OREANDA-NEWS. On 27 February 2009 was announced, that "ITERA and Uralsevergaz (Urals North Gas) employ responsible approach to the fulfillment of their obligations related to natural gas supply to the Sverdlovsk Region, which is the third largest consumer of natural gas among constituent entities of the Russian Federation", - stated Vladimir Makeyev, Chairman of the Board of Directors of CJSC Uralsevergaz, Chairman of the Management Board of ITERA Oil and Gas Company, LLC. Given the difficulties of economic development under the crisis conditions, we have adjusted the pricing policy and reduced considerably the gas price for industrial consumers. Should they make advance payments, gas would cost them 10.3 per cent less in the first quarter of this year as against that of last year. At that 40 per cent the total volume of gas supplied to the Region is intended for municipal and daily living needs. It is sold to industrial enterprises, power industry and housing and utilities infrastructure at FST tariffs, while 60 per cent of the gas is supplied for industrial needs at commercial prices below their market level".

ITERA jointly with CJSC Uralsevergaz (30 per cent the stock is owned by the Region Administration) have been supplying the whole of the ever growing gas demand of the economy and the social establishments of the Middle Urals since 1999. Annual natural gas consumption went up by 3.6 billion cu m, and cumulative volume of gas supplied was 172 billion cu m within the past ten years.

"There was not a single gas supply failure within the entire term of operation in the Region, - V. Makeyev stressed. Reliability and continuity of the gas supply is assured by the fact that much of the gas comes to the Region from fields developed by ITERA jointly with OJSC Gazprom.

ITERA Oil and Gas Company, LLC short term plan envisions that the gas-supply base of the Region should be expanded due to development of new gas resources, including the local ones. The Company bought rights to explore and develop Artinsky license area in the Sverdlovsk Region last May.

The Company is an active participant in the social and economic development of the Region: it finances provision of gas supply and power production projects, as well as projects related to other industries. It was at the expense of the Company that 60 modern gas-fired boiler houses, 188 km of high pressure off-take gas pipe lines and over 200 km of distribution network have been commissioned.

ITERA’s plan is to continue modernizing old power related facilities and to construct new facilities of a small-scale power generation, participating in implementation of energy-saving technology and equipment, including computer-aided systems for commercial record keeping of energy supply. A Complex Program for Re-equipping Heat Economy of the Region is currently underway. It is being implemented with the involvement of the Bank for development and foreign economic activity (Vnesheconombank), a State Corporation, Administration of the Region and ENECO, an energy related company (An ITERA Oil and Gas company affiliate). To achieve these goals Rub 5 billion is expected to be spent within the next two years alone.

ITERA had commissioned Vyisk Wood-working Combine in 2007. It is getting prepared for construction of a gas chemistry complex in Nizhniy Tagil. The capacity of the complex is 600 thousand tons of methanol a year. The Company is also involved in a number of other production projects.

ITERA and Uralsevergaz are active in sponsorship and charity efforts in the region. A Palace for Sport Games, a polyclinic for war veterans, a Spiritual and Enlightenment Center in Ekaterinburg have been constructed with these companies’ involvement. The purposeful support is provided to day-care centers, military subdivisions, organizations for war-veterans, medical, sporting and cultural organizations. Over Rub 500 million have been appropriated for these purposes.

"We are going to further the investment and charity potentialities of our presence in the Region, - Vladimir Makeyev pointed out. Considerable systematic indebtedness for gas interferes with the efficient operation of the Company and jeopardizes the energy safety of the Region".

The economic crisis and decline in production affected the volume of gas consumed and payments for gas supplied. The cumulative indebtedness by gas consumers of the Sverdlovsk Region in front of Uralsevergaz is Rub 4.6 billion.

OJSC TGK-9, the largest gas consumer in the region, a part of KES-Holding, was a debtor, too. This enterprise had settled the indebtedness for gas consumed in December of 2008 (Rub 617 million) on this February 10. All issues related to the settlement of indebtedness for January of 2009 and payments for gas to be supplied in 2009 have been settled by negotiations of Uralsevergaz and TGK-9.

The constantly growing indebtedness by enterprises of municipal housing and utilities infrastructure of the region remain a cause of special concern. This indebtedness has reached Rub 1.96 billion. Many debts have to be written off. Uralsevergaz has written off the indebtedness of bankrupt enterprises for an amount of Rub 180 million. Illiquid receivables of the Company are assessed as being in excess of Rub 500 million.

The plunge of payment by consumers of gas supplied by Uralsevergaz is a trend that affects ITERA Oil and Gas Company’s payments for gas and transportation of gas to the Middle Urals. In this situation the Company has to raise additional loans.

"There is no doubt that ITERA and Uralsevergaz would fulfill their obligations on continuous gas supply to the Region, implementation of other projects envisioned by the Cooperation Agreement between the Government of the Sverdlovsk Region and ITERA until 2015, - Vladimir Makeyev stressed. – A system for a reliable supply of gas to industry and social enterprises has been created in the Region. Attempts to destroy it would produce an extremely negative effect on the social and economic development of the largest industrial center of the country".