OREANDA-NEWS. December 9, 2011. Alexey Miller, Chairman of the Gazprom Management Committee held a meeting today in Minsk on the integration of Beltransgaz into Gazprom Group.

Taking part in the meeting were Deputy Chairmen of the Gazprom Management Committee: Andrey Kruglov, Head of the Department for Finance and Economics, and Sergey Khomyakov, Director General of the Corporate Security Service as well as Members of the Company's Management Committee: Oleg Aksyutin, Head of the Gas Transportation, Underground Storage and Utilization Department; Yaroslav Golko, Head of the Investment and Construction Department; Vlada Rusakova, Head of the Strategic Development Department; Nikolai Dubik, Head of the Legal Department; Vladimir Mayorov, Director General of Beltransgaz; heads and representatives from the specialized structural units of Gazprom and Beltransgaz.
It was highlighted that Gazprom was planning to significantly increase the efficiency of the Beltransgaz performance. Achieving that, the Beltransgaz corporate requirements, norms and standards should be in compliance with the ones adopted in Gazprom.
In this regard, the meeting participants discussed the current and future Beltransgaz production activity. It was stressed that the technical state of the Gazprom key assets was planned to be audited. Based on the audit results, there would be elaborated some proposals aimed to improve the efficiency of the gas transmission and the gas underground storage facilities as well as to adjust the Beltransgaz programs of diagnostics, capital overhaul and reconstruction in accordance with the relevant Gazprom programs. The parties also noted that the Beltransgaz technical requirements had to be brought in line with the Gazprom regulatory system.

The meeting participants addressed the Beltransgaz current marketing performance with regard to the agreements reached between Russia and Belarus in November 2011. The agreements identify the gas pricing terms for Belarus and the markup on gas sold to Belarusian consumers.
The parties reviewed the plans on the Beltransgaz development programs for three-year and ten-year periods as well as the General Scheme of Gas Supply of the Republic of Belarus.

The financial and economic data of the Beltransgaz performance was presented, including the plans of the company's integration into the Gazprom budgeting system and the formation of the investment program, taking into account the Gazprom requirements for cost optimization. The current issues of Beltransgaz accounting reports submission were also discussed.

A focus was placed on the Beltransgaz corporate management issues. It was underlined that Gazprom has a great experience in the corporate structure upgrade aimed at improving transparency and efficiency of the Company. The meeting participants also discussed personnel management issues, including wages, social benefits and guaranties with regard to the Gazprom corporate standards and the labor legislation of the Republic of Belarus.

Following the meeting results, the specialized structural units of Gazprom and Beltransgaz were tasked to ensure effective operation of Beltransgaz as part of Gazprom Group.
Background

Until December 31, 2011 (inclusive) the terms and conditions for Russian gas supply to and transmission across Belarus are defined by the gas supply and transit contract for 2007–2011 signed between Gazprom and Beltransgaz. The document prescribes that the gas price for Belarus is calculated under a formula (corresponding to the price formula for Russian gas supplies to Europe). Between 2008 and 2010 discount rates (0.67, 0.7 and 0.9 respectively) were used for determining the price.

On November 25, 2011 the Russian Federation Government and the Government of the Republic of Belarus signed:
— the Agreement on the prices (tariffs) formation procedure for natural gas supply to the Republic of Belarus and transmission via the gas pipelines located in the Republic of Belarus;
— the Agreement on the terms and conditions for shares purchase and sale, and further activities of Beltransgaz.

In furtherance of the above mentioned documents, Gazprom and Beltransgaz signed on November 25, 2011 contracts for gas supply to Belarus and gas transmission via the Republic for 2012–2014. In addition, Gazprom and the State Property Committee of the Republic of Belarus entered into the purchase and sale contract for a 50 per cent stake in Beltransgaz. Taking account of the 50 per cent stake in Beltransgaz acquired by Gazprom between 2007 and 2010, Gazprom became the owner of 100 per cent of Beltransgaz shares.