NOVATEK signs 11.5-year gas supply contracts with two Mechel enterprises
CHELYABINSK. July 17. (Interfax) - LLC NOVATEK-Chelyabinsk has signed gas supply contracts with two enterprises belonging to Russian mining and steel company Mechel - OJSC Chelyabinsk Metallurgical Plant (ChMK) and OJSC Urals Stampings Plant, the NOVATEK subsidiary said in a statement.
The contracts were signed for 11.5 years until the end of 2023, which is NOVATEK's longest contract to date. Throughout that period, gas supplies will top 17 billion cubic meters (bcm).
Under the contract, NOVATEK-Chelyabinsk will supply ChMK and Urals Stampings Plant with 0.7 bcm of gas in the second half of this year. In 2013, it will deliver 1.5 bcm of gas to the two enterprises.
In the near future, the NOVATEK subsidiary expects to enter into gas contracts with another two Mechel enterprises, the statement said.
"The basis for the contract with the enterprises in Mechel's metallurgical segment was a newly developed public contract that offers transparent conditions for gas supplies to the Chelyabinsk region. It fixes new approaches to price formation and adjustments in consumption volumes," the statement said.
According to information on NOVATEK-Chelyabinsk's website, the terms of the gas delivery contracts with industrial consumers in the Chelyabinsk region involve a monthly 100% advance payment of the planned cost of the gas, calculated as the product of monthly gas volumes and the gas price, including payment for distribution and logistical support services, before the 25th of each month preceding the month of gas delivery. The supplier will recalculate the price based on actual calorific value once a month in accordance with the gas' passport of quality.
In addition, pursuit to a contract it previously signed with OJSC Magnitogorsk Iron & Steel Works (MMK) , NOVATEK-Chelyabinsk will supply the company with 2.3 bcm of gas in the second half of this year. Next year, it will deliver 4.5 bcm of gas to MMK.
NOVATEK finished consolidating 100% of LLC Gazprom mezhregiongaz Chelyabinsk through its subsidiaries last December. This purchase allowed the gas major to provide for 100% of the Chelyabinsk region's gas needs starting in 2012. Each year the region uses about 15-16 bcm of gas.
Gazprom mezhregiongaz Chelyabinsk was recently merged to NOVATEK-Chelyabinsk.
