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May 12, 2005

Gazprom and Komi Republic enter into Cooperation Agreement and Pact

Signing of a five-year Cooperation Agreement and Cooperation Pact for 2005 to 2007

From left to right: Vladimir Torlopov, Head of the Republic of Komi and Alexey Miller, Gazpromís Management Committee Chairman

Today, at Gazpromís Headquarters, Alexey Miller, Gazpromís Management Committee Chairman and Vladimir Torlopov, Head of the Republic of Komi have entered into a five-year Cooperation Agreement and Cooperation Pact for 2005 to 2007.

Alexey Miller and Vladimir Torlopov agreed to set up a joint standing commission for cooperation deepening between Gazprom and the Komi Republic.

Under the Cooperation Agreement, the parties confirm their mutual interests in meeting the following paramount challenges:

- Constructing the Northern Tyumen Region (NTR) Ė Torzhok gas pipeline and a transmission network carrying gas from the Yamal Peninsula;

- Subsurface prospecting and hydrocarbon exploration & production;

- Building gas supply infrastructure at the Syktyvkar industrial hub;

- Expanding gas deliveries to cities, towns and rural settlements;

- Developing and improving sustainable gas deliveries to consumers;

- Developing capacities spurring wider use of compressed and liquefied gas as motor fuel;

- Developing and introducing gas saving technologies;

- Ensuring environmental safety and rational nature management;

- Developing and introducing a program to enhance the commercial gas consumption measurement accuracy and meteorological maintenance;

- Creating a comprehensive automated natural gas consumption and quality measurement system based on existing gas measurement units;

- The parties will jointly step up measures aimed at improving the Republican energy balance, i.e. rationalizing and using alternative energies on a larger scale.

Gazprom and the Government of the Komi Republic will also contribute to introducing a power conservation program in the Republic, targeted at reduced gas consumption through the use of state-of-the-art technologies and equipment.

The Government of the Komi Republic will channel timely and full payments for gas deliveries to budget-financed bodies and offset Gazpromís losses when gas is supplied to privileged customers.

The Komi authorities will redeem in cash the budget-sponsored consumersí debt for the gas provided earlier. Gazprom and its subsidiaries will be assisted in timely settling accounts with the Regional consumers providing gas payments from self-run budgets as well as in establishing account settlement centers and an integrated fuel and power (gas inclusive) payment collection and processing network.

The Komi Republic will, on its part, assist its municipalities in setting up economically, organizationally and technically viable household gas consumption standards fitting with the gas suppliersí calculations and will also contribute to developing and implementing a program aiming to furnish the population with lacking gas measurement units.

Simultaneously, the Republic will back Gazprom and its subsidiaries in meeting challenges relative to the registration of land intended for the production & social and design & development building sites.

In addition, Gazprom and its subsidiaries will be supported in obtaining hydrocarbon exploration & development licenses for the fields discovered during self-funded prospecting.

Gazprom and its subsidiaries, on their part, will provide reliable natural gas deliveries to the population, social sector and budget-financed customers in the predetermined amount depending on timely gas payments and debt clearance. Other customers will be furnished with gas provided there is availability of resources, adequate gas payments and UGTS technical capacities.

At the same time, Gazprom and its subsidiaries will get involved in joint investment projects in the Region provided the project viability fits with Gazpromís intra-corporate standards.

In accordance with the Cooperation Pact, the parties acknowledge the need to comprehensively develop the gas supply network of the Republic of Komi, taking into account the NTR-Torzhok gas line engineering and construction to be effected through measures aiming to enhance the reliability of existing gas transmission network and gas deliveries to rural areas.

The parties also agreed to develop together with Promgaz a Program on energy and fuel supplies to the Komi Republic over 2005 to 2010 and potentially to 2020. The Program will include the following subprograms:

  • gas deliveries to rural areas;
  • conversion of municipal motor vehicles and agricultural machinery to compressed and liquefied natural gas.

Pursuant to the Document, the parties will seal a natural gas supply to the Komi Republic contract. Gazprom will step up measures aimed at expanding gas deliveries to consumers, through independent suppliers inclusive.

Gazprom is committed to arranging for the contest-based selection of the companies operating in the Komi Republic and contributing to the NTR-Torzhok line construction, including by manufacturing competitive output and equipment.


The Komi Republic is a strategically significant partner of Gazprom represented in the region by Severgazprom, a prominent subsidiary. At present, the Republic sees the construction of the Northern Tyumen Region (NTR) - Torzhok gas main, with a transmission network carrying gas from the Yamal Peninsula slated for the future.

Gazprom and the Komi Republic first entered into a cooperation agreement in December 1999.

Last year, Gazprom provided Republican customers with over 3.2 bcm of gas and roughly the same amount is slated for 2005.

The natural gas supply infrastructure of the Komi Republic is developed at 41.3% of maximum demand, including at 51.4%, in cities, towns and urban settlements and 5.7%, in rural area. The identical Russia-averaged parameters account for 53%, 60% and 34.7%, respectively.

Over 2005, gas supply has been paid up by 92.87%, with the gas debt accounting for RUR 80.35 mln, as of 1 April, which is RUR 79.4 mln up on 1 January.






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