VOG 2005 New Thread

Is it true that Gazprom does not give other producers access to the Unified Gas Transportation System of Russia?
No. Gazprom will oblige all independent gas producers seeking access to the Unified Gas Transportation System (UGS), unless access cannot be granted for purely technical reasons, such as system overload. Gazprom relates to other players in the gas industry as prescribed by the Federal Law "On Gas Supplies in the Russian Federation", which sets the terms and conditions for granting access to available UGS pipelines, giving Gazprom the discretion to grant or deny access, provided that access cannot be unreasonably denied.

Gazprom will grant independent gas producers access to the pipeline system if:
• there is pipe capacity available for the period when the producer intends to supply gas;
• their gas meets the required quality level and technical specifications;
• the producer has the pipe capacity to funnel gas into the UGS, and pipe-bends to deliver from UGS to consumers, all fitted with gas testing and flow control facilities.

The requirements for gas tunneled into the system, and the terms and conditions of access to gas mains are governed by federal law.
Seeking to simplify access to its gas mains, Gazprom will, in the first two quarters of 2005, finalize the drafting of its new internal Policy Governing the Preparation and Issuance of Permits to Independent Entities Seeking Access to Gazprom’s Gas Transportation System.
The compliance of independent suppliers with the terms and conditions of access to Gazprom’s gas mains is monitored by a special government panel whose decisions are binding for all the parties concerned.
Gazprom first opened up its gas mains to independent gas producers in 1998, granting access to six independent producers supplying 28.2 billion m3 of gas between them.

The list below shows how many independent suppliers joined in later years, and how much gas they supplied through Gazprom system year on year:

• 1999:10 entities and 83.7 billion m3 on aggregate;
• 2000:20 entities and 106.2 billion m3;
• 2001:24 entities and 92.4 billion m3;
• 2002:33 entities and 103.6 billion m3;
• 2003:31 entities and 95.4 billion m3;
• 2004:33 independent Russian gas producers used the UGS to supply 99.9 billion m3 of gas.

Can independent producers contract with Gazprom on a long-term basis to ship their gas through the UGS?
Yes, they can. In the near-term, however, independents wishing to make deals like that with Gazprom will be required to contribute towards rehabilitating, expanding and upgrading Gazprom’s gas transit facilities. Gazprom has established a workgroup to develop a legal and financial soluion for independent gas producers to participate in rehabilitating, expanding and upgrading Gazprom’s gas transit facilities. The workgroup has come up with several alternatives, and is about to select the best ones.