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SPP and Gazprom sign 10-year gas transit deal

The governments of Russia and Slovakia on April 29 signed a series of contracts aimed at enhancing the supplies and flow of Russian natural gas through Slovak territory to central and eastern Europe.
In a signing ceremony as part of an official two-day visit by Russian Prime Minister Viktor Chernomyrdin, the Russian and Slovak gas distribution companies, Gazprom and Slovenský Plynárenský Priemysel (SPP), respectively, signed a 10-year contract to form a joint-venture to manage deliveries of Russian gas above contracted quotas to western Europe.
"This is the first long-term treaty we have concluded with any state; it goes to the year 2008 and contains clauses for future prospects," Chernomyrdin said at a news conference with Slovak Prime Minister Vladimír Mečiar arranged at the Slovak oil refinery Slovnaft. "This contract means the full coverage of Slovakia's consumption to the year 2008."

The governments of Russia and Slovakia on April 29 signed a series of contracts aimed at enhancing the supplies and flow of Russian natural gas through Slovak territory to central and eastern Europe.

In a signing ceremony as part of an official two-day visit by Russian Prime Minister Viktor Chernomyrdin, the Russian and Slovak gas distribution companies, Gazprom and Slovenský Plynárenský Priemysel (SPP), respectively, signed a 10-year contract to form a joint-venture to manage deliveries of Russian gas above contracted quotas to western Europe.

"This is the first long-term treaty we have concluded with any state; it goes to the year 2008 and contains clauses for future prospects," Chernomyrdin said at a news conference with Slovak Prime Minister Vladimír Mečiar arranged at the Slovak oil refinery Slovnaft. "This contract means the full coverage of Slovakia's consumption to the year 2008."

The amount of gas to be supplied under the contract was not revealed, but the Russian firm supplied virtually all of Slovakia's six billion cubic meter consumption in 1996.

Mečiar said the two countries were also in talks over further cooperation in the energy sector, including crude oil exploration, sales and refining. "Slovnaft will be included in these possible deals," Chernomyrdin added.

SPP and Russia's Gazexport meanwhile concluded long-term deals on natural gas supplies to Slovakia and on the supplies the joint-venture will transfer.

Plans for the Russian-Slovak gas joint venture, which still has no formal name, initially sparked controversy when announced at the beginning of the month, as Slovak opposition deputies in parliament fiercely criticized the project, saying it would lead to heavier reliance on Russia by Slovakia.

The Slovak government rejected the criticism and forged ahead with the plan, arguing the proposed 50-50 joint venture would help Slovakia retain its position as one of the world's largest gas transporters.

SPP already manages transit of Russian gas to western Europe, which last year totalled around 80 billion cubic meters. The pipeline, which began operation in April 1971, serves 10 major consumers in central and western Europe. Gazprom pays for the transfer by supplying about four billion cubic meters of gas to Slovak consumers, which covers about two-thirds of domestic annual consumption.

In the days leading up to Chernomyrdin's visit and even while the Russian premier was here, SPP officials were saying that no deal would be finalized. "Contract talks on the creation of a joint venture are still ongoing, but the two sides will sign only a letter of intent on a future contract," SPP's new director, Ján Ducký was quoted by the Národná Obroda daily as saying on April 27.

But Chernomyrdin told Národná Obroda two days later he wanted nothing less than a full contract. "We have an interest in an agreement with results, and not one that is an agreement about an agreement," he said.

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