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Putin to order Energy Ministry to improve regulatory framework for gas market

November 19, 2012, 18:10 UTC+3

This issue was raised by NOVATEK CEO Leonid Mikhelson at a meeting with Putin

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NOVO OGAREVO, November 19 (Itar-Tass) — President Vladimir Putin will instruct the Energy Ministry and Gazprom to consider improving the regulatory framework for the development of the lower-tier segment of the domestic gas market.

This issue was raised by NOVATEK CEO Leonid Mikhelson at a meeting with Putin on Monday, November 19.

“The lower-tier segment of our gas market still operates by resolutions that were issued 20 years ago and that do not reflect the present state of affairs… if small enterprises or small and medium-sized business want to get gas, they have to spends a year and a half or up to three years for that,” Mikhelson said.

“State your proposals in writing and I will ask our colleagues at the Energy Ministry to work on them together with Gazprom,” Putin replied.

Mikhelson also briefed the president on NOVATEK’s performance statistics. “We will sell about 60 billion cubic meters of gas this year and, with the purchases from SIBUR, we plan to bring this amount to 70 billion cubic metres next year,” he said.

NOVATEK is Russia’s largest independent natural gas producer and the second-largest natural gas producer in the country after Gazprom. The company is principally engaged in the exploration, production, processing and marketing of natural gas and liquid hydrocarbons and has over 17 years of operational experience in the Russian oil and natural gas sector. In 2011, it accounted for about 8 percent of the natural gas produced in Russia, providing approximately 15 percent of total natural gas deliveries through underground gas storage facilities to the domestic market.

NOVATEK’s core strategy is to maintain its position as the leading independent natural gas producer in Russia, based on reserves and production, by increasing our hydrocarbon production on a sustainable and profitable basis, while efficiently expanding our hydrocarbon resource base, optimising its marketing channels and exploring complementary and value added projects. The company supplies natural gas to Russia’s domestic market and is focused on meeting the anticipated growing demand in Russia.

Exploration, development, production and processing of natural gas and liquid hydrocarbons are primarily conducted within Russia and the company’s main operating fields are concentrated in the Yamalo-Nenets Autonomous Area, which is the most significant gas producing region in Russia, accounting for approximately 83 percent of Russia’s natural gas production and approximately 16 percent of global natural gas production.

NOVATEK’s three core fields—Yurkharovskoye, East-Tarkosalinskoye and Khancheyskoye—accounted for about 64 percent of its total proven reserves, as of 31 December 2010, and 99.7 percent of the company’s production volumes in 2010. NOVATEK also holds licenses for prospective fields and license areas located in the Yamalo-Nenets Autonomous Area and acquired a 50 percent interest in a concession for an offshore block in Egypt in 2007.

The company is currently required to sell 100 percent of its natural gas to customers in Russia. Its customers are primarily power generation companies, industrial users, regional gas distributors and wholesale gas traders.


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