Directors’ Board of Gazprom made a decision on setting up a design company for perticipation in the West – East project

A meeting of the Directors’ Board was held in the central office of Gazprom. The Directors’ Board approved acquisition by Gazprom a 100% stake in the authorized capital of a special design company West-East Pipeline Project Investment B.V. that is being set up in the Netherlands; the company is intended to take part in the West – East project. Under the agreement between Gazprom, PetroChina, Royal Dutch Shell and ExxonMobil a Gas Pipeline Joint Venture (GPJV) will be set up in China as well as a United Trading Company (UTC). The agreement also assumes implementation of the projects of gas production on the Production Sharing Contract (PSC) terms. Meanwhile, the foreign participants join the GPJV and UTC through founding two consortiums, and in the projects on gas production they will participate on individual basis.

Gazprom will participate in the consortiums through a special design company. In the result, part of Gazprom’s risks including legal ones, will be transferred to this company. Such an approach corresponds to the conventional world practice.

The partners in the project – Royal Dutch Shell and ExxonMobil – will participate in the consortiums with their own daughter companies. Both consortiums will be set up in the Netherlands.


The West – East project will be carried out during 45 years; the project assumes development of the gas fields of the Tarim basin of China (the Xinjiang Uygur Autonomous region), construction of the gas main to Changhai and gas marketing on the market of Eastern China. The pipeline should be commissioned in the end of 2003. It is believed that by the year of 2007 the pipeline throughput capacity will reach the design level, i.e. 12 bcm/y. Gas deliveries may be carried out both from the Tarim basin and other fields of China.

According to the framework Agreement with the Chinese gas company PetroChina on setting up a joint venture for implementation of the West – East project, Gazprom, Royal Dutch Shell and ExxonMobil will each hold 15% of the JV share capital.

Information Directorate, OAO Gazprom

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