Russia’s largest independent gas producer Novatek has signed a five-year deal to supply natural gas for leading steel producer Severstal, the companies said in a statement on Tuesday.
“The natural gas supply contracts have been signed for a period of five years effective from January 1, 2013, with the total volume of natural gas supplied over this period estimated at approximately 12 billion cubic meters,” the statement said.
Under the contracts, Novatek will supply natural gas to Cherepovets Steel Mill, Severstal-metiz (Cherepovets) and Severstal SMC (Kolpino).
“The conclusion of these gas supply contracts is another step in the implementation of the company’s commercial strategy, providing for the increase in the proportional share of end-customers in our total sales mix. Severstal is a reliable gas consumer and we are happy to establish partnership between our companies,” Novatek CEO Leonid Mikhelson said.
“This contract supports Severstal’s strategy to diversify supplies in order to strengthen the company’s financial stability,” Severstal Russian Steel’s Alexander Grubman said.
Experts say the deal is advantageous for Novatek, which has no direct access to the export pipelines controlled by gas monopoly Gazprom.