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March 29, 2005

Gazprom and Kaliningrad Region ink Cooperation Agreement

Today, at Gazpromís Headquarters, Alexey Miller, Gazpromís Management Committee Chairman and Vladimir Yegorov, Governor of the Kaliningrad Region have inked a 5-year Cooperation Agreement.

Under the Cooperation Agreement, Gazprom and the Kaliningrad Region key joint businesses will be as follows:

  • Expanding gas deliveries to the Region;
  • Effecting and improving sustainable gas deliveries to consumers;
  • Upgrading gas infrastructure;
  • Developing capacities spurring the use of gas as motor fuel;
  • Developing and introducing gas saving technologies;
  • Ensuring environmental safety and rational nature management;
  • Creating a comprehensive automated system of natural gas consumption and quality measurement.

The parties will jointly step up measures aimed at improving the Kaliningrad Regionís energy balance, i.e. rationalizing and using alternative energies on a larger scale and endeavoring to slash gas consumption through the use of innovative power saving technologies and progressive gas-fired equipment.

In accordance with the targeted Federal Program on the Kaliningrad Regionís development to 2010, Gazprom and the Regional authorities will come up with an investment mechanism ensuring sustainable development of Regional natural and liquefied gas supply networks.

In addition, the parties will develop legislation to protect gas mains and facilities, detect and eliminate breakdowns, ensure free passage and access of emergency vehicles and prevent non-sanctioned third-party intrusions.

The Kaliningrad Regionís authorities will update within their authority regulated retail pricing for natural gas delivered to the population, taking into account the consistency of state-fixed wholesale gas pricing with the level ensuring returns on economically underpinned expenses of suppliers. The budget-financed bodies will earmark funds to pay for pipeline gas deliveries as well as for gas used in electricity and heating power generation. Gazprom will be granted assistance in timely receiving gas payments from self-funded consumers.

Simultaneously, the Regional authorities will assist Gazprom and its subsidiaries in acquiring land and settling disputes in relation to the land plots with gas infrastructure on.

The Kaliningrad Regionís government will annually endorse timetables stipulating the conversion of customers to reserve fuels during cold spells.

Gazprom and its subsidiaries, on their part, will provide natural gas to the population, social sector and budget-sponsored bodies, taking into account the United Gas Transmission System capacities and gas quotas throughout Russia and provided gas deliveries are paid up in full.


Gazprom and the Kaliningrad Region first entered into a cooperation agreement on 19 September 1997.

Last year, Gazprom provided Regional customers with some 650 mln cu m of gas, with roughly the same amount and 1,050 bcm slated over 2005 and 2006, respectively.

The gas supply infrastructure of the Kaliningrad Region is developed by 41.9% of maximum gas demand, including by 51.9%, in cities, towns and urban settlements and by 4%, in rural area (the identical Russia-averaged parameters account for 53%, 60% and 34.7%, respectively).

This year, Gazprom is intent on channeling over RUR 15 mln to intensify gas consumption in the Region.

The Kaliningrad Regionís current gas payments account for 94.5% and, as of 1 March 2005, there was no gas debt whatsoever. The Regional authorities have so far allocated sufficient funds to pay for pipeline gas deliveries and to offset Gazpromís losses when gas is supplied to privileged customers.





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