutsk.

The natural gas reserves of the field are estimated at 1.9 tcm.

The RUSIA Petroleum company holds the license to develop the field. The company’s major shareholders are the TNK-BP holding company, the Interros holding company and the State Property Management Committee of the Irkutsk Region owning 62.42%, 25.82%, 11.24% of the company’s stake, respectively.


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