On 21 December 2006 OAO Gazprom issued its unaudited consolidated interim condensed financial information prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” (IAS 34) for the six months ended 30 June 2006.

A significant factor impacting the comparability of the consolidated financial information of Gazprom Group for the six months ended 30 June 2006 with the same period of 2005 was the acquisition in October 2005 of OAO Sibneft (from June 2006 – OAO Gazprom Neft). Higher oil and gas prices also significantly impacted results.

The table below presents the unaudited consolidated interim condensed statement of income for the six months ended 30 June 2006 and 2005. All amounts are presented in million Russian Roubles, unless otherwise stated.

	Six months ended 30 June
	2006		2005
Sales (net of excise tax, VAT and customs duties)	1,091,424		611,233
Operating expenses	(686,425)		(402,178)
Operating profit	404,999		209,055
Finance income	61,845		25,788
Finance expenses	(39,354)		(33,568)
Share of net income of associated undertakings and jointly controlled entities	16,968		8,943
Gains on disposal of available-for-sale financial assets	3,144		1,427
Profit before profit tax	447,602		211,645
Current profit tax expense	(112,355)		(51,081)
Deferred profit tax expense	(3,011)		(6,565)
Profit tax expense	(115,366)		(57,646)
Profit for the period	332,236		153,999
Profit for the period attributable to:
Equity holders of OAO Gazprom	321,491		152,810
Minority interest	10,745		1,189
	332,236		153,999

Sales (net of excise, VAT and customs duties) increased by RR 480,191 million, or 79%, to RR 1,091,424 million in the six months ended 30 June 2006 compared to the six months ended 30 June 2005. More detailed information on our sales for the six months ended 30 June 2006 and 2005 is presented in the table below.

in million RR (unless otherwise stated)	Six months ended 30 June
Sales of gas	2006	2005
Europe
Net sales (net of excise tax and customs duties)	428,262	287,143
Volumes in bcm	84.9	81.4
Gross average price, RR/mcm (including excise tax and customs duties)	6,944.2	4,876.1
FSU
Net sales (net of excise tax, VAT and customs duties)	102,559	45,797
Volumes in bcm	51.1	36.4
Gross average price, RR/mcm (including excise tax, customs duties and net of VAT)	2,312.4	1,490.6
Russian Federation
Net sales (net of excise tax and VAT)	191,064	163,016
Volumes in bcm	170.8	162.1
Gross average price, RR/mcm (including excise tax and net of VAT)	1,123.5	1,012.8
Total sales of gas
Net sales (net of excise tax, VAT and customs duties)	721,885	495,956
Volumes in bcm	306.8	279.9
Net sales of refined products (net of excise tax, VAT and customs duties)	209,737	67,686
Net sales of crude oil and gas condensate (net of excise tax, VAT and customs duties)	95,470	6,422
Gas transportation sales (net of VAT)	16,976	12,181
Other revenues (net of VAT)	47,356	28,988
Total sales (net of excise tax, VAT and customs duties)	1,091,424	611,233

Net sales of natural gas increased by RR 225,929 million, or 46%, to RR 721,885 million in the six months ended 30 June 2006 compared to the six months ended 30 June 2005. This increase was primarily due to higher European and FSU prices for gas as well as higher volumes of gas sold.

Net sales of natural gas to Europe increased by RR 141,119 million, or 49%, to RR 428,262 million in the six months ended 30 June 2006 compared to the six months ended 30 June 2005. This was primarily due to higher average prices for gas to European customers and the 4% increase in the volume of gas sold.

Net sales of natural gas to FSU countries increased by RR 56,762 million, or 124%, to RR 102,559 million in the six months ended 30 June 2006 compared to the six months ended 30 June 2005. The increase of sales in this segment is explained by higher average prices and higher sales volumes.

Net sales of natural gas in the domestic market increased by RR 28,048 million, or 17%, to RR 191,064 million in the six months ended 30 June 2006 compared to the six months ended 30 June 2005. This is explained primarily by increased average domestic price for gas established by the Federal Tariff Service, and increased volumes.

In the six months ended 30 June 2006, sales of refined products increased by RR 142,051 million, or 210%, primarily due to consolidation of Gazprom Neft as well as increased market prices for refined products in the six months ended 30 June 2006 compared to the six months ended 30 June 2005.

In the six months ended 30 June 2006, net sales of crude oil and gas condensate increased by RR 89,048 million. The increase of sales in this segment is explained by the consolidation of Gazprom Neft’s results for the six months ended 30 June 2006.

Operating expenses increased by RR 284,247 million, or 71%, to RR 686,425 million in the six months ended 30 June 2006 compared to the six months ended 30 June 2005 primarily due to the consolidation of Gazprom Neft’s results.

The increase in operating expenses included higher expenses on purchased oil and gas (RR 98,224 million, including Gazprom Neft - RR 38,571 million), higher taxes other than on income (RR 50,739 million, including Gazprom Neft - RR 41,489 million), higher expenses on transit of gas, oil and refined products (RR 30,621 million, including Gazprom Neft – RR 22,699 million), higher depreciation (RR 19,121 million, including Gazprom Neft – RR 18,612 million), higher expenses on goods for resale, including refined products (RR 19,929 million, including Gazprom Neft – RR 16,367 million) and higher staff costs (RR 16,608 million). In addition to the appearance of a new type of expense - “purchased oil” - due to consolidation of Gazprom Neft , the cost of purchased oil and gas increased on higher purchases of gas from Central Asia. The increase in taxes other than on income was primarily due to the consolidation of Gazprom Neft and changes in tax legislation related to natural resources production tax enacted from 1 January 2006. The increase in expenses on transit of gas, oil and refined products was primarily due to the consolidation of Gazprom Neft as well as a general increase in gas volumes sold to Europe and FSU customers and the growth of transit tariffs. The increase in the staff costs resulted from the increase in average base salaries and other payments and the increase in the average number of employees.

The profit tax increased by RR 57,720 million, or 100%, to RR 115,366 million in the six months ended 30 June 2006 as compared to the six months ended 30 June 2005. Our effective current profit tax rate for the six months ended 30 June 2006 was 25.8% compared to 27.2% for the six months ended 30 June 2005.

In the six months ended 30 June 2006 our profit for the period attributable to equity holders of OAO Gazprom totaled RR 321,491 million which is RR 168,681 million, or 110%, higher compared to the six months ended 30 June 2005.

Our net debt balance (defined as the sum of short-term borrowings, current portion of long-term borrowings, short-term promissory notes payable, long-term borrowings, long-term promissory notes payable and restructured tax liabilities, net of cash and cash equivalents and balances of cash and cash equivalents restricted as to withdrawal under the terms of certain borrowings and other contractual obligations) decreased by RR 126,716 million, or 16%, from RR 797,465 million as of 31 December 2005 to RR 670,749 million as of 30 June 2006. This decrease can be explained primarily by net cash repayments of long-term borrowings from increased cash inflow from operating activities and the effects of foreign exchange rate fluctuations.

More detailed information on the IFRS consolidated interim condensed financial information for the six months ended 30 June 2006 can be found here.