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EBRD and RAO Gazprom agree on investment cooperation to increase reliability and efficiency of gas supply
The Russian joint-stock company RAO GazProm, the world's largest gas producer, and the European Bank for Reconstruction and Development (EBRD) have agreed an investment cooperation programme aimed at increasing the reliability and export supply of gas for the period 1996-2000. Viatcheslav Sheremet, Vice Chairman of GazProm, and Guy de Selliers, EBRD Deputy Vice President, signed a memorandum of understanding last week in Helsinki which sets forth the areas of joint investment cooperation, principles of cooperation and financing, and priority projects of mutual interest.
The investment targets have been identified in an extensive independent reconstruction study on the Russian unified gas supply system which was organised by the EBRD in close cooperation with GazProm. The study, launched in 1993, has specified and prepared concrete investment projects worth US$ 3 billion related to more efficient utilisation of gas reserves, improved conditions and operations of pipelines and compressor stations, removal of transportation bottlenecks in the supply system, and the prevention of corrosion defects.
Implementation of these investments would cost US$ 500 million to US$ 700 million annually for 1996-2000, of which the EBRD could fund up to 35 per cent of the total project costs. Mr Sheremet and Mr de Selliers signed a mandate letter initiating a first GazProm investment project linked with the study recommendations, to be financed by the EBRD and other financiers.
The gas supply study was financed by several donor governments (Canada, France, Netherlands, Norway, UK and USA) and private sources and was executed by a consortium of 13 consulting firms from the donor countries in cooperation with Russian consulting and engineering firms led by IKEM. A high level Russian delegation from GazProm and engineering firms held meetings with the Western consultants and the EBRD from 26 June to 1 July to discuss and finalise the content and recommendations of the study to be incorporated in a Final Report in September. The meeting was hosted by major Finnish gas buyers and consumers including Gasum Oy of Neste Corp, Imatran Voima Oy, Helsinki Energy, Jaakko Poyry Group and FINNFUND.
GazProm has built a gas transport network of more than 140,000km of large diameter (up to 56") pipeline, and more than 250 compressor station complexes. This amounted to annual construction of more than 4000 km of large diameter pipelines for the last 20 years. GazProm produced in 1994 more than 600 billion cubic metres of natural gas, of which about 200 billion cubic metres was exported. GazProm is invaluable to the Russian Federation by earning foreign exchange amounting to more than US$ 9 billion in gas sales annually.
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