Gazprom and Republic of Sakha (Yakutia) sign Partnership Agreement

RELEASE

Today at the Gazprom headquarters Alexey Miller, Chairman of the Company's Management Committee and Yegor Borisov, President of the Republic of Sakha (Yakutia) signed the Partnership Agreement for socioeconomic development driven by the Eastern Gas Program implementation.

Yegor Borisov and Alexey Miller signing Partnership Agreement between Gazprom and Republic of Sakha (Yakutia)
Yegor Borisov and Alexey Miller signing Partnership Agreement between Gazprom and Republic of Sakha (Yakutia)

Yegor Borisov and Alexey Miller signing Partnership Agreement between Gazprom and Republic of Sakha (Yakutia)

The Agreement provides for a set of joint measures aimed at:

  • creation and development of the social and production infrastructure in the Republic along with Gazprom's regional activity expansion;
  • arrangement of long-term gas supply to the Far Eastern consumers and building Gazprom's business in Asia-Pacific markets;
  • gasification development in regional population centers.

Pursuant to the document, the Republic will help Gazprom to work out measures of state support for the gas industry development projects in Eastern Russia and to form the power supply and transport infrastructure in Yakutia intended for efficient implementation of the Eastern Gas Program.

In addition, Yakutia will allocate lands for the infrastructure creation by Gazprom as part of the Chayanda field development.

In turn, Gazprom will take a set of measures to develop the Chayanda field following the plan of putting its oil rim and gas deposits into pilot commercial operation in 2014 and 2016 respectively. Meanwhile, the Company carries out the required environmental actions.

Gazprom will provide employment assistance in the region offering jobs at its facilities. Social investment projects and the regional gasification program will be continued. Moreover, the Company will build a multifunctional sports complex for children in Yakutsk as part of the Gazprom to Children program.

“Gazprom's operations geography expands eastwards. The demand for energy carriers in Eastern Russia and Asia-Pacific markets is rapidly growing with almost no infrastructure in this region. The focus of Gazprom's investment activity is moving here with Yakutia being among the key regions of our endeavors. There is no doubt that we will timely meet the tasks on the Chayanda field development and the Yakutia – Khabarovsk – Vladivostok gas trunkline construction,” Alexey Miller stated.

Background

Gazprom and the Republic of Sakha (Yakutia) entered into the Cooperation Agreement in July 2007 and Gasification Accord – in June 2008.

Natural gas penetration in the Republic of Sakha (Yakutia) averages 23.3 per cent including 27.8 per cent in cities and towns and 14.1 per cent in the rural area. The identical figures throughout Russia average 63.2, 67.5 and 45.5 per cent respectively.

Gazprom doesn't supply natural gas to the Republic.

Pursuant to the Eastern Gas Program approved by the 2007 Order of the Russian Federation Industry and Energy Ministry, new gas production centers will be established in Eastern Russia: the Krasnoyarsk, Irkutsk, Yakutia, Kamchatka and Sakhalin centers.

The Chayanda oil, gas and condensate field with the subsurface license held by Gazprom is the cornerstone for the Yakutia gas production center. The field is located in the Lensk District, Republic of Sakha (Yakutia). The field's C1+C2 reserves make up 1.24 trillion cubic meters of gas and 68.4 million tons of recoverable oil and condensate reserves.

In the first half of 2011 Gazprom is going to finalize the Investment Rationale for the Chayanda field pre-development as well as natural gas transmission and processing.

The Investment Project for South Yakutia Comprehensive Development stipulates establishing in Eastern Russia a new large industrial region based on mineral and hydropower resources of the Republic of Sakha (Yakutia) including the Chayanda field. Gazprom is planning to act as a co-investor of the South Yakutia Comprehensive Development Project, in particular with a view to create the Yakutia gas production center.

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