Actuality December, 18, 2007

Vladimir Putin and Dmitry Medvedev have started the practical realization of two large power projects

in Moscow.

The Russian president and the Greek prime minister

have agreed upon the long-term cooperation in oil pipeline Burgas – Alexandrupolis and gas pipeline South Stream construction.

The Russian ruling party president candidate has taken part in the official putting into operation of South-Russian gas deposit ceremony.

The Russian power entering Europe proceeds in two orientations. In the north it is planned to construct Nord Stream gas pipeline on the Baltic Sea bottom

soon through which will pass gas from the South-Russian deposit on Yamal.

There is also a Shtokmanovsk Barents Sea gas deposit prospect.

In the south it is planned to construct the Bulgarian Burgas – Greek Alexandrupolis oil pipeline through which the Russian tanker oil, passing the Black Sea channels, will get into the Aegean Sea ports. Besides the South Stream gas pipeline Feasibility Study is already prepared. It will be on the Black Sea bottom. The main events in the northern and southern realization variants of Russian energy carriers export have been perfectly represented.

Christ Folias (the Greek minister of development), Christ Dimas (the Hellenic Petroleum-Thraki company top manager), Stephen Gunchev (the Bulgarian “Design company “Burgas – Alexandrupolis – BG” board of directors head), Dmitry Evstratov (the Russian company “Pipeline consortium “Burgas – Alexandrupolis” top manager) have signed the International Design Company (IDC) creation agreement and its registration in the Netherlands.

IDC is a consortium that will be responsible for the oil pipeline (from Bulgaria to Greece) project construction practical realization. The IDC 51% will belong to Russian Transneft, Rosneft and Gazprom Neft (they are included into the company “Pipeline consortium “Burgas – Alexandrupolis”). The Greek IDC part of 24,5 % will be divided between the Hellenic Petroleum and Thraki (23,5 %) companies and the government (1%). The Bulgarian “Design company “Burgas – Alexandrupolis – BG” will receive 24,5% of IDC. According to the arrangements, the Bulgarian and Greek authorities governments will be obliged to guarantee a favorable tax treatment for IDC, and the Russian one will guarantee the oil pipeline load.

“We consider that the mutual efforts should be concentrated on the largest bilateral and multilateral projects promotion, including the “Burgas – Alexandrupolis” oil pipeline and the South Stream gas pipeline construction”, announced Vladimir Putin during the press conference on the negotiations

results with the prime minister of Greece Constantinos Karamanlis. “Now we are ready to inform that the final International Design Company creation agreement between the stockholders has been reached”, informed the Greek prime minister.

There has not been signed anything on South Stream. At the same time, this is a very important project in the Russian-Greek negotiations. So, this point has been reflected well by the Russian leader.

“Greece is interested in that after 2016 up to 2040 the Russian gas delivery contracts should be signed with the prospect of its volume increase at least twice.

We are ready for such work”, promised Vladimir Putin. However, according to the Russian president, “one should apply the additional transport facilities in order to increase production line and delivery sizes”. That is why the gas pipeline South Stream construction, as marked Putin, “is a very necessary project both for Greece and Europe as a whole”.

In response the Greek prime minister has expressed a hope, that the intergovernment agreement between Russia and Greece on South Stream project will be signed as soon as possible. “Both work, and we hope that we will sign this project intergovernment agreement as soon as possible”, informed Constantinos Karamanlis. He also specified that “considerable studies are required for the South Stream project”.

Unlike the Russian president the candidate has received basically representative functions. Dmitry Medvedev (who is vice-prime minister and Gazprom board of directors head at the same time) together with Franc Walter Shtajnmajer (German minister for Foreign Affairs), Alexey Miller (the Russian concern top manager) and Aggert Fosherau (the BASF vice-president) have officially put into service the South-Russian gas deposit with the telebridge use with Yamal-Nenets Autonomous District at Gazprom main office in Moscow. Actually, technically it started to function two months ago.

On October, 25 the company put into service the deposit starting complex.

Now there are 26 functioning gas wells that provide a daily gas production in volume of 15 mcm. In the last quarter of this year it is planned to obtain 1,4 bcm of gas on this deposit. It is also planned to make this deposit with the power of 25 bcm of gas in 2009. According to January, 1, 2007 the explored resources make up 805,3 bcm of gas and 5,7 mln. tons of oil.

Severneftgazprom (its main stockholder is Gazprom) owns the geological studying and development deposit license. On Monday Alexey Miller signed with Yurgen Hambreht (the BASF company head) the certificate on the transaction finishing of assets exchange in the gas production sphere and natural gas trade between the companies, as it is informed in the Russian gas company press-release. This year the assets exchange agreement between Gazprom and BASF was signed. According to it, the Gazprom group has increased its quota in Wingas GmbH authorized capital up to 50 % with one stake minus, and  has also received stake in Wintershall authorized capital at the rate of 49 %. BASF AG has received 25% with one common stock minus in the Severneftgazprom authorized capital and one preferred stocke without a vote right that is the 10% equivalent participation stake in the project economy.

Now there are also the negotiations about German power company E. ON joining the project. But they are not finished yet. Before, both have informed about the progress achievement in the assets exchange negotiations and about the assets list formation that E.ON can offer to exchange for the hydrocarbons production project in Russia. It can be either power stations in different countries of Western and Central Europe or underground gas storage (UGS).