July 18, 2008

Sakhalin-1 to Sell More Gas to Russian Far Eastern Regions

GORKI, Moscow Region. July 18 (Interfax) - Sakhalin-1, a consortium set up to locate and produce oil and natural gas on Russia's Sakhalin island and immediately offshore, will additionally sell 1.5 billion to 2 billion cubic meters of natural gas to Russian Far Eastern regions, Deputy Prime Minister Igor Sechin said on Friday.

Russia's natural gas monopoly Gazprom (RTS: GAZP) and oil company Rosneft (RTS: ROSN) have signed an agreement on "interaction in the supply of gas for Far Eastern regions," Sechin said at a meeting with Russian President Dmitry Medvedev in reporting work done to fulfill the task of helping Far Eastern regions set by Medvedev at a conference in Khabarovsk in February on development proposals for those territories.

The measures the agreement prescribes include "elimination of earlier contradictions,""interaction between the parties to modernize the current gas transportation system" and "interaction in negotiations with the Sakhalin-1 project consortium," Sechin said.

"A basic agreement has been reached with the consortium on the sale of extra volumes of 1.5 to 2 billion cubic meters of gas produced under the project at a price not lower than volumes that have been contracted," he said.

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