Gazprom’s Board of Directors discuss gas purchase, transit and sale in CIS countries

It was noted that Gazprom's international business policy toward the CES member states was aimed to balance the interests of gas suppliers, transiters and consumers through maintaining and strengthening the Company's coordinating role within the integrated export channel.
Central Asian natural gas is a crucial component in shaping Gazprom's comprehensive resource base. Through participation in Central Asian projects the Company:
— retains and raises the share of Russian gas in the traditional European market; — adequately responds to demand growth in the CIS; — diversifies Gazprom's export portfolio in terms of the marketing geography; — minimizes the investment burden on the Company; — optimizes gas flows through the Unified Gas Supply System and simultaneously increases the export operations cost effectiveness. For the purpose of enhancing the reliability and cost effectiveness of gas supplies to the domestic and foreign markets, Gazprom has established a robust legal framework for strategic cooperation with Central Asian countries in the gas sector. The legal framework enables for Central Asian natural gas production, processing, transportation and marketing on the basis of the integrated export channel. At present, cooperation agreements are in place with Turkmenistan, Uzbekistan, Kazakhstan, Kyrgyzstan and Tajikistan.
Gazprom Group acquired 37.3 billion cubic meters of gas from Turkmenistan, Uzbekistan and Kazakhstan in 2009 and nearly 38 billion cubic meters in 2010 with 38.8 billion cubic meters slated for 2011.
Gazprom implements a number of joint investment projects in Central Asia. In particular, the agreement was signed to restore gas production from the Shakhpakhty field on the PSA basis, geological exploration is performed in the Ustyurt region of Uzbekistan. The Agreement on the general principles for the geological survey of subsurface resources was signed with the Government of Tajikistan for the Rengan, Sargazon, Sarykamysh and Zapadny Shaambary oil and gas prospects. Gazprom obtained two subsurface use licenses for the Kugart and Eastern Mailu-Suu IV blocks in Kyrgyzstan.
The major consumers of Russian gas in the CIS are Ukraine and Belarus also ensuring its transit to Europe.
On January 19, 2009 Gazprom and NAK Naftogaz Ukrainy signed two separate contracts:
— purchase and sale contract for the period from 2009 through to 2019; — contract on volumes, terms and conditions of natural gas transit across Ukraine for the period from 2009 through to 2019. In April 2010 Gazprom and Naftogaz Ukrainy signed addenda to the above mentioned contracts. Under the addendum to the gas purchase and sale contract, NAK Naftogaz Ukrainy pays for gas with the discount equal to the abatement in the export duty set for gas supplies to Ukraine. The abatement amounts to 30 per cent of the gas price but no more than USD 100 per 1,000 cubic meters. The abatement was applied to 30 billion cubic meters delivered in 2010 and it will be applied to 40 billion cubic meters to be delivered in the subsequent years.
In December 2010 Gazprom and Naftogaz Ukrainy inked the Memorandum on setting up a JV for coalbed methane production in Ukraine.
On December 31, 2006 Gazprom and Beltransgaz signed the Gas Supply and Transit Contract for 2007 through to 2011. Among other things, the Contract set a price formula starting from January 1, 2008 (which is in line with the price formula for Russian gas deliveries to Europe) and discount rates for 2008 through to 2010 (0.67, 0.8 and 0.9 respectively).
In May 2007 Gazprom and the State Property Committee of the Republic of Belarus signed the Purchase and Sale Agreement for a 50 per cent stake in Beltransgaz amounting to USD 2.5 billion to be paid by Gazprom in equal portions during four years. In 2010 the transaction was completed.