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November 8, 2005

Management Committee addresses preliminary operating highlights of Gazprom over 2005, major draft financial documents for 2006 and projections up to 2008

The Management Committee has heard a report on JSC Gazprom’s preliminary operating highlights, projected budget (financial plan) for 2005 and budget and cost optimization (reduction) program forecasts over 2007 to 2008.

The Management Committee endorsed the Company’s socioeconomic development plan over 2006.

The Management Committee gave its sanction to and decided to submit the Gazprom 2006 draft budget and cost reduction program for the Board of Directors’ approval.

The Gazprom 2005 budget and cost reduction program are expected to be executed fully in line with the target endorsed by the Board on 28 September of this year.

The draft socioeconomic development plan over 2006 stipulates 548 bcm of gas to be extracted, with the parent company’s revenues expected at RUR 1.7 trln.

The draft budget for 2006 and budget projections for 2007 and 2008 earmark RUR 1,889.3 bln, RUR 1,806.1 bln and RUR 1,904.4 bln, respectively, of overall income and revenues, RUR 1,980.2 bln, RUR 2,007.6 bln and RUR 2070.3 bln of liabilities, expenses and investments and yearly RUR 90 bln of financial borrowings between 2006 and 2008.

The draft cost optimization (reduction) programs over 2006 to 2008 incorporate measures to be resultant in RUR 11 bln, RUR 10.2 bln and RUR 9.8 bln saved.

The Management Committee addressed provisional results of the Company’s 2005 investment program execution and decided to approve a draft investment program for 2006 pending subsequent endorsement by the Board.

Under the 2006 draft investment program, total investments over 2006 stand at RUR 310.1 bln including RUR 278.42 bln and RUR 31.68 bln as capital and long-term financial investments, respectively.

With the Gazprom 2006 budget and investment program developed with so far no data on JSC Sibneft, the 2006 draft budget earmarks finance to settle the Sibneft deal by timely fulfilling obligations before a syndicate of banks.


When drafting its investment program for 2006, Gazprom has taken into account the following key development targets:

 - 548 bcm of gas production;

 - 195.6 bcm of gas exports including 151 bcm to West Europe;

 - providing the reliability and technological safety of the core businesses;

 - maintaining the required level of gas reserves;

 - meeting social priorities.

The top business priorities of Gazprom are as follows:

 - building up gas, condensate and oil reserves as scheduled;

 - commissioning prominent facilities incorporated in the capital construction projections for 2006;

 - initiating construction of key facilities to be brought into operation in 2007;

 - debottlenecking the United Gas Transmission System;

 - upgrading core gas extraction assets;

 - performing design and survey for prospective investment projects.

The Gazprom 2006 investment program encompasses the most crucial investment projects including those aimed at:

 - extracting gas (developing the Bovanenkovskoye, Kharasaveyskoye, Yety-Purovskoye, Vyngayakhinskoye, Yen-Yakhinskoye, Urengoyskoye, Zapolyarnoye, Yamburgskoye and other fields);

 - constructing and upgrading gas transmission capacities including the North-European, Northern Tyumen Region – Torzhok and Yamal-Europe gas pipelines, expanding the Urengoy gas transmission hub, etc.;

 - creating underground gas storage capacities;

 - creating gas processing capacities.

Over 2006, Gazprom is resolute to bring on stream 1,231.65 km of gas mains and branches, six compressor stations at gas pipelines and underground gas storage depots and a gas treatment unit as well as to hook up 178 wells on gas fields and 11 wells at UGS depots.

The capital investments are mainly intended for gas transmission projects, which account for some 60 per cent of the total investment amount.




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