GAZPROM PLANS TO ACQUIRE PART OF A LATVIAN GAS COMPANY

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MOSCOW, March 31 (RIA Novosti) - Gazprom plans to buy 9% of Latvijas Gaze, a Latvian natural gas company, from an Itera subsidiary, a Gazprom press release says.

This issue will be submitted to the board of directors of Gazprom for consideration.

Annually, Gazprom supplies about 1.15 billion cubic meters of natural gas to Latvia.

Purchase, transportation, storage and distribution of natural gas in Latvia are the main directions of Latvijas Gaze's activity. Latvijas Gaze owns the Inchukalnskoye underground natural gas storage (PHG) facility. Natural gas from the facility is supplied to consumers in the Novgorod and Pskov Regions (northwestern Russia, about 1 billion cubic meters of natural gas a year), as well as in Latvia and Estonia.

The Inchukalnskoye PHG has a 4 billion cubic meter capacity, the capacity is planned to be increased to 5 billion cubic meters by 2005.

There are currently 39.9 million shares of Latvijas Gaze: 25% + 1 share belong to Gazprom, 35.6% belong to Ruhrgas AG, 25% + 701 shares belong to OOO Itera-Latvia, 11.5% belong to E/ON Energie, 2.9% belong to minority shareholders, and 117 shares belong to Latvia's government.

On July 9, 2002 Gazprom and MGK Itera signed an agreement of intentions (for a term of three years) aimed at regulating mutual relations, obligations and settlements. The document, in particular, provides for repayment of the MGK Itera's debt to Gazprom for the natural gas transportation services through the sale of 9% of Latvijas Gaze. In pursuance of this agreement, Gazprom and Itera-Latvia signed a conditional contract for purchase of the block of shares (until respective permissions are received).

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