Today, at Gazprom’s Headquarters, Alexey Miller, Chairman of Gazprom’s Management Committee and Viktor Shershunov, Governor of the Kostroma Region have inked a network schedule for the construction of gasification facilities in the Kostroma Region.

The network schedule is expected to synchronize the Kostroma Government and Gazprom’s activities aimed at preparing consumers for gas deliveries and constructing gas pipelines, respectively, as stipulated by the gasification program for RF regions over 2005 to 2007.

“We will pay special attention to rural gasification. While the overall gasification rate of the Kostroma Region is acceptable largely at the expense of the city of Kostroma and neighboring areas, other Regional territories, especially villages, have a rather low gasification rate. Rural gasification is therefore among the top priorities of our program,” said Alexey Miller.

The Governor, on his part, reassured Alexey Miller that the Region would apply maximum efforts not to drag behind the projected rates of pipeline construction by Gazprom and planned to commit more than RUR 300 mln for the preparation of consumers for gas deliveries.

“Between 2005 and 2007 the Kostroma Region’s authorities are resolute to construct 78 km of local gas pipelines, make 59 heating plants natural gas-fired and gasify 5,969 households,” said Viktor Shershunov.

The network schedule signing was preceded by a working meeting between Dmitry Medvedev, RF First Deputy Prime Minister & Chairman of Gazprom’s Board of Directors and Viktor Shershunov. The parties discussed issues surrounding the implementation of the gasification program for RF regions over 2005 to 2007 in the Kostroma Region.

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The network schedule of gasification identifies an activity list and implementation date for gas infrastructure between 2006 and 2007, and is aimed at providing gas connections to consumers immediately upon pipeline completion. To connect consumers, regional authorities are to construct local and household networks, build new or convert to gas existing heating plants, install household gas appliances, etc.

Network schedules are signed for the implementation of Gazprom’s gasification program for RF regions over 2005 to 2007, which is funded with RUR 35 bln. Of this amount, RUR 5.2 bln was already committed in 2005 and not less than RUR 17.6 bln and RUR 12.2 bln is slated for 2006 and 2007, respectively. Extra RUR 1.1 bln will be allocated for the reconstruction and modernization of existing gas distribution pipelines.

At present the Russia-averaged level of gasification makes up 53 per cent including 60 per cent in cities & towns and 34 per cent in rural area.

Implementing the gasification program over 2005 to 2007 will help boost gas supply to Russian regions to a 60 per cent average by 2008 already, including to 66 per cent in cities & towns and 42 per cent in rural area.

To achieve said targets, Gazprom will provide gasification of a further 3,851 thousand apartments & households including 2,673 thousand in cities & towns and 1,178 thousand in rural area.

The Program will enable Gazprom to convert to natural gas about 20 thousand new residential facilities (hospitals, kindergartens, schools, etc.), over 5 thousand heating plants in villages & settlements and more than 500 agricultural companies, with an excess of 12 thousand km of pipelines to be laid and some 11 mln citizens of 53 Russian regions to be serviced.

Gazprom’s investment priorities for regional gasification are determined based on the following criteria: full payments for gas deliveries; repayment of gas debts; economic viability of projected gas infrastructure; customers’ readiness to receive gas; actual loading of gas laterals and distribution stations; assistance of RF regional authorities in promoting the use of compressed and liquefied natural gas as motor fuel.

Gazprom and the Kostroma Region’s authorities signed an Agreement on cooperation and Accord on gasification on October 28, 2004 and November 27, 2001, respectively.

Over 2005 Gazprom provided the Region with over 3.6 bcm of gas.

As of March 1, 2006 the Regional gas debt to Gazprom has accounted for some RUR 140 mln, with the bulk owed by the household sector.

The actual average loading of Regional branch pipelines is 39 per cent versus 25.5 per cent throughout Russia, with the optimum yearly average loading making up 60%.

Enhanced gasification will help increase loading of branch pipelines and reduce the payback period.

The Kostroma Region’s residential sector is currently gasified by 47 per cent including by 63 per cent in cities, towns & population centers and 17 per cent in rural area. The Russia-averaged gasification rate stands at 53 per cent.

This year Gazprom plans to build 8 local gas pipelines in the Kostroma Region.