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Gazprom & Yamal-Nenets Sign Cooperation Agreement for 2013

Source: 10/23/2012, Location: Asia

A working meeting between Alexey Miller, Chairman of the Gazprom Management Committee and Dmitry Kobylkin, Governor of the Yamal-Nenets Autonomous Area was held at the Bovanenkovo oil, gas and condensate field.

During the meeting, the parties underscored the successful development of the bilateral strategic cooperation. The Yamal-Nenets Autonomous Area has been a strategic region for Gazprom for several decades, and with the start of gas production in Yamal the role of the region in energy supplies to Russia will become ever more important.

The particular importance of the Yamal-Nenets Autonomous Area for Russian gas production defines the scope of Gazprom's investments in the area. Over six years, between 2007 and 2012, Gazprom's capital investments (including subsidiary companies) in regional projects totaled some RUB 1.6 trillion, including investments into the Bovanenkovo field development, construction of the Bovanenkovo – Ukhta gas trunkline system and the Obskaya – Bovanenkovo railroad, the Zapolyarnoye, Urengoyskoye, Yamburgskoye fields pre-development, the Urengoy gas transmission hub expansion and the Zapolyarnoye – Urengoy gas pipeline construction.

Gazprom's large-scale activity in the Yamal-Nenets Autonomous Area yields considerable profits to the regional budget. The volume of the Company's tax payments is growing year by year. Thus, Gazprom paid around RUB 45 billion in taxes to the regional budget in 2011, and around RUB 40 billion for 9 months of the current year so far. Eventually, after bringing the Bovanenkovo field to its full capacity, Gazprom's tax payments to the Yamal-Nenets Autonomous Area budget may exceed RUB 70 billion.

The parties discussed cooperation between Gazprom and the Yamal-Nenets Autonomous Area in the social sphere. They considered the transportation of passengers, particularly among indigenous minorities of the North, by the Obskaya – Bovanenkovo railroad in the Yamal-Nenets Autonomous Area. Gazprom's subsidiary Gazpromtrans worked out a scheme for such services, and in August a contract for their rendering was signed with the Yamal District Administration. Passenger carrying operations have already started. Other Districts of the Area may also conclude such contracts.

At the meeting, Alexey Miller and Dmitry Kobylkin signed a Cooperation Agreement for 2013.

According to this document, the Yamal Peninsula onshore and offshore fields development and the gas transmission system expansion remain the priorities of cooperation. The parties will carry on their joint activities in the gasification of the region, in promoting natural gas use as a motor fuel and the efforts within the framework of energy saving and energy efficiency programs.

The Yamal-Nenets Autonomous Area Administration will promote regional tax benefits for the organizations whose scope of activities includes hydrocarbons extraction, transmission and processing, as well as energy saving and environmental issues. Gazprom will be given assistance in registering land plots for constructing industrial and social facilities.

The Agreement formalizes Gazprom's obligations on natural gas and hydrocarbon products supplies, on capital construction, environmental management, social policy, charity and in a number of other spheres.

The document suggests that as a matter of priority Gazprom should engage qualified specialists from among the population of the region, including the representatives of indigenous minorities, who have a specialized education in professions and specialties demanded by the Company. A provision is made for setting up contests for Gazprom scholarships among the students of vocational and higher educational institutions, who are getting degrees in specialties relevant for Gazprom. Gazprom and its subsidiaries will provide secure natural gas and hydrocarbon products supplies to consumers in the Yamal-Nenets Autonomous Area.

The Yamal-Nenets Autonomous Area is a region of Gazprom's strategic interests. The principal document regulating cooperation between Gazprom and the Yamal-Nenets Autonomous Area is the General Agreement. In furtherance of the document the parties annually enter into Agreements of Cooperation. They have also signed a Memorandum of Cooperation, accords on gasification and cooperation in the natural resources exploitation area.

The level of the Yamal-Nenets Autonomous Area gasification as for January 1, 2012 was at 40.4 per cent, including 43.4 per cent in urban areas and 29 per cent in rural areas (Russia's average indicators equal 63.2, 70 and 46.8 per cent respectively).

From 2007 to 2011 Gazprom invested RUB 488.4 million in the Yamal-Nenets Autonomous Area gasification. The funds were used to design and construct six gas laterals, five of which have been built so far. In 2012 Gazprom allocated another RUB 60 million to continue construction of the sixth gas lateral.

As part of the Gazprom for Children program, the Company has built two sports and health centers (in Nadym and Novy Urengoy), an indoor ice arena (in the Pangody settlement), a versatile sports complex (in Nadym) and other facilities.

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