Gazprom is ready to promptly deliver Altai project if commercial agreements with China are reached

RELEASE

Today in Tomsk Alexey Miller, Chairman of the Gazprom Management Committee and Viktor Tolokonsky, Plenipotentiary Envoy of the Russian Federation President to the Siberian Federal Okrug (SFO) held a meeting dedicated to the Altai gas pipeline construction project designed for arranging Russian gas supply to China.

Alexey Miller and Viktor Tolokonsky
Alexey Miller and Viktor Tolokonsky

Alexey Miller and Viktor Tolokonsky

Taking part in the meeting were the following Members of the Gazprom Management Committee: Oleg Aksyutin, Head of the Gas Transportation, Underground Storage and Utilization Department; Yaroslav Golko, Head of the Investment and Construction Department; Viktor Ilyushin, Head of the Department for Relations with Regional Authorities of the Russian Federation; Viktor Timoshilov, Head of the East-Oriented Project Coordination Directorate; as well as heads and experts of Gazprom's specialized subdivisions: Gazprom transgaz Surgut, Gazprom transgaz Tomsk, Gazprom komplektatsiya and Giprospetsgaz.

Alexey Miller speaking at meeting dedicated to Altai gas trunkline construction project
Alexey Miller speaking at meeting dedicated to Altai gas trunkline construction project

Alexey Miller speaking at meeting dedicated to Altai gas trunkline construction project

The meeting was also attended by Alexander Karlin, Governor of the Altai Krai; Natalia Komarova, Governor of the Khanty-Mansiysk Autonomous Okrug; Viktor Kress, Governor of the Tomsk Oblast; Vasily Yurchenko, Governor of the Novosibirsk Oblast; Vladimir Vladimirov, First Deputy Governor of the Yamal-Nenets Autonomous Okrug and Robert Paltaller, Deputy Chairman of the Altai Republic Government.

At meeting dedicated to Altai gas trunkline construction project
At meeting dedicated to Altai gas trunkline construction project

At meeting dedicated to Altai gas trunkline construction project

Addressing the meeting Alexey Miller highlighted the strategic importance of the Altai project.

Alexey Miller speaking at meeting dedicated to Altai gas trunkline construction project
Alexey Miller speaking at meeting dedicated to Altai gas trunkline construction project

Alexey Miller speaking at meeting dedicated to Altai gas trunkline construction project

“The feasibility of the Altai project was first announced by Russian President in March 2006. The Russian leader emphasized that this particular route of gas deliveries from Russia to China was a paramount one. The Altai project is backed by Western Siberia's ample proven gas reserves that will enable to secure full loading of the gas pipeline in the amount of at least 30 billion cubic meters a year over the project lifecycle while gas supplies to Russia and Europe will remain intact.

Moreover, the area, where the Altai project will be implemented, accommodates active facilities of the Unified Gas Supply System and well-established gas production and transmission companies, we know this region well. All these preconditions along with a great track record in such projects give confidence that the state task on the Altai project execution may be fulfilled within a short timeframe,” said Alexey Miller.

The Management Committee Chairman stated that the Investment Rationale was ready for the project and engineering works were in progress including the pipeline route survey, and some project solutions had been updated.

At the same time, Alexey Miller underlined that the pipeline construction would be launched only after all commercial issues had been settled with the Chinese side and the gas purchase and sale contract had been signed. If all the agreements are reached in mid-2011, natural gas supplies may start as early as in late 2015.

The project is characterized by complex natural conditions, from swamps in the north to the mountains of Altai in the southern end of the pipeline, that pose special challenges to construction works and pipeline operation. At the same time, it has to be of high quality and inexpensive.

“This will call for advanced technical and engineering solutions, efficient management techniques, optimal logistic operations, wide application of competitive ordering packages, production and installation of pipes and equipment. Strict control will be maintained at all stages of pre-construction activities,” stressed Alexey Miller.

It is planned to place special emphasis on the work withcontracting companies.

Only proven contractors with similar experience will be admitted to construction on a competitive basis. They will also include companies from the Siberian Federal Okrug.

Environmental protection issues will be of immense importance during the Altai gas pipeline construction. The experience gained from the Blue Stream project revealed the opportunity of safely routing a pipeline in protected environmental zones and complex mountain terrain. The Management Committee Chairman noted that in Altai Gazprom would once again demonstrate high environmental safety standards.

“We would like to count on the SFO regional and municipal authorities' support when solving issues that fall under their competence. It primarily relates to prompt permitting,” said Alexey Miller.

“Summarizing the meeting results I can say that we have checked the readiness to initiate the Altai project and find ourselves at the final stage ofthe preparatory operations,” said the Gazprom Management Committee Chairman at the end of the meeting. “Synchronized schedules of design and exploration work, procurement, construction and commissioning for the Altai gas trunkline as well as reconstruction and overhaul schedules for existing gas transmission facilities will be prepared by the end of the first quarter. From then on we will be fully ready to launch the construction. The “Start” signal will be the signing of commercial gas supply contracts with our Chinese partners.”

Background

The Altai project envisages supplying natural gas from fields in Western Siberia to China via the western part of the Russian-Chinese border.

In October 2009 Gazprom and CNPC inked the Framework Agreement on the Major Terms and Conditions of Natural Gas Supply from Russia to China. In December 2009 the Basic Major Terms and Conditions of Gas Supply from Russia to China were signed.

In September 2010 Gazprom and CNPC signed the Extended Major Terms and Conditions of Natural Gas Supply from Russia to China. The document sets the key commercial parameters of the forthcoming natural gas deliveries to the Chinese market via the “western” route: the volumes and the timeframe for export startup, the take-or-pay level, the supply buildup period, the guaranteed payment level. The document is of a legally binding nature. Under the agreements reached the contract period will be 30 years and the supply volume – 30 billion cubic meters a year.

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