Gazprom top management held a meeting with the Russian Federation administrative territories representatives

The annual meeting of Gazprom top management with heads of representations of the administrative territories accredited with the President of the Russian Federation and the Russian Federation Government was held today at Gazprom headquarters.

The heads of representations visited the key production facility of Gazprom – the Central Dispatch Management Center in accordance with the meeting’s schedule.

The Russian federation natural gas industry development prospects, gas supply management structure optimization and regional gas supply system development issues were discussed at the meeting. Alexander Ryazanov, Deputy Chairman, Gazprom Management Committee, Viktor Ilyushin, Member, Gazprom Management Committee and Head of the Department of Relationships with Regional Authorities of the Russian Federation, and Anatolii Khripunov, acting Director General, Mezhregiongaz, presented their reports at the meeting.

The meeting participants focused their attention on natural gas market development in Russia. According to Alexander Ryazanov, this development should have three stages.

The first stage of development up to the year 2006 will include the program of gradual price increases providing the industry’s self-financing possibilities and its investment attractiveness. During this stage plans implementation, a natural gas commodity exchange to facilitate market price based trading (including trading a part of Gazprom produced natural gas), long-term gas supply contracting system and unified gas transmission tariffs methodology should be established. Independent natural gas producers should have easier access to the gas trunk pipelines.

The second stage up to the year 2008, according to A. Ryazanov, should include a shift to contractual natural gas prices for all consumers excluding the residential end-users, a possibility for independent producers to export natural gas by means of a unified export facility, and an export and domestic markets profitability leveling. Excise payments should be substituted by rent payments at this stage.

The final third stage will end in the year 2010. At this stage, natural gas producer competitive market is planned to be established to allow consumers to choose suppliers, as well as to provide different types of energy resources competition. Besides, Alexander Ryazanov emphasized that government control over natural gas should be effective in natural gas transmission over gas pipelines only.

Information Directorate, OAO Gazprom