Novatek Signs Gas Supply Agreement with MMK

Russian independent Novatek has signed a deal with Russian steel producer MMK, to supply 50 billion cubic metres of gas over a 10.5 year period. 

The agreement, which was signed between the two companies yesterday, will run until the 31st of December of 2022. Novatek will supply MMK with 2.3 billion cubic metres of gas for the second half of this year, with this amount rising to 4.5 billion cubic metres for the whole of next year.

The amount of gas agreed massively increases the amount already supplied to MMK from Novatek, which had previously peaked at 0.5 billion cubic metres.

"In 2003, Novatek began to supply natural gas to MMK with an annual volume of 500 million cubic meters of gas," Deputy General Director of MMK, Vitaly Bakhmetyev said. "The contract we have signed today meets the interests of both parties and ensures the energy security of MMK Group for more than 10 years. Novatek is a reliable partner and we are happy to establish long-term bilateral relations between our companies."

Novatek described the deal as "precedent-setting", saying the agreement would change the face of its relationship with its customers.

"The execution of the 10-year gas supply contract with MMK sets a new precedent in consumer-supplier relations, enabling both companies to establish and implement our respective production plans on a mutually beneficial basis over a long-term perspective," Novatek’s First Deputy Chairman of the Management Committee, Mikhail Popov said.

"Our marketing policy is aimed at building stable relationships with our partners, and Novatek's resource base allows us to guarantee the reliability of natural gas deliveries." 

Novatek is the largest independent producer and supplier of gas in Russia, coming second in Russian gas supply only to Gazprom.