OREANDA-NEWS. September 12, 2012. Today we have a number of issues drawing heightened attention of the media and we’ve decided to conduct a special press briefing for clarifying our stance. So, there are three such issues: the Presidential Decree signed today on the nature of the strategic companies’ operations abroad, the anti-trust investigation of the European Commission in respect of Gazprom and the results of the gas talks as part of the APEC Summit in Vladivostok.

Let’s begin with the latest news.

Today Russian President has signed the Decree on the Measures for Protecting the Interests of the Russian Federation in the Course of Foreign Trade Operations Performed by Russian Legal Entities.

The Decree refers to the activities of the “strategic companies”, among which Gazprom is, and deals with three main aspects:
— disclosure of information;
— alteration of contracts;
— sale of assets.
According to the Decree, the “strategic companies” have the right to disclose information about their operations to foreign countries, companies and regulators only with prior consent of an authorized Russian federal body. If there is no such consent, information is disclosed only as per the requirements of the Russian legislation or in connection with an issue or circulation of securities.

Alterations in contracts with foreign counterparties, which deal with the pricing policy in foreign countries, are also subject to prior approval in accordance with the Decree.

Assets in foreign companies, operating rights and immovable property abroad may be sold by the “strategic companies” only with prior consent of an authorized federal body.

Under the Decree, if any actions are capable of damaging the economic interests of the Russian Federation, such consent will be refused.

As you understand, the Decree signed now directly regulates our actions in such situations as the searches conducted by the European Commission at the premises of Gazprom subsidiaries and the investigation launched last week.

Now requests related to information disclosure, contract alterations and asset sale should be addressed to an authorized body, and if this is not in line with Russia’s economic interests, a request will be refused by the authorized body.

On its part, Gazprom would like to emphasize that we are bewildered by the European Commission’s statement on this investigation as it contains absolutely nothing new as compared to the last year’s assumptions.

It’s no secret that a number of the EU’s relatively weak economies continue demanding that Gazprom unilaterally cut down prices, and such statements can be interpreted as nothing else but the European Commission’s support to the practice of subsidizing Eastern Europe with cheap gas at the expense of Gazprom. This is an attempt to meet the economic challenges of the EU, particularly of its new member countries, Eastern Europe, at the expense of Russia.

Over the expired year the European Commission did not take any steps to discuss the existing issues in the form of an open dialogue. We have always spoken in favor of fair and open discussions of any issues with our partners: both Gazprom and the Government of the Russian Federation have repeatedly invited the European Commission to engage in a dialogue in respect of the ongoing investigations but the initiative of the Russian side hasn’t been heard.

Gazprom always abides by the legal requirements of the countries where it conducts trading and investment activities and with whom it cooperates.
Gazprom supplies gas to European consumers at market-based prices according to long-term contracts agreed with the buyers. The relationships of Gazprom as a gas supplier to the European market with the European consumers have lasted for more than 40 years now. Over this time there have been no precedents that the parties were unable to settle the arising discrepancies by means of negotiations.

The European Commission’s actions on the formal launch of the investigation as well as the last year’s searches at Gazprom affiliated companies can be viewed as pressure from the European Commission on Gazprom with the aim of influencing prices and the results of commercial negotiations, which obviously disagrees with the market economy principles.

Strange are the allegations of the European Commission that we use our dominating position and ban the free flow of gas across the EU member countries. The market development requires transport infrastructure, in which Gazprom as any other gas market player is interested in. We have been active in investing in such infrastructure in a number of the EU countries. However, the adoption of the Third Energy Package has virtually deprived us of the opportunity of performing such investment activities. Also absurd are the allegations that Gazprom “unfairly” links gas prices to oil and its derivatives, as this is a traditional pricing mechanism in the gas industry and is applied elsewhere in world gas markets.
In future, Gazprom will continue performing its operations based on long-term contracts linked to an oil basket.

It should also be mentioned that Gazprom has virtually pioneered the European market liberalization. Back in the 1990s we made attempts to independently access end users but consistently faced serious resistance of the local players who were and continue blocking our access to transport capacities.

We hope that the European Commission’s actions will resume within the framework of a constructive dialogue.

Let’s review now the so-called Shift toward Asia in the context of the aggravating crisis in the European Union.

During the APEC Summit a Memorandum on the Vladivostok-LNG project was inked in Vladivostok.

The Memorandum stipulates the comprehensive cooperation deepening to promote the project including its financing and marketing aspects.

By signing the Memorandum we are approaching the Vladivostok-LNG project implementation. It will have a great meaning for developing the eastern part of the Unified Gas Supply System of Russia  as well as boosting Russian gas supplies to Asia-Pacific markets including Japan. The Japanese market has an advantageous
size and is considered a top-priority in the Far East. Gazprom and our Japanese partners with high skills in LNG  projects already have a successful experience
of cooperation within the existing projects.

The Asia-Pacific region is the most receptive market in the world, and within the next few years the gas volumes to be delivered there by Gazprom will surpass the volumes supplied to Europe. The Eastern Gas Program  is our top priority and progresses rapidly, and considering the growing gas demand in the Asia-Pacific
region, decisions will soon be taken to speed up the Program. This issue will be shortly reviewed at a Management Committee meeting and submitted for consideration by the Board of Directors.