Gazprom’s Headquarters today has hosted a working meeting between Alexey Miller, Gazprom’s Management Committee Chairman and Valentina Matviyenko, St. Petersburg’s Governor.

The meeting looked into the implementation of a long-term Cooperation Agreement and 2005 Cooperation Pact concluded between Gazprom and St. Petersburg.

Alexey Miller and Valentina Matviyenko emphasized the fulfillment of all the mutual commitments under the 2004 Cooperation Pact between Gazprom and St. Petersburg, which is another indication of mutually beneficial strategic cooperation between the two parties.

At the same time, Alexey Miller and Valentina Matviyenko addressed issues in relation to upgrading St. Petersburg’s fuel and power facilities, outlining Gazprom’s 2005 projections to channel RUR 560 mln for these purposes.

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Gazprom and St. Petersburg’s Government entered into the Cooperation Agreement on 25 December 2003. In pursuance of the Agreement, St. Petersburg’s authorities will provide full payments for gas deliveries to budget-financed bodies as well as will completely offset Gazprom’s losses when gas is channeled to privileged customers, with special funds to be allocated for these purposes during budget drafting.

The 2005 Cooperation Pact was signed between Gazprom and St. Petersburg’s authorities on 28 December 2004. Under the Pact, Gazprom will supply St. Petersburg’s consumers with 10.8 bcm of gas in 2005 and will allot funds for the intensification of gas consumption in the Kurort and Pushkin districts.

St. Petersburg’s Government, on its part, will provide timely and full payments for prospective gas deliveries to budget-financed bodies, specially allocating finance to clear their gas arrears. At the same time, the Government is committed to stepping up measures intended to fully offset Gazprom’s losses arising when gas is channeled to privileged customers.

St. Petersburg’s natural gas supply infrastructure is developed by 65%, as compared to the Russia-average parameter of 53%.

In accordance with the Pact, Gazprom is being involved in the construction and upgrading of heat and power generation facilities of St. Petersburg’s Petrograd district, including demolition, repairs or replacement of 114 boilers and some 190 km of heating mains.

St. Petersburg’s authorities resolved to transfer under 25-year leasing terms the entire heat and power generation network of the Petrograd district to Peterburgteploenergo provided said facilities were fully upgraded within 5 years. In 2004, the parties developed and implemented a pilot project on upgrading 2 blocks and building 2 boilers in the Petrograd district.

This year, Peterburgteploenergo has entered into agreements to design eight heat and power supply zones, with 29 boilers to be constructed or upgraded. As a result, 262 apartment houses, 11 children’s institutions and 41 administrative buildings will be provided with secure power and heat supply.

At present, the company is gearing up to conduct a tender aimed at identifying contracting parties to be involved in the construction and upgrading of boilers.

The heat and power generation infrastructure of the Kurort district is planned to be upgraded, as well, with 52 boilers to be natural gas-fired. This work will be done simultaneously with the intensification of gas consumption in the district to be supported with Gazprom’s RUR 500 mln over 2005.

A Mezhregionteploenergo 100% subsidiary, Peterburgteploenergo is owned by the former company’s regional gas trading business units Mezhregiongaz and Regiongazholding (59% and 41% of shares, respectively). Peterburgteploenergo was founded in April 2004 to upgrade and manage St. Petersburg’s heat and power supply network.

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