Alexey Miller and Akhmat Kadyrov sign a 5-year Cooperation Agreement between Gazprom and the Chechen Republic

From right to left: Alexey Miller and Akhmat Kadyrov

Today, at Gazprom’s Headquarters, Alexey Miller, the Company’s Management Committee Chairman and Akhmat Kadyrov, President of the Chechen Republic, first signed a 5-year Cooperation Agreement between Gazprom and the Chechen Republic.

The Agreement envisages for the following obligations to be fulfilled by the Government of the Chechen Republic:

implementing necessary measures aimed to provide safe and secure operation of gas supply facilities as well as to prevent unauthorized individuals and legal entities from getting involved in operating activities of gas transmission and gas supply companies

assisting Gazprom and its subsidiaries in obtaining land parcels to conduct preventive repair works at the Regional gas supply facilities

contributing to taking measures aimed to observe the gas consumption discipline

determining a company that will conclude with Gazprom or its subsidiary an agreement on gas deliveries to and gas transmission via the Republic

contributing to timely and full cash payments for current gas deliveries

Gazprom (or its subsidiary) will, in its turn, conclude gas supply and transmission contracts with organizations authorized to do so by the Government of the Chechen Republic. Gas will be delivered to Chechnya with implication for the production capacities of the United Gas Transmission System, annually drafted RF gas balance, solvent demand and Regional gas payment volumes.

A. Miller and A. Kadyrov reached an accord that the documentation coordinated between the parties as for repaying the Chechen Republic’s indebtedness for the gas supplied in 1993-2003 will be submitted for the RF Government’s consideration. Taking into account the considerable ratio of population in the Republican gas structure (as compared to other regions), the issue of gas subsidies to be granted to eligible consumer categories will be separately considered, as well.

As A. Miller pointed out, “the Agreement adopted builds strong foundation for developing cooperation between Gazprom and the Chechen Republic and for introducing a transparent and clear scheme of interaction in the gas supply sector.”

Reference:

While the state-run Chechengazprom company serves as a gas transmission organization in the Chechen Republic, the Chechengaz company acts as a gas distribution organization.

From 1 January 1993 to 1 January 2004, Gazprom delivered 24 bcm of natural gas to the Chechen Republic.

In 1993-2001, the Republic was receiving gas without any contracts adopted, except for 1997 and 1998. In 2001-2003 gas was delivered to Chechnya based on the gas supply and transit contracts. At the same time, while signing the contracts, Chechengazprom was introducing Dispute Resolution Protocols refusing to purchase gas due to its status of a gas transmission company. Gazprom, in its turn, hasn’t received any payments for the pervious gas deliveries to the Republic since 1993.

In 2004 the parties signed separate Agreements on gas transit via and gas deliveries to the Chechen Republic.

This year Gazprom plans to provide the Chechen Republic’s consumers with 1,633 bcm of gas, including:

• based on the Gas Supply Agreement adopted between Mezhregiongaz and Chechengaz envisaging deliveries of 1,351 bcm of gas
• as payment for the gas transit via the Republic, pursuant to the Agreement (signed between Gazprom and Chechengazprom) on deliveries of 0,282 bcm of gas

For the time being, 95% of the gas supplied to the Republic are consumed by the population and 5%, by industrial companies.

This year Gazprom plans to transit via Chechnya 13.2 bcm of gas to the consumers of the Russian Federation and the Caucuses region, including:

• 5.69 bcm, to Russia
• 7.51 bcm, to the Caucuses region

Gas will be transited through the Chechen Republic by the Chechengazprom company.

DIVISION OF RELATIONS WITH MASS MEDIA