Contract for TPP Construction in Pancevo Signed

October 31, 2017

A contract for construction of a thermal power plant (TPP) in Pancevo has been executed in Belgrad by TE-TO Pancevo and Chinese Shanghai Electric Group. The industrial and energy holding of Shanghai Electric Group has become the winner of the tender having started in July 2017. The tender participants included companies from Greece, Austria, Switzerland, and China. Shanghai Electric Group will be engaged in design, supply of equipment and materials, construction and installation works, personnel training, and Pancevo TPP commissioning. The tender committee assessed the technical and commercial offers submitted by the participants. The winner was determined based on the results of such assessment. The contract is signed by Aleksandr Varnavsky, the director of TE-TO Pancevo, and Yi Xiaorong, the President of Shanghai Electric Group. Pancevo CHPP is a combined cycle power plant intended for generation of electric and heat power from natural gas. The heat and electricity generated will be intended to cover the growing needs of Pancevo Refinery. The rest of the electrical power will be forwarded to the power system of Serbia. The start of construction is planned for Q2 2018, completion and commissioning of Pancevo CHPP — for Q4 2019. “Gazprom Energoholding, which is the Russian leader in heat generation, expands the geography of its projects. We have extensive experience of investment programs implementation in the energy sector in Russia. In the 10 recent years, our Group’s companies have implemented projects for construction and upgrade of power units whose total installed capacity approximates 8.5 GW, including in cooperation with the partners from the People’s Republic of China. The planned scope of investments in the project for TPP construction is about EUR 180 million, and the major part of them will be provided by Gazprom  Energoholding. We expect the new experience and joint work by the companies from Serbia, Russia, and China to result in a modern and reliable energy facility in Pancevo to be in demand in the long term and to contribute to development of the Serbian economy. I am sure successful implementation of the project will prove high competitive ability of collaboration between Russia and China in implementation of projects on the European energy markets among others”, says Denis Fedorov, General Director of Gazprom Energoholding LLC. Shanghai Electric Group will be engaged in design, supply of equipment and materials, construction and installation works, personnel training, and Pancevo TPP commissioning. “TPP construction in Pancevo is a project representing one more guarantee of energy stability in Serbia. Reliability of electrical and heat power supply to Pancevo Refinery and additional volumes of electrical power to be placed on the market wil ensure the required energy stability for the country’s citizens. I am proud that NIS is a part of this important project to confirm its status of the largest energy company in the region one more time”, states Kirill Tyurdenev, the CEO of NIS. “Use of modern heat and power cogeneration technologies in construction will provide for production of environmentally friendly energy. The total installed electric capacity will be 200 MW and the heat installed capacity will amount to 121 Gcal. The CHPP will be built within an unprecedentedly short period and the planned plant start-up is scheduled for Q4 2019”, states Aleksandr Varnavsky, the director of TE-TO Pancevo. Background: Gazprom Energoholding Gazprom Energoholding LLC is a specialized company (100% subsidiary of Gazprom PJSC) for management of Gazprom Group’s companies in the energy sector. Gazprom Energoholding is a leader in heat and electrical power production by heat generation companies in Russia and is among the TOP 10 European power producers. Gazprom Energoholding’s power plants generate about 16% of the total electric power in the Unified Energy System of Russia. Gazprom Energoholding is a leader if the heat supply market of Moscow region, which is the largest heat market globally. The main production companies of Gazprom Energoholding are Mosenergo PJSC, TGC-1 PJSC, OGC-2 PJSC generating electrical and heat power mostly from natural gas and coal (the total installed electrical capacity is about 39 GW) and MOEK PJSC, the largest heat supply company of Moscow region. NIS NIS is one of the leading vertically integrated energy companies in South-Eastern Europe. Its core includes exploration, production, and refining of oil and gas, sales of petroleum products, and implementation of projects in the petrochemical and energy sectors. Russian Gazprom Neft holds 56.15% of the share capital of NIS, while 29.87% of its shares are held by the Republic of Serbia. The rest of the shares are owned by individuals, the company’s employees and former employees as well as other minority shareholders. Shanghai Electric Group Shanghai Electric Group is one of the largest engineering companies actively involved in implementation of major projects in power plant construction all over the world. Shanghai Electric Group provides a wide range of services for construction of energy sector facilities and is a large manufacturer of equipment for the energy sector. TE-TO Pancevo TE-TO Pancevo d.o.o. Pancevo, a 100% subsidiary, to act as a Customer in the course of implementation of the Pancevo TPP construction project. In June 2015, the Shareholders’ Agreement between NIS a.d. Novi Sad and Centroenergoholding OJSC (owned by Gazprom Energholding) on establishent of the joint company to implement the project for CHPP construction was signed at St. Petersburg International Economic Forum.  Based on this document, Centroenergoholding OJSC holds 51% of the shares in the joint venture, while NIS holds 49%.