22.01.03

Antimonopoly Committee Approves Creation Of International Gas Consortium

The Ukrainian Antimonopoly Committee has approved creation of a company named “International Consortium for Management and Development of the Ukrainian Gas Transportation System” by Ukraine’s state-owned Neftegaz Ukrainy company and Russia’s Gazprom gas company.

The Antimonopoly Committee approved creation of the consortium at the pre-investment stage, during which the consortium will draft feasibility studies for an international project for management of Ukrainian gas pipelines.

This stage is expected to be completed not later than 2003.

Presently, Neftegaz Ukrainy and Gazprom plan to submit documents for registration of the consortium, which will be registered in Kiev as a limited liability society with a statutory capital of USD 1 million.

Neftegaz Ukrainy and Gazprom will each contribute USD 0.5 million to the company’s statutory capital.

Ukraine’s Prime Minister Anatoly Kinakh and Russia’s Prime Minister Mikhail Kasyanov signed an agreement on Ukrainian-Russian strategic partnership in the gas industry in Kishinev (Moldova) on October 7, 2002. The agreement provided for creation of this consortium.

This agreement on creation of the consortium is a framework agreement that provides for subsequent approval of the feasibility studies for creation of the consortium and adoption of founding documents outlining the procedures for creation and the shares of the consortium’s founders in its statutory capital as well as the conditions under which other European gas companies will participate in the consortium.

Ukraine’s President Leonid Kuchma and Russia’s President Vladimir Putin reached agreement in June 2002 on Ukrainian-Russian joint management of the Ukrainian gas transportation system.

Germany, whose Chancellor Gerhard Schroeder participated in the relevant talks between Kuchma and Putin, has also stated its desire to participate in management of the Ukrainian gas transportation system.

Ukraine’s gas transportation system consists of 35,200 kilometers of major pipelines, 122 compressor stations, and 13 underground storage facilities.