The Gazprom Headquarters hosted today a working meeting between Alexey Miller, Chairman of the Company’s Management Committee and Oleg Dubina, Chairman of the Board of NAK Naftogaz Ukrainy. The parties discussed the present situation related to NAK Naftogaz Ukrainy’s payment default for the supplied gas.

The accord was achieved that NAK Naftogaz Ukrainy would fully settle its debt before December 1, 2008 for the gas delivered in September 2008 and partially repay its debt for the gas delivered in October the same year. Thereafter, the parties will resume negotiations with regard to implementing the provisions of the Intergovernmental Memorandum of Cooperation in the gas sector dated October 2, 2008. It was underscored at the negotiations that under the Memorandum a transition to direct long-term contracts between Gazprom and NAK Naftogaz Ukrainy was possible only on the condition that the Ukrainian party cleared its arrears in full.

Background:

On October 2, 2008 in the course of the meeting between the Russian Federation Prime Minister Vladimir Putin and his Ukrainian counterpart, Julia Timoshenko the Memorandum of Cooperation in the gas sector was signed. One of the key provisions of the Memorandum is a possibility to transfer to direct long-term relations between Gazprom and NAK Naftogaz Ukrainy starting from January 1, 2009. At the same time, Gazprom retains the right to sell 7.5 bcmpa of gas directly to Ukraine’s ultimate consumers. The Memorandum also confirms the intention to establish a stagewise transition to market, economically expedient and mutually agreed gas prices for Ukraine, as well as tariffs for gas transit across its territory.

Full settlement of Ukraine’s debt for the received gas is a prerequisite for the Memorandum provisions to be implemented.

At present, RosUkrEnergo is selling gas to NAK Naftogaz Ukrainy priced at USD 179.5 per 1,000 cu m. Ukraine is supplied with Central Asian gas.