Irkutsk Government, TNK-BP Sign Cooperation Deal

The administration of the Irkutsk Region and TNK-BP recently signed a Social and Economic Cooperation Agreement. The purpose of the agreement, signed on December 19, 2006, is to develop stable, mutually advantageous bilateral relations on a long-term basis.

Cooperation between the Irkutsk region and TNK-BP targets further development and diversification of the region's industry and social infrastructure, creation of jobs and raising the living standard of the people of the region. TNK-BP committed to finance environmental and conservation activities, provide sponsorship and social investment in the areas where it operates.

"We are interested in investors who have a strategic vision of their presence in the Irkutsk region," said Irkutsk Governor Alexander Tishanin. "We had a chance to see that TNK-BP entered our region with serious intentions and for a long time. The agreement we signed today will give a new impetus to our cooperation. We expect that in 2007—2008 the company will invest about 2 billion rubles in the Irkutsk oil and gas sector. Next year another 100 million rubles will be spent on environment and approximately 40 million rubles will go towards solving the Region's social and economic issues."

The agreement envisages establishing a major new center of oil production in the north of the Irkutsk Region. The Verkhnechonskoye oil field is the core of this project. The parties agreed to establish a joint standing Working Group to develop optimal solutions to issues arising in the course of the pilot development of the Vekhnechonskoye field. Investment in field development in period of 2006—2009 may exceed $900 million.

The Agreement stipulates that the Administration of the Irkutsk Region and TNK-BP implement the regional gasification project. The total amount of capital spending in 2006 -2009 may reach $650 million. The agreement also envisages steps to facilitate formation of a regional market for gas distribution and heating services in the region.

"Development of the Irkutsk region is an integral part of the future economic well-being of East Siberia and the whole of Russia," said Victor Vekselberg, Executive Director Gas Development, TNK-BP. "TNK-BP's capabilities will help bring these plans to fruition."