Today, at Gazprom’s Headquarters, Alexey Miller, Chairman of Gazprom’s Management Committee and Georgy Shpak, Governor of the Ryazan Region have inked a network schedule for the construction of gasification facilities in the Ryazan Region.

In compliance with the network schedule the parties will perform in the Region a whole range of activities aimed at preparing consumers for gas deliveries by Gazprom’s gas pipelines currently undergoing large-scale construction as stipulated by the gasification program for RF regions over 2005 to 2007.

A. Miller and G. Shpak also reviewed the implementation of an Agreement sealed between Gazprom and the Government of the Ryazan Region.

“Timely readiness of industrial and household consumers, primarily in rural areas, for gas supply is a strategic prerequisite for the implementation of a gasification program for Russian regions. In this regard, regional authorities should endeavor to synchronize the preparation of consumers for deliveries with the construction of pipelines. The document signed today gives a thorough outline of the tasks to be accomplished,” noted Alexey Miller.

“All potential customers in the Ryazan Region must have an opportunity to enjoy the fruits of gasification immediately upon the completion of branch pipeline construction. Between 2005 and 2007 the Regional Government plans to construct a total of over 1,000 km of in-settlement pipelines, make gas-fired some 200 boilers and gasify more than 16 thousand households. The amount of funds to be committed for these purposes by the Region will be in line with Gazprom’s investment,” stated Georgy Shpak.

The network schedule signing was preceded by a working meeting between Dmitry Medvedev, RF First Deputy Prime Minister & Chairman of Gazprom’s Board of Directors and Georgy Shpak. The parties discussed issues surrounding the implementation of the gasification program for RF regions over 2005 to 2007 in the Ryazan Region.

Reference:

The network schedule of gasification identifies an activity list and implementation date for gas infrastructure between 2006 and 2007, and is aimed at providing gas connections to consumers immediately upon pipeline completion. To connect consumers, regional authorities are to construct local and household networks, build new or convert to gas existing heating plants, install household gas appliances, etc.

Network schedules are signed for the implementation of Gazprom’s gasification program for RF regions over 2005 to 2007, which is funded with RUR 35 bln. Of this amount, RUR 5.2 bln was already committed in 2005 and not less than RUR 17.6 bln and RUR 12.2 bln is slated for 2006 and 2007, respectively. Extra RUR 1.1 bln will be allocated for the reconstruction and modernization of existing gas distribution pipelines.

At present the Russia-averaged level of gasification makes up 53 per cent including 60 per cent in cities & towns and 34 per cent in rural area.

Implementing the gasification program over 2005 to 2007 will help boost gas supply to Russian regions to a 60 per cent average by 2008 already, including to 66 per cent in cities & towns and 42 per cent in rural area.

To achieve said targets, Gazprom will provide gasification of a further 3,851 thousand apartments & households including 2,673 thousand in cities & towns and 1,178 thousand in rural area.

The Program will enable Gazprom to convert to natural gas about 20 thousand new residential facilities (hospitals, kindergartens, schools, etc.), over 5 thousand boilers in villages & settlements and more than 500 agricultural companies, with an excess of 12 thousand km of pipelines to be laid and some 11 mln citizens of 53 Russian regions to be serviced.

Gazprom’s investment priorities for regional gasification are determined based on the following criteria: full payments for gas deliveries; repayment of gas debts; economic viability of projected gas infrastructure; customers’ readiness to receive gas; actual loading of gas laterals and distribution stations; assistance of RF regional authorities in promoting the use of compressed and liquefied natural gas as motor fuel.

Natural gas penetration in the Ryazan Region is currently at 69.4 per cent including 89 per cent in cities, towns & population centers and 37.2 per cent in rural area.

Gazprom and the Ryazan Region’s authorities signed a 5-year Agreement on cooperation and an Accord on gasification in June 2005 and January 2003, respectively.

Over 2005 Gazprom provided the Region with some 4.4 bcm of gas and roughly the same figure is scheduled for this year.

Since the beginning of the year the Ryazan Region’s gas debt to Gazprom has increased more than RUR 168 mln to some RUR 249 mln as of March 1, 2006. Said growth was driven by the above-limit natural gas consumption on the part of heat companies and residential consumers during exceptionally cold winter months.