Over 11 to 12 November, Gazprom’s delegation led by Alexander Ananenkov, Deputy Chairman of Gazprom’s Management Committee was on a business trip to the Republic of Daghestan, paying a visit to the Kizlyar, Kaspiysk and Makhachkala-based production facilities.

The town of Kizlyar hosted the inauguration of a link between the Makat – North Caucasus and Mozdok – Kazimagomed pipelines.

The ceremony was attended by Magomedali Magomedov, Chairman of the Daghestani State Council.

At a rally held within the ceremony it was emphasized that the link was both a key component of Russia’s United Gas Transmission System and a substantial factor for reinforcing social equilibrium in the South Federal District.

Gazprom and the Daghestani Government sealed an Accord on gas supply.

In pursuance of the Accord, the parties will develop and endorse an investment project for gas deliveries to Daghestan, encompassing a feasibility study, general scheme of gas supply and economic viability report for the gas pipelines under construction and stipulating measures for the loading of existing and new gas facilities.

A stage-by-stage gas supply program will be developed and financing sources & scheme will be identified on the investment project platform.

The Accord emphasizes the need of developing regional energy conservation and conversion-to-gas motor fuel programs.

While annually drafting the Republican budget, the Daghestani Government will earmark finance for providing timely and full payments for gas deliveries to budget-financed bodies and offsetting natural gas rebates given to eligible consumers.

On its part, Gazprom will provide natural gas to Daghestani customers in a predetermined amount provided there is spare UGTS capacity available and gas deliveries are paid up in full. The Company will consider potential acquisition of Daghestan-owned gas pipelines and other gas facilities including by writing off the budget-sponsored firms’ debt for the gas supplied.

The town of Kaspiysk hosted a meeting between Gazprom’s top managers and Kaspiygazprom’s team.

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Running via the Kumli – Kizlyar – Babayurt - Aksai route, the link between the Makat – North Caucasus and Mozdok – Kazimagomed gas pipelines is about 115-km-long, has a 1,020mm diameter, 8.5/bcm annual throughput capacity and includes a gas disposition terminal and gas purification facility.

A Gazprom’s wholly-owned subsidiary, Kaspiygazprom is servicing an over 1,400-km-long gas transmission network in the Republic of Daghestan, including a total of some 650 km of the Mozdok – Kazimagomed and Makat – North Caucasus gas mains. Kaspiygazprom has 21 business units including five pipeline operation & maintenance outlets.

Along with transmitting natural gas and channeling it to Daghestani consumers, Kaspiygazprom transits gas to Azerbaijan, takes part in erecting gas facilities in Daghestan’s rural area and turns out industrial & technical products.

At present, Gazprom and the Government of the Republic of Daghestan are building cooperation pursuant to the Agreement signed in September 2003.

The natural gas infrastructure in Daghestan is developed by 69 per cent of maximum gas demand, including by 95.2 per cent in cities, towns & localities and by 51.2 per cent in rural area. The identical Russia-averaged parameters account for 53, 60 and 34.7 per cent, respectively.

Last year, Gazprom provided Daghestani consumers with 2.2 bcm of gas.