The Government of the Republic of Slovenia and the Government of the Russian Federation, hereinafter referred to as the Parties,
– Aiming to facilitate the development of mutually beneficial cooperation in the field of energy and, inter alia, in ensuring stable supplies of natural gas from the Russian Federation to the Republic of Slovenia and other European countries,
– Seeking to enhance energy security of the Republic of Slovenia and the Russian Federation, as well as other European countries, by diversifying the routes of supply of natural gas to European markets, and in order to positively influence the economic development,
– Supporting the construction of a new gas pipeline system to transit and supply natural gas to European countries,
– Wishing to create conditions for the design, construction and operation of the aforementioned gas pipeline system in accordance with the law of the states of both Parties and the international agreements to which the Republic of Slovenia and the Russian Federation are participants,
– Taking into account the Convention between the Government of the Republic of Slovenia and the Government of the Russian Federation for the avoidance of double taxation with respect to taxes on income and capital signed on 29 September 1995 and the Agreement between the Government of the Republic of Slovenia and the Government of the Russian Federation on the promotion and reciprocal protection of investments signed on 8 April 2000,
have agreed as follows:
Article 1
The terms used in this Agreement shall have the following meaning:
– ”gas pipeline system” means a new pipeline system to transit and supply natural gas from the Russian Federation via the Black Sea and the territories of other countries representing a potential additional supply of natural gas to the Republic of Slovenia;
– ”gas pipeline” means a new gas pipeline as a part of the gas pipeline system on the territory of the Republic of Slovenia;
– ”project” means the design, construction and operation of the gas pipeline;
– ”existing gas pipeline” means the natural gas transmission network on the territory of the Republic of Slovenia, which is owned and/or managed by Geoplin plinovodi, Ltd., on the date of the start of the operation of the gas pipeline system;
– ”founders” means “Geoplin plinovodi, Ltd.” (Republic of Slovenia) (hereinafter referred to as the Slovenian founder) and the joint stock company ”Gazprom” (Russian Federation) (hereinafter referred to as the Russian founder);
– ”company” means the company incorporated in the Republic of Slovenia by the founders to design, construct and operate the gas pipeline;
– ”feasibility study” means the study before designing of the gas pipeline, carried out by the founders with a view to determine technical, environmental, economic and financial feasibility of the construction of the gas pipeline and/or assess the viability of utilisation of the existing gas pipeline for the implementation of the project.
Article 2
The company shall conduct its activities on the territory of the Republic of Slovenia in accordance with the law in the Republic of Slovenia, including applicable requirements for transmission system operators (in particular their certification), and this Agreement.
The company shall own the gas pipeline as well as other assets and facilities constructed and/or acquired by the company in the process of its business activities.
The said property of the company shall not be expropriated, nationalised or subjected to measures resulting in consequences equal to expropriation or nationalisation, except if these measures are necessary in respect of the land needed for the construction of public infrastructure in the Republic of Slovenia, without damage for the project and subject to prompt, adequate and effective compensation.
Article 3
The founders shall have the following shares in the company's registered capital:
– the Slovenian founder – 50 per cent;
– the Russian founder – 50 per cent.
Prior to the establishment of the company, all agreed expenditures associated with the project, including the feasibility study costs, shall be borne by the founders in proportion to their shares indicated above.
After the establishment of the company, each founder shall ensure independently the funding of the company’s activities in accordance with its share in the company’s registered capital.
New shareholders may accede to the company. The founders shall jointly decide upon these matters on the basis of the principle of corporate governance. Any decision by Slovenian founder in this regard requires prior agreement of Slovenian Party.
Article 4
The Parties proceed from the agreement that the gas pipeline shall have annual transmission capacity around 8 billion standard cubic meters of natural gas. The parameters of the gas pipeline and necessary infrastructure, account taken of the possibility of utilisation of the existing gas pipeline, shall be specified by the founders in detail on the basis of the results of the feasibility study. The founders shall jointly decide on establishing the company, designing and the construction of the gas pipeline on the basis of these results.
On the proposal of the company, the Slovenian Party shall adopt a decision on the route of the gas pipeline on the territory of the Republic of Slovenia as soon as possible in accordance with the law in the Republic of Slovenia and taking into account the Spatial Development Strategy of the Republic of Slovenia.
Article 5
The Parties proceed from the agreement that the founders shall prepare the feasibility study by 30 June 2011 at the latest. The founders shall adopt a decision on constructing the gas pipeline not later than 27 months after the date of the receipt of the concluded feasibility study and based on its results.
One of the preconditions for the beginning of the gas pipeline construction is conclusion of long-term contract for transmission of volumes of natural gas in accordance with the Article 4 of the present Agreement through the gas pipeline, between the company and the Russian founder or a legal entity designated by the Russian founder.
Article 6
The Parties shall make every reasonable effort to ensure that the gas pipeline system is identified as a Trans-European Energy Networks project in order to utilise all the advantages granted to such gas transmission projects.
Article 7
The Slovenian Party shall provide all necessary assistance in obtaining an exemption from third party access and tariff regulation rules regarding the capacity of the gas pipeline and from unbundling of transmission systems and transmission systems operators’ rules, in order to ensure realization of the project.
Subject to obtaining the exemption referred to in this Article (if and when required by the law in the Republic of Slovenia):
– the functions of the gas pipeline’s transmission system operator shall be performed by the company;
– tariffs for utilisation of the gas pipeline are set by the company in accordance with the law in the Republic of Slovenia.
The right to allocate the capacity of the gas pipeline in accordance with the law in the Republic of Slovenia shall belong to the company.
Should the founders decide to utilise the existing gas pipeline for transit of natural gas in accordance with the Article 4 of the present Agreement, the Russian founder or a legal entity designated by the Russian founder and a relevant transmission system operator shall conclude a long-term gas transportation contract for transportation of the agreed volumes of natural gas through the existing gas pipeline.
Article 8
The Slovenian Party shall ensure all necessary conditions for full and unrestricted transportation of natural gas through the gas pipeline and, if relevant, the existing gas pipeline in accordance with the contracts concluded.
The Russian founder shall provide additional natural gas supplies from the Russian Federation to the Republic of Slovenia via the gas pipeline system and, if relevant, the existing gas pipeline, on market conditions.
Article 9
Each Party shall provide support to the founders and the company in obtaining, under the conditions prescribed by the law of its state, all necessary permits and approvals related to the implementation of the project, as well as to the supplies of required machinery and equipment, construction works and other services required for the implementation of the project.
The company shall select contractors, suppliers of material and technical resources and organizations providing services necessary for the implementation of the project on the basis of tender procedures.
The Parties shall, in accordance with the law of the states of the Parties, ensure simplified procedures to cross the borders of the states of the Parties for experts, materials, construction and assembly equipment necessary for the implementation of the project.
Article 10
The Slovenian Party ensures conditions, which enable the company to acquire all the necessary permits for the construction and operation of the gas pipeline, including the land-use rights, in accordance with the law in the Republic of Slovenia.
Article 11
In order to increase the economic efficiency of the implementation of the project, the Slovenian Party shall grant the company the most favoured customs and tax treatment under the law in the Republic of Slovenia, in particular the acceleration of the procedures of the refund of the value added tax paid on goods and services, necessary for the construction and operation of the gas pipeline.
Article 12
Taxation of the business of the company, founders and contractors involved in the project shall be implemented in accordance with the law of the Party’s state on the territory of which this business is being conducted.
Taxation of the business of the company, the founders and contractors involved in the project will be based on the principles of non-discrimination, fairness and treatment transparency. With respect to the mentioned taxation, the Slovenian Party shall grant the company, founders and contractors involved in the project the most favoured tax treatment in accordance with the law in the Republic of Slovenia and will not impose new specific taxes that would apply specifically to the project only.
However, if subsequent changes of the law in the Republic of Slovenia in the field of taxation would result in a higher tax obligation of the company, the Slovenian Party shall promptly, adequately and effectively compensate the company for the difference between the amount of the after-tax profit, which would have been obtained before changes of the law in the Republic of Slovenia in the field of taxation or the amount of the reasonable after-tax profit in this sector, whichever of these amounts is lower, and the amount of the reduced after-tax profit actually obtained after changes of the law. Such compensation shall be in accordance with the state aid rules applicable in the Republic of Slovenia.
For the purposes of this Article “reasonable after-tax profit in this sector” means the average return on capital in the sector of transmission system operators of natural gas in the European Union, taking into account calculation of return generated by comparable projects for the last three years for which data are available.
For the purposes of this Article “a higher tax obligation of the company” means the imposition of new taxes, charges and duties and/or other similar payments and/or increase in tax rates and in the amount of charges and duties and/or other similar payments.
This Article shall only apply to the taxation of activities related to the implementation of the project.
Article 13
The designated authorities for the implementation of this Agreement shall be as follows:
– for the Slovenian Party – the Ministry of the Economy of the Republic of Slovenia;
– for the Russian Party – the Ministry of Energy of the Russian Federation.
In the event of alteration of their designated authorities, the Parties shall immediately notify each other thereof through diplomatic channels.
Article 14
Should any circumstances arise that prevent any of the Parties from fulfilment of its obligations, or should any controversies arise concerning this Agreement, the designated authorities of the Parties shall conduct consultations for the purpose of reaching mutually acceptable decisions to overcome the said circumstances or controversies and to ensure the performance of this Agreement.
Controversies between the Parties with regard to the interpretation and/or application of the provisions of this Agreement that may not be reconciled through consultations between the designated authorities shall be resolved by way of negotiations between the Parties recorded in the relevant minutes.
Article 15
The provisions of this Agreement shall not affect the rights and obligations of each Party arising from other international treaties to which its state is a party.
This Agreement shall not affect the rights and obligations of the state of either Party arising from membership to a regional economic integration organisation.
The invocation of this Article by either Party under this Agreement is without prejudice to:
– Compliance with the obligations of this Party under this Agreement, if and to the extent that the circumstances which caused such an invocation and which prevent this Party to implement obligations in question no longer exist;
– Compensation by this Party for any material loss caused by its act or omission based on such an invocation to another Party or the company. The material loss shall not exceed the amount of the direct investment in the project that has not been returned through its utilization.
Article 16
The Parties shall not be held liable for the obligations of the company and its founders arising from the participation in the project.
Article 17
This Agreement shall enter into force on the first day of the month following the receipt by the Parties through diplomatic channels of the last written notification of the completion by the Parties of their respective internal procedures required for its entry into force and shall remain in force for 30 years.
After the expiration of this period, the present Agreement shall be automatically extended for subsequent 5-year periods unless one of the Parties notifies the other Party of its intention to terminate the Agreement no later than 9 months before expiration of the relevant period. Such written notification shall be forwarded through diplomatic channels.
In the event of founders not reaching a positive decision on constructing the gas pipeline by 1 October 2013, this Agreement shall cease to exist except if agreed otherwise by the Parties.
The provisions of this Agreement may be amended by written consent of both Parties. Any amendment to this Agreement shall enter into force in accordance with paragraph 1 of this Article.
Termination of this Agreement shall not affect the implementation of obligations under agreements (contracts) concluded within the framework of this Agreement while it was in force.
Done in Moscow on November 14, 2009 in duplicate in the Slovenian, Russian and English languages, all texts being equally authentic. In case of any differences in interpretation of the provisions of this Agreement, the English text shall be used.
For the Government of For the Government of
the Republic of Slovenia the Russian Federation
Matej Lahovnik (s) Sergey Shmatko (s)