Today, Alexey Miller, Chairman of Management Committee, and the Governor of the Krasnodar area Alexander Tkachev signed an Agreement on cooperation between Gazprom and the Krasnodar regional authorities for 5 year term and an Agreement on cooperation for 2004.

It was noted over the negotiations that pipeline gas supply to the region was substantially increased to the region, by 8 % and to the out town area, by 11%. Gas consumption in the Krasnodar area is constantly rising amounting to 8 bcm per annum by now thus indicating economic growth in the area.

The Agreements are orienting to cooperation development in:

• gas supply to towns and rural settlements;
• geologic survey, in the Azov and the Black Sea Shelf inclusive;
• oil and gas condensate processing;
• environmentally-safe and efficient natural resource management, totally automated gas metering and gas quality control system installation in the Krasnodar area;
• introduction of extra charges to be added to gas transmission tariffs to facilitate funding of the Regional gas supply development program;
• energy mix balancing, energy saving, alternative energy expansion, gas motor fuel development;
• accumulated debt for gas supply settlement;
• housing construction within the program of Gazprom’s employees transfer from the Extreme North;

The Krasnodar authorities are committed to regulate natural gas consumption on a historical gas consumption track record basis and to standardize comprehensive residential sector gas consumption quotas by municipal consumers. In addition, Gazprom and its entities will be allowed to acquire land blocks for housing and industrial facilities construction, as well as will be rendered help in real estate inventory etc.

Gazprom, in its turn, is committed to securely supply natural gas to Krasnodar customers based on agreements signed implying the United Gas Transmission System throughput and the state of payments for gas delivered previoudsly.

Gazprom and the Krasnodar Administration will annually be analyzing the Cooperation Agreement progress.

The Cooperation Agreement for 2004 between Gazprom and the Krasnodar regional authorities signed within the frames of the General Cooperation Agreement presumes the following:

• Common gas distribution company establishment and transition to a unified gas transit tariff;
• Gas distribution network further development;
• Krasnodar gas fields development funding in line with the Gazprom’s investment priorities program;
• Elaboration and introduction of the regional gas distribution business development program;

The parties to the agreements authorize Krasnodarregiongaz a gas supply agent responsible for natural gas deliveries within the Krasnodar area.

Task Forces will be set up to examine the following issues:

• 17 gas distribution stations transfer to Gazprom’s assets;
• the Jubga-Lazarevskoye-Sochi gas pipeline loop construction plans.

Under the agreements the regional administration will help to facilitate favorable for the Gzprom’s subsidiaries investment environment to speed up public interest projects.

Gazprom, in its turn, is committed to proceed gas distribution network in the Krasnodar area construction, the rehabilitation of the Lazarevskoye-Tuapse-Mikhaylovskoye (Nebug) pipeline as well. In addition, Gazprom will effect a phased rehabilitation of the Maykop-Samurskaya-Sochi pipeline.

Reference:

The Agreement on cooperation between Gazprom and the Krasnodar area administration was singed in 1998. The Program on cooperation for 2000-2002 was adopted in 2000. In 2001, a Supplement to the Agreement was derived. Starting from 2003 cooperation agreements are signed on a year by year basis.

Gas supply intensity to the Krasnodar area is estimated at 82.5% compared to total Russia’s 51.7%. At the beginning of 2004 indebtedness of the regional consumers accumulated for gas delivered by Gazprom amounts to RR 637.6 million.

DIVISION OF RELATIONS WITH MASS MEDIA