Meeting on extra volumes of gas supply to power companies held

The Gazprom Headquarters has hosted a meeting dedicated to extra volumes of gas supply to the Russian Federation power companies. The meeting was moderated by Alexander Ananenkov, Acting Chairman of the Gazprom Management Committee.

Attending the meeting were the following Gazprom Management Committee Members: Bogdan Budzulyak, Head of Gas Transportation, Underground Storage and Utilization Department, Yaroslav Golko, Head of Investment and Construction Department, Vlada Rusakova, Head of Strategic Development Department, Kirill Seleznev, Head of Gas and Liquid Hydrocarbons Marketing and Processing Department, Director General of Mezhregiongaz as well as heads of the Gazprom core business units.

The participants discussed the progress with the Protocol for the working meeting between Alexey Miller, Chairman of the Gazprom Management Committee and Anatoly Chubais, Chairman of the Management Board of UES of Russia held in March 2007.

The meeting particularly specified that additional gas volumes will be supplied to Russian power companies based on the “take or pay” principles at the price formula providing the same gas supply profitability for both domestic and foreign markets. Thus, additional volumes of gas supply must not stimulate gas component increase in the Russian energy balance and negatively affect the alternative energy sources usage by domestic power companies.

In the result of the meeting the Gazprom core business units were tasked to sign long-term gas supply contracts with wholesale and generating companies.

Based on the technical opportunity to transport extra gas volumes via the Gazprom gas transmission system, the core business units were tasked to specify a list of UES of Russia’s power stations and yearly needed volumes of gas supply until 2020 in accordance with the General Scheme of power facilities allocation during the period until 2020. Additionally, the core business units were tasked to develop an action plan to provide technical opportunity to transport gas to UES of Russia’s newly commissioned power stations and prepare proposals on financial sources for said activities, gas supply terms and volumes.

On March 6, 2007, Alexey Miller, Chairman of the Gazprom Management Committee met with Anatoly Chubais, Chairman of the Management Board of UES of Russia.

The parties agreed on the basic principles for the conclusion of long-term contracts and confirmed the volumes of gas supply to power companies: 162.9 bcm in 2007, 166.9 bcm in 2008, 174.8 bcm in 2009 and 186 bcm in 2010 as laid down in the Russian Federation Government Protocol №42 of November 30, 2006.

The volume of natural gas to be supplied by Gazprom is 103 bcm, with extra volumes to be purchased from independent gas producers and at the Mezhregiongaz trading point. The parties also agreed that under the 2006–07 contracts gas would be delivered at the price fixed in Item 3 of the Russian Federation Government Protocol №42 of November 30, 2006, with additional gas to be supplied based on an agreement between the parties.

The parties achieved the accord that the mainstay of the long-term contracts was the “take or pay” principle.

Information Directorate, OAO Gazprom

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