Today, in the presence of the Russian and Ukrainian Presidents Vladimir Putin and Leonid Kuchma, Alexey Miller and Yuri Boiko, CEOs of Gazprom and Naftogaz Ukrainy, respectively, entered into an Agreement on Interaction at the investment stage of activities by the International Consortium for the Ukrainian Gas Transmission System Management and Development.

The Agreement identifies partnership relationships among members of the International Gas Transmission Consortium and their Project financing commitments. Signing the Document will allow the parties to continue the construction and further operation of the Bogorodchany-Uzhgorod gas trunk line and will establish environment for gas transmission in the time and amount determined by an Inter-Governmental Agreement dated 18 August 2004.

At the same time, Gazprom and the International Consortium for the Ukrainian Gas Transmission System Management and Development signed today a Contract to transport additional gas to be provided by the Consortium. The ‘Transmit-Or-Pay’ Contract was concluded for the purpose of meeting rapidly growing natural gas demand in Europe (given expanded Ukrainian gas transit capacities) and of boosting natural gas transit via the Ukraine to West Europe (by 5 bcm in 2005 to 19 bcm, starting 2010).

“The Papers signed today identify the terms and conditions of our joint businesses at the investment stage of activities by the International Consortium for the Ukrainian Gas Transmission System Management and Development and ensure uninterrupted operation of capacities developed,” – noted Alexey Miller, Gazprom’s Management Committee Chairman, adding that this was a real example of efficient partnership meeting interests of all the parties involved, including Russia and the Ukraine, Gazprom and Naftogaz Ukrainy.

“Implementing the investment stage of the International Gas Transmission Consortium will allow the Ukraine to hold a leading position among countries transiting “east” natural gas to Europe. Bringing on line new gas transportation facilities will make it possible to shortly boost fuel transit amount through the Ukraine and, consequently, to ensure additional revenues to the federal coffers,” – stressed Yuri Boiko, Chairman of the Board of Naftogaz Ukrainy.

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The International Consortium for the Ukrainian Gas Transmission System Management and Development was founded on a par by Naftogaz Ukrainy and Gazprom on the heels of the Russian and Ukrainian Presidents’ Statements and Agreement signed between the Russian Federation Government and Ukrainian Cabinet of Ministers on strategic cooperation in the gas industry, dated 7 October 2002. The newly established company’s charter capital accounted for USD 1 million.

Within the preinvestment stage of its activities, the Consortium performed a feasibility study of the investment project; identified a possible route of a new gas pipeline; coordinated a financing scheme stipulating attraction of corporate and borrowed funds under Gazprom and Naftogaz Ukrainy’s 50%/50% guarantees; resolved to increase in 2004 the Consortium’s charter capital to UHR 186.55 million.

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