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Mar 30, 2017

Russian Railways and Gazprom agree to joint construction of Northern Latitudinal Railway

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Russian Railways and Pubic Joint Stock Company Gazprom have signed an agreement on the joint implementation of an investment project to construct the Northern Latitudinal Railway (NLR) Obskaya - Salekhard - Nadym - Pangody - Novy Urengoy - Korotchaevo and its railway approaches.

The document was signed in Moscow on 30 March 2017 by Oleg Belozerov, President of Russian Railways, and Alexei Miller, Gazprom's Chairman of the Board.

The aim of the project is to provide for the transportation of freight from the mineral fields and deposits of the northern regions of Western Siberia and reduce the length of transport routes to Russia's ports in the country's northwest region.

The project will be implemented by attracting private investors under a concession scheme.

The main participants are Russian Railways, PJSC Gazprom and the Yamalo-Nenets Autonomous District, which will finance the facilities of their existing railway infrastructure, while the concessionaire will construct the new facilities.

In accordance with the agreement, PJSC Gazprom will establish a special subsidiary which will ensure the completion of the construction and the commissioning of its own 112-km railway line between Nadym - Pangody.

It is assumed that the Russian Federation will act as a concession provider, while the concessionaire will be a special project company (SPC Concessionaire) and subsidiary of Russian Railways. The SPC's shareholders may also be interested investors.

Under the concession agreement, the SPC Concessionaire will provide financing and construction and operate the Obskaya-Salekhard-Nadym line. In particular, the railway section of the bridge across the river Ob and its approaches and the new 353-km railway section Salekhard-Nadym will be built, as well as the railway section of the bridge over the Nadym river and its approaches.

Within the framework of its investment programme, Russian Railways will carry out the reconstruction of the adjacent sections of Konosh - Kotlas - Chum - Labytnangi at Northern Railways, including Ob station, and the railway line between Pangody - Novy Urengoy - Korotchaevo at Sverdlovsk Railways.

In turn, the administration of the Yamalo-Nenets Autonomous District will act as an investor in the construction of the automobile section of the bridge across the river Ob and provide the necessary project documentation.

Yamalo-Nenets will also transfer the plots of land needed for the construction of the line to federal property, ensure access for construction workers to water bodies and forest areas and provide deductions and benefits on property tax.

A corresponding agreement covering these issues was signed between Russian Railways and the Yamal-Nenets Autonomous District on 19 October 2016.

Construction work on the Northern Latitudinal Railway is planned to be carried out from 2018 to 2022.

The total length of the line is 707 km.

The projected traffic volume will amount to 23.9 million tons, consisting mainly of gas condensate and bulk oil cargoes.

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