OREANDA-NEWS. July 21, 2009. The progress in executing long-term contracts for gas supply to industrial consumers in the Russian Federation was addressed. The meeting noted that Gazprom had fully performed its obligations under long-term contracts in 2008.

The Management Committee was entrusted to continue work on coordinating the draft Russian Federation Government Resolution on making changes in some governmental acts related to gas supply.
Background

On November 30, 2006 the Russian Federation Government approved proposals allowing gas supply at regulated prices to power plants under five-year contracts. The respective minutes of the Government's Meeting also stipulated that alongside with power plants other industrial enterprises should be switched to long-term contracts.

On March 6, 2007 Gazprom and UES of Russia agreed on the basic principles underlying long-term contracts as well as volumes of supply to power plants under long-term contracts. As agreed, the annual volume of gas supplied in 2007–2010 to power plants at regulated prices accounts for 105.1 billion cubic meters including 103.5 billion cubic meters supplied to UES of Russia. Additional volumes are to be supplied based on a mutual agreement of the parties. The parties achieved the accord that the mainstay of the long-term contracts was the “take or pay” principle coupled with the right of UES of Russia subject to the availability of technical capacity to re-distribute uncommitted gas between its power facilities and re-schedule deliveries over subsequent periods.

In pursuance of the above stated decisions Gazprom and UES of Russia jointly developed standard long-term contracts for power plants as well as a version of a standard long-term contract for industrial enterprises.

Long-term gas supply contracts awarding became a top-priority goal of Gazprom's contract campaign in 2008. The campaign resulted in making 66 thousand long-term gas supply contracts accounting for 65 per cent of the total amount of gas supplied to industrial consumers in the Russian Federation.

Operation under long-term contracts proved it was necessary to make certain changes in some governmental acts related to gas supply.

Thus, for example, in cold weather uncoordinated gas withdrawal becomes possible. The existing coefficients applied to the payment for unapproved gas withdrawals are undervalued and do not correspond to the prices for alternative fuels. Gazprom believes it is necessary to change multiplying coefficients and to increase the payments for uncoordinated gas withdrawals, especially, within the peak consumption periods. This will give industrial consumers an impetus to increase the amount of alternative fuel reserves and considerably enhance the reliability of energy and heat supply.