2004
On January 13, in London, Gazprom received awards from International Financial Review for the best 2003 bond issue in Emerging Market Bond and EEMEA Bond nominations. These awards were for Gazprom’s 144A ten-year Eurobond issue for the amount of US$ 1.75 bln with the yield of 9.625 per cent. These Eurobonds were finally bought by more than 400 investors from the USA, Europe and Asia, and the demand was more than US$ 6.5 bln.
On January 15, the Gazprom Headquarters hosted a meeting on establishing a comprehensive manufacture & acceptance quality assurance system for the equipment purchased by the Gazprom Group of companies. The meeting resulted in setting up the Company’s operational structure for development of sectorial quality and business coordination system engaged in equipment quality control matters.
On January 16, the RF Government issued Order N64-r, in which the Government approved the RF Energy Ministry and Gazprom’s proposal (agreed with respective Russian Federal Executive bodies) on engineering the North-European Gas Pipeline (NEGP). Under the Order, the RF Energy Ministry had to prepare, jointly with Gazprom, documentation required for the NEGP construction. The RF Government commissioned the RF State Committee for Civil Construction (Gosstroy) and the RF Ministry of Natural Resources to provide, together with the interested Russian Federal Executive Bodies, public expertise of this documentation.
On January 22, in the course of the Gazprom Management Committee’s meeting a corporate budget (financial plan), money raising program, a program on cost reduction and investment tasks were approved for 2004. In 2004, borrowings were accounting for RUR 150 bln. So, debt repayment, including loans provided, debentures and bills issued, interest and coupon yield, was figured at RUR 166.2 bln. Balance of payments for 2004 was engineered with the RUR 30 bln costs reduction. Operating expenses and investments would be cut by RUR 20 bln and RUR 10 bln, respectively. Major costs reduction would be effected through new technology implementation and energy saving, non-core business optimization, current business and administrative expenditures cuts, construction expenditures reduction. The Management Committee approved the RUR 212.3 bln Gazprom’s investment program for 2004. Of this figure, capital expenditures were RUR 192.3 bln, long-term capital expenditures, RUR 20 bln. Gas transmission was a priority in the investment program with 54 per cent of total capital expenditures planned, in contrast to gas production with stubborn 26 per cent. The changes resulted in the RUR 10.76 bln corporate budgetary surplus.
On January 27, the Board of Directors considered information on the Company’s preliminary operating results for 2003 and approved the corporate Budget (Financial Plan), Investment Program and Cost Reduction Program for 2004. The Board of Directors commissioned the Company’s Management Committee to amend the Investment Program and Budget, in case Gazprom received additional income in the 1st half of 2004, and to submit relevant proposals for the Board of Directors’ approval. The Board of Directors also adopted a resolution to start elaborating the Company’s 3-year draft investment programs and budgets from 2004 onwards.
On January 28-29, the target range of the Engineering Troops of the Ministry of Defense hosted acceptance inspection of the Gazprom commission (set up under the Company’s order) of the first state snow and swamp-going vehicle SHSG-401. The car made enabled to transport cargo through hardly accessible places, snowy virgin soil, ground with low load bearing capacity, bogs and could be used at temperature from -40 to +40 degrees.
On February 3, Gazprom successfully issued ruble bonds A3 in amount of RUR 10 bln, at nominal price of RUR 1000 with 3 year maturity. Bond stipulated a coupon of 4 per cent from nominal price with payment each 180 days.
On February 4, within the meeting, the Board of Directors took into account information on the corporate gas pricing policy. The Gazprom Management Committee was commissioned to elaborate, jointly with relevant federal bodies, measures on improving corporate gas pricing (tariffs) fundamentals and on managing gas production and transportation subsidiaries’ expenditures.
On February 5, the celebrations on the occasion of the Adler - Krasnaya Polyana gas pipeline inauguration were held in the settlement of Krasnaya Polyana in the Adler district of the city of Sochi.
On February 9, the meeting of the Coordination Committee for cooperation of Gazprom and Siemens AG approved Joint Work Program between Gazprom and Siemens AG in 2004. The Program on Gazprom and Siemens’ joint activities for 2004 aimed to coordinate main directions of cooperation between companies that joined their efforts to promote and implement sci-tech projects and innovations oriented on optimizing Russia’s United Gas Supply System as well as on transferring production to the Russian Federation.
On February 10, within the meeting, Alexey Miller, Chairman of the Gazprom Management Committee and Herbert Walter, Chairman of the Board of Managing Directors of Dresdner Bank AG agreed on the issue that Dresdner Bank appeared as a financial consultant for the North European Gas Pipeline construction project.
On February 10, Gazprom and the Irkutsk Oblast Administration signed the cooperation Agreement for five years.
On February, at the Gazprom Headquarters, Alexey Miller, Chairman of the Gazprom Management Committee, held a meeting dedicated to implementation of the North European Gas Pipeline (NEGP) construction project. As it was pointed out at the end of the meeting, the Draft business plan on the NEGP construction was thoroughly elaborated and could be taken as a basis in providing a detailed feasibility study. The participants decided to invite Linklaters as a legal advisor and Dresdner Bank and ABN Amro as financial advisors as well as to conduct a tender to select an engineering advisor for the Project.
On February 12, Gazprom and the Krasnoyarsk Kray Administration signed the cooperation Agreement for five years.
On February 25, the Board of Directors approved the Company’s Long-Term Borrowing Principles up to 2013. Abiding by the Principles should provide stable financing of the Gazprom Group’s production activities for the period up to 2013, to ensure reduced debt-servicing costs and minimization of the Company’s total indebtedness. The Board also heard information on Gazprom’s non-convertible interest-bearing documentary bonds of series A3, subject to mandatory centralized custody and approved Bond Issue Report.
In March, the Kaluga Oblast Administration approved Investment Project for regional gas supply and gasification developed by Gazprom and Promgaz’s subsidiaries. The Kaluga Oblast was the first region in Russia that approved said project. The Document represented the complex program for fuel and energy saving of the Kaluga Oblast. The document was the basis for identifying perspective gas supply volumes to the region as well as developing programs for reconstruction and technical re-equipment of regional gas transportation system, gas supply and gasification development programs.
On March 10, Warsaw hosted the celebrations on the occasion of the tenth anniversary of Russian-Polish joint venture EuRoPolGaz set up. The main business directions of EuRoPolGaz were engineering, construction and exploitation of the Polish section of the Yamal Europe Gas Pipeline. Gazprom held 48 per cent stake in the company.
On March 17, at the Gazprom Headquarters, within the meeting dedicated to issues of the Yuzhno-Russkoye field exploration the parties decided to identify the said field as the basic resource base for gas supply via North European Gas Pipeline aimed at synchronizing preparation of business plans and technical and economic background for North European Gas Pipeline construction and the Yuzhno-Russkoye field development.
On March 18, at the Gazprom Headquarters, Alexey Miller, Chairman of the Gazprom Management Committee held a meeting on the changes in the Company’s corporate structure. A. Miller pointed out that Gazprom had mostly fulfilled the core tasks targeted for the 1st phase of the Company’s restructuring: developing the governance structure, regulatory procedures and the parent company’s budgeting system. Gazprom was shifting over to the 2nd phase of restructuring, which included improving the Company’s performance as a vertically-integrated organization as well as optimizing the subsidiaries’ core business management structure. In order to achieve these objectives, Gazprom was setting up specialized units within the subsidiaries combining gas production and processing with gas transmission and storage. The structural changes were expected to completely differentiate financial flows in the gas and liquid hydrocarbon production, transmission, processing, underground storage and marketing. In addition to focusing on the core business activities, Gazprom plans to establish independently functioning service agencies, distribution networks and social infrastructure facilities as well as to separate business and non-business operations in the telecommunications sector.
On March 23, Gazprom and the Leningrad Oblast Administration signed the Agreement for cooperation in 2004.
On March 24, in Vilnius, Gazprom accomplished a deal on buying 34-stake in Lietuvos dujos (the Lithuanian company). At the same time Gazprom and Lietuvos dujos signed a long-term contract for gas supply to Lithuania up to 2015.
On March 25, Moscow hosted the Russian Wings-2003 National Aviation Award Ceremony. OOO Gazpromavia (Gazprom’s 100 per cent subsidiary) became the Award Winner in the nominee of Best Aviation Company- Passenger Carrier on domestic Airlines in Group II (passenger carriages revenue on home airlines are at 500 mln of passenger-kilometers).
On March 30, the Gazprom Management Committee examined and approved the preliminary results of Gazprom’s draft financial plan, balances of payments, investment program forecasts and cost optimization programs for 2005 through 2006. Draft financial plan considered Russian Social & Economic Development scenario for 2005 and for the period up to 2007. The development scenario was prepared by Mineconomrazvitiye of Russia and examined on March 25, 2004 at the meeting of the RF Government. In accordance with the draft documents examined, investments in 2005 were stipulated in amount of RUR 258.6 bln. In 2006 investments were planned in the volume of RUR 277 bln. Financial borrowings in 2005 were planned in the volume of RUR 120 bln, in 2006 were planed to be at RUR 120 bln. Within Gazprom’s draft cost optimization programs, savings revenue would be at RUR 20 bln in 2005, RUR 15 bln in 2006, respectively.
On March 30, the Gazprom Management Committee approved a complex program for reconstruction and technical re-equipment of Gazprom’s gas facilities for 2004 through 2008. The program stimulated the gas distribution system upgrading in accordance with modern requirements for production safety requirements as well as increasing reliability of gas supply, effectiveness for gas distribution network functioning and management.
In April, Gazprom and ZAO United Metallurgy Company (OMK) signed the Memorandum of understanding between Gazprom and Vyksa Metallurgic Plant (OAO VMP) for the period from 2004 to 2007. In accordance with the document, the strategic goal for cooperation was to satisfy Gazprom’s needs in home made gas and oil pipelines from 1220 to 1420 mm in diameter.
In April, Gazprom’s delegation chaired by Alexey Miller, Chairman of the Management Committee, paid a working visit to Turkmenistan. In the course of the business trip, Alexey Miller met Saparmurat Niyazov, President of the Republic of Turkmenistan. The parties discussed issues related to implementing the Agreement on Cooperation in the Gas Industry and the Contract on Gas Deliveries to Russia, adopted within the frames of the above-mentioned Agreement. As it was pointed out during the meeting, cooperation was keeping up a rapid pace and mutual agreements were being abided by in full. Starting 2004, Gazprom purchased over 1.1 bcm of gas in Turkmenistan. Gas volumes targeted for this year are expected to be supplied in full. Gazprom, in its turn, also fulfils all its obligations on transiting Turkmen gas. A Gazprom branch started operating in Turkmenistan. The meeting discussed the progress in the pre-project planning and pre-investment study conducted within the Program on upgrading, expanding and constructing new facilities of the Central Asia – Center gas transmission system. An accord was reached to speed up producing a General Substantiation of Investments to be made into this system. A. Miller and S. Niyazov agreed that Gazprom would participate in exploring the fields (including gas and oil ones) located on the Turkmen shelf of the Caspian Sea. The aforementioned Agreement allowed for such an opportunity and Gazprom received a respective proposal. A Joint Commission (to be represented by the governmental officials on the part of Turkmenistan) would focus on the details of cooperation in this sector.
On April 13, Alexey Miller, the Gazprom Management Committee Chairman, signed an Order to perform a feasibility study for the opportunity of using the existing Poland-situate underground gas storage (UGS) facilities with the view of providing secure operation of the Yamal Europe gas pipeline. The Paper was produced in accordance with the agreements previously achieved with the Polish side to devise mechanisms aimed at enhancing the security of Russian gas deliveries to Poland and other European countries.
On April 13, Gazprom and the Chechen Republic Administration signed a five-year Agreement on cooperation.
On April 14, in Tashkent, Zarubezhneftegaz (with 60.1 per cent stake of Gazprom) and Uzbekneftegaz National Holding Company signed the Production Sharing Agreement for the Shakpakhty field development in Uzbekistan. According to the document the Russian side committed more than US$ 15 mln for field infrastructure upgrade. Gas sales profit was distributed between the parties in equal shares.
On April 22, Gazprom and the Tambov Oblast Administration signed a five-year Agreement for cooperation.
On April 27, Gazprom’s Board of Directors approved Gazprom’s draft budget (financial plan) and investment program for 2005-2006. The Board discussed measures for improving work with investors and shareholders. The Board also authorized the Management Committee to continue work aimed at Gazprom’s capitalization increase and investment attractiveness. The Board saw it efficient to increase share capital of Lietuvos dujos by issuing additional shares and acquiring shares of new emission.
On April 29, the city of Korolev hosted the meeting of the Government Committee for summer test operations of space complex of socially-economic, scientific and commercial purpose. The meeting decided to give recommendations to Gazcom to accept Yamal-KA (Yamal-200) space complex for operations. Yamal-200 project was implemented by Gazcom (Gazprom, the Korolev Rocket & Space Corporation Energia, Gazprombank hold 80, 16, 4 per cent stake, respectively). Gazcom provided development of space telecommunication and television systems as well as providing telecommunication services based on Yamal satellite connection. Nearly a quarter of satellite resource Yamal-200 was planned to be used for solving Gazprom’s problems. The other part of resource would be used by Russian state, departmental and commercial structures as well as large foreign telecommunication companies.
On April 30, Gazprom and EvrazHolding signed the Framework Agreement for long-term strategic cooperation in the sector of large diameter pipeline production and marketing. The main cooperation goal was to create first Russian unified technological large diameter pipeline production complex stimulating production of high quality pipeline products made of Russian steel. The Agreement stipulated quality control for products released within all stages: from steel production up to pipeline supply to the final consumers.
On May 18, Gazprom and the Smolensk Oblast Administration signed the Agreement for cooperation for five years.
In May, the Competitive Tender to audit Gazprom's 2004 financial accounts came to an end. The Tender Commission considered proposals submitted by PricewaterhouseCoopers Audit as best meeting the requirements brought forward.
On May 20, the town of Tomsk hosted celebrations held on the occasion of Vostokgazprom's 5-year anniversary since the company had started producing commercial gas (Gazprom's share in Vostokgazprom's charter capital accounts for 86.5 per cent).
On May 24, the Gazprom Management Committee approved the Conception of the Gazprom Group’s asset consolidation in the gas distribution sector. Gas distribution assets were being consolidated within the 2nd phase of Gazprom’s restructuring that prescribes optimization of the subsidiaries’ core business management structure. The Conception presumed setting up an independent Mezhregiongazholding gas distribution company to be initially owned by Mezhregiongaz (a 99 per cent stake) and by Lentransgaz (a 1 per cent stake). Under the Document, Mezhregiongazholding would take general control over gas distribution networks currently possessed by Gazprom, its gas transmission subsidiaries and Regiongazholding.
On May 25, Gazprom’s Board of Directors resolved to place three A ruble bond issues, worth RUR 5 bln each and with a maturity of 3, 4 and 5 years, respectively. The bonds were planned to be floated in 2004/2005, subject to the gas market situation and the corporate cash needs.
On May 28, the city of Ufa hosted the ceremony dedicated to 50th anniversary of Bashtransgaz (Gazprom’s subsidiary).
On June 2, at the Italian Embassy in Moscow, Marat Ishmiyarov, Salavatnefteorgsintez’s General Director and Rosario Alessandrello, Technimont’s President signed a Contract on the construction of a suspension polyethylene production line within Salavatnefteorgsintez. Salavatnefteorgsintez is one of the leading Russian petrochemical companies. Commissioning a new Salavatnefteorgsintez’s production line would enable us not only to produce the feedstock indispensable for domestic consumers but would enlarge the company’s export capacity. Salavatnefteorgsintez’s promoter was the State Property Management Committee of the Republic of Bashkortostan, owning 53.92 per cent of the company’s ordinary voting shares transferred to Gazprom’s trust management under the Agreement dated 21 March 2003.
On June 3, the Gazprom Headquarters hosted a working meeting between Alexey Miller, Chairman of the Gazprom Management Committee and Eivind Reiten, President and CEO of Hydro. Within the meeting the parties achieved accords on setting up a working group for working out terms of possible participation of Hydro in the project of Shtokman field exploration.
On June 7, Gazprom signed a package of Agreements for purchasing 12.8 per cent stake of Stimul and mutual dispute settlement between the parties. Under the Papers signed, Gazprom would buy out a 12.8 per cent stake of Stimul from Victory Oil. After executing this transaction, Gazprom and Orenburggazprom would increase their total share in Stimul’s share capital to 51 pre cent.
On June 8, Gazprom’s delegation chaired by Alexey Miller, Chairman of the Gazprom Management Committee paid a working visit to Belorussia. The business trip was undertaken within the frames of the Program of activities scheduled for the occasion of the meeting of the Council of Ministers of the Russia-Belarus Union State. The meetings discussed key issues concerned with relations between Russia and Belorussia in the gas sector. Alexey Miller conducted negotiations with Vladimir Semashko, First Deputy Prime Minister of Belorussia and Pyotr Petukh, Director General of Beltransgaz. The parties agreed on gas delivery terms to Belorussia in 2004 and its transit via the territory of the Republic. The negotiations resulted in signing a contact for gas supply & transit via the territory of the Republic. The negotiations resulted in signing the contract for gas deliveries and transit between Gazprom and Beltransgaz in the presence of Russian and Belarusian Prime Ministers.
In June, Alexey Miller, Chairman of the Gazprom Management Committee signed the order emphasizing that the Gazprom Representative Office in China was authorized to represent interests of the Company in Asia Pacific countries.
On June 23, the Gazprom Management Committee made a decision to give an offer for purchasing 51 per cent stake in Distrigaz Sud SA Romanian gas Distribution Company on its own or in consortium with Dutch company Marco Industries BV.
On June 25, Moscow hosted the Gazprom Annual Shareholders Meeting. The participants represented the interests of the shareholders holding totally nearly 21969032845 shares which was equal to 92.8 per cent out of the total quantity. Within the meeting the participants approved the Annual Report, Annual Accounting Report including the Report for Profit and Losses as well as profit distribution including dividend payments. The participants also examined other issues. Alexey Miller, Chairman of the Gazprom Management Committee reported on the Company’s business activity in 2003 at the meeting. Particularly, Alexey Miller underscored that he saw Gazprom as a global vertically integrated company integrating gas exploration, production, transportation, storage, marketing and distribution of natural gas as well as production of broad range of final products of high quality. “We are sure that Gazprom will be not just a noticeable player on the global energy market but will dictate the rules of the game,” said Alexey Miller. The meeting elected the new Board of Directors. The session resulted in the meeting of newly-elected Board of Directors which elected Dmitry Medvedev, First Deputy Prime Minister of the Russian Federation to the position of the Board of Directors’ Chairman. Alexey Miller was elected to the position of the Deputy Chairman of the Board of Directors.
In June, Gazprom, Spetsneftegaz and Transportadora de Gas del Sur Argentine gas transmission company signed the Protocol of Intentions fixing prospects of further joint technical cooperation. Under the Document signed, Gazprom, TGS and Spetsneftegaz would share experience in tackling problems embracing the aged service life of gas pipelines, detection and elimination of stress corrosion and other pipe defects, operation of compressor stations as well as performance of the International Gas Union’s Gas Transmission Committee.
On June 1, Gazprom’s subsidiary Mezhregiongaz and Federal Agency for Construction and Housing in Moscow signed the Cooperation Agreement on housing development and modernization in the regions of the Russian Federation. Pursuant to the Document signed, the parties would focus on: enhancing the operating efficiency of housing facilities, attracting investments into Russia's housing sector, improving the utilities billing, payment and purpose-oriented financing system, contributing to the establishment of organizational, financial and legislative mechanisms with the view of reforming the housing sector, introducing market-based methods of utility rate regulations, financial rehabilitation of housing facilities and their shifting over to lossless functioning.
On June 6, Gazprom and the Kirov Regional Administration signed a five-year Agreement for cooperation.
In June, E.ON AG and Gazprom signed a Memorandum of understanding fixing mutual agreements on further deepening of successful cooperation in the area of strategic projects. The parties intended to implement joint projects on gas production and power generation in Russia as well as gas supplies to and development of natural gas and electricity marketing infrastructure in Europe. For these purposes, Gazprom and E.ON planed to use appropriate shareholdings and assets in third party businesses, thus, benefiting from their standing on the energy and gas markets.
On June 9, Gazprom and Khanty-Mansiysk Autonomous Okrug Administration signed the Agreement on cooperation in 2004.
On June 12, Gazprom presented the audit consolidated financial reporting for 2003 prepared according to the International Financial Accounting Standards.
On June 15, marked the 40th anniversary of Gazkomplektimpex, a 100 per cent Gazprom subsidiary. Since its foundation, Gazkomplektimpex converted into a multi-service business with a manifold network of affiliates (10 branches in various Russian regions) specializing in deliveries of gas production, drilling, petrochemical equipment and machinery, pipes, chemical materials and fuel, pipeline fittings and gas cranes, timber, electrical equipment, communications devices, machine-building and other output.
In July, Gazprom set up the Working Group for introduction of expenses control system. The Group would reform the expenses control system in the Company which included planning and expenses control methodology and financial accounting centers for expenses optimization (reduction) programs execution.
In July, the international audit for Gazprom’s gas reserves was completed. For these purposes DeGolyer and MacNaughton, an internationally recognized petroleum- consulting firm was engaged in performance of an estimation of proved and probable natural gas reserves, condensate, natural gas & sulfur liquids and in 19 fields (21 deposits) as of December 31, 2003 according to the Gazprom international standards of oil engineers. On the basis of the specified estimation of proved and probable natural gas reserves of field separation were at 18.48 tcm. The fields which were estimated by DeGolyer and MacNaughton hold more than 90 per cent of total amount of Gazprom’s natural gas reserves of categories ABC1 relevant to the Russian reserves classification.
On July 23, to consolidate Gazprom’s assets in the gas distribution sector, the Board of Directors resolved to set up the Mezhregiongazholding. Consolidating Gazprom’s gas distribution assets within a single company would ensure improvement of gas distribution system in the regions of the Russian Federation, create conditions for implementing a united tariff policy and detecting finance sources to intensify gas consumption in Russian regions. In addition, this work would ensure prerequisites for the liberalization of the domestic gas market by providing all gas producers with equal terms and conditions of access to end-use consumers as well as secure operation of gas distribution systems, common standards and requirements apply.
On July 26, the city of Yalta hosted a meeting of Russian and Ukrainian Presidents with businessmen from the 2 countries. The parties achieved an accord to jointly scheme gas deliveries to the Ukraine. To promote the agreement reached, the Gazprom Headquarters hosted a signing ceremony of a set of documents identifying terms and conditions of the Russian-Ukrainian cooperation in natural gas supplies and transit up to 2028. Under the documents signed, Gazprombank and Raiffeisenbank’s 100 per cent subsidiaries set up the 50/50 per cent RosUkrEnergo joint venture registered in Switzerland. The newly founded company would be managed by a Coordinating Committee to be formed from Gazprom, Naftogaz of the Ukraine, Gazprombank and Raiffeisenbank’s top executives.
On August 4, Gazprom and the Altay Krai Administration signed the cooperation Agreement for 5 years.
On August 10-11, Gazprom, Vneshekonombank and Naftohaz Ukrainy signed a package of documents on full and final debt settlement to Gazprom for gas deliveries to Ukraine over 1997 to 2000. The signed Papers supplement accords on cooperation in the gas deliveries and transit sector till 2028 achieved within the meeting on July 29, 2004 between Alexey Miller, Chairman of the Gazprom Management Committee and Jury Boiko, Chairman of the Naftohaz Ukrainy Management Committee.
On August 31, at the ordinary meeting the Gazprom Management Committee acknowledged the expediency of shifting over to the implementation of the investment phase within the International Consortium for the Ukrainian Gas Transmission System Operation and Development to be engaged in the consecutive construction of the Bogorodchany-Uzhgorod gas pipeline. The Management Committee also ratified an UAH 182 million (some USD 34 million) increase in the Consortium’s charter capital, to be achieved by Gazprom and Naftogaz of the Ukraine’s 50/50 per cent additional contributions. The issue of increasing the Consortium’s charter capital is pending approval by Gazprom’s Board of Directors.
On September 8, Gazprom, Rosneft and Statoil (Norway) signed the Memorandum of understanding.
On September 14, Chairman of the Gazprom Management Committee Alexey Miller held a briefing with Gazprom’s managers of core business units. During the briefing Alexey Miller notified the managers that the RF Government had proposed a scenario to increase its stake in Gazprom by means of share transfer. Such increase would be realized by the transfer of the shares of Rosneft, which would become a 100 per cent owned subsidiary of Gazprom.
On September 20, Gazprom issued its non-audited consolidated interim condensed financial information prepared in accordance with International Accounting Standard 34 Interim Financial Reporting (IAS 34).
On September 22, Gazprom’s delegation was on a visit to the United States of America Alexey Miller, the Gazprom Management Committee Chairman and David O’Reilly, Chairman of ChevronTexaco’s Board of Directors signed a Memorandum of understanding. The Memorandum stipulated 6-month-long survey studies to be conducted with the view of implementing joint oil and gas projects in Russia and the USA.
On September 24, Helsinki hosted celebrations dedicated to a 30-year anniversary of Russian gas deliveries to Finland and to a 10-year anniversary of Gasum (Gazprom holds 25 stake in Gasum).
On September 28, the Board of Directors coordinated the voting stance of Gazprom’s representatives in managing bodies of the Kaunas Combined Heat and Power (KCHP) as well as the increase of said company’s charter capital through the issue and placement of additional ordinary inscribed shares to be allocated through a private subscription proportionally to KCHP’s stockholders-owned shares. KCHP’s charter capital was planned to be increased with the view of attracting finance to be channeled for the re-construction and modernization of the Kaunas Central Heat and Power Station (KCHPS). In addition, the Board of Directors decided to partially alter its resolution, dated July 23, 2004, to set up the Mezhregiongazholding company, namely to change said company’s business name to Gazpromregiongaz. The business name change pointed to the acknowledged gas distribution sector significance of Gazprom as a vertically integrated company. Virtually, this was the 1st time a Gazprom subsidiary changes its business name within the Company’s 2nd phase of restructuring.
On September 30, the Leipzig Museum of Fine Arts hosted a Presentation of “The Golden Map of Russia. The Masterpieces of the Russian Art” Art Album published by the State Tretyakov Picture Gallery with the participation of the museum-supporting Fatherland’s Treasures Foundation and with Gazprom’s financial backing. The Masterpieces of the Russian Art” Art Album was a part of the “Golden Map of Russia” large exhibition and publishing Project being implemented by the Tretyakov Picture Gallery, that was awarded with the RF 2003 National Prize. Said Book was unparalleled among domestic and foreign arts editions and was unique for its collection of some 400 best works of the Russian fine arts and sculptures gathered by the State Tretyakov Picture Gallery and leading arts museums from 25 Russian regions. A range of the Art Album’s images was published for the first time.
On October 2, the Yamal-Nenets Autonomous Area (YNAA) hosted the celebrations dedicated to the Zapolyarnoye oil and gas condensate field attainment of the designed capacity as well as to Yamburggazdobycha’s 20-year anniversary. Gazprom annually would produce 100 bcm of natural gas from this field. This was approximately one-sixth of Russia’s total gas production and one-third of Russian gas deliveries to domestic consumers.
On October 5, Gazprom and the Archangelsk Oblast Administration signed the Agreement of cooperation for five years.
On October 5, the Chamber of Patent Disputes of the Federal Service for Intellectual Property, Patents and Trade Marks registered the trade marks “GAZPROM” and “” as generally accepted in the territory of the Russian Federation. The registration secures the right of Gazprom on unlimited use of the said trade marks for production of any goods and rendering any services included in the International Classification.
In October, the meeting dedicated to competition basis transition at suppliers identification, the Gazprom Group business activities and services operators. The meeting resulted in decision to identify all contact works (financed by Gazprom and stipulated in its Investment Program) performers by the Competition Committee and the Company’s Tender Committee.
On October 12, Gazprom and Petro-Canada Canadian oil & gas company signed the Memorandum of understanding. The Memorandum stipulated opportunities for LNG deliveries from Russia on Northern American market by 2009.
On October 12, Gazprom placed A5 series corporate notes denominated in rubles, the face value is RUR 1000, and maturity is three years.
On October 13, the first gas from the Pestsovaya area of the Urengoy gas and oil condensate field was supplied to the Russian Unified Gas Supply System. In 2005, production at the Pestsovaya area is planned to reach 12.6 bln cubic meters of gas, and 27.5 bln cubic meters of gas, the design capacity, by the end of 2006.
On October 14, in Beijing, during the Russian President Putin's visit to the People's Republic of China, Alexey Miller, Chairman of the Gazprom Management Committee, and Chen Gen, President of China National Petroleum Corporation (CNPC) signed an Agreement on strategic cooperation.
In October, Alexey Miller, Chairman of the Gazprom Management Committee, Gennady Fadeev, President of the Russian Railways Open Joint Stock Company, and Eduard Rossel, Governor of Sverdlovskaya Oblast, signed a joint Program on setting up test operation of liquefied and compressed natural gas powered locomotives at the Sverdlovsk railway test grounds. The Program was aimed at constructing experimental main-line and yard locomotives powered by natural gas, and conducting their field tests.
On October 19-20, the annual meeting of representatives of the dispatching services responsible for control over the gas flows through the Yamal Europe gas pipeline was hold on October 19-21 in Smolensk. Participants of the meeting signed a protocol wording the key principles of the dispatching services operational cooperation in gas supply for the period of 2004-2005.
On October 22, Gazprom subsidiary, received the National Ecology Award in the Eco-Efficiency Nomination for introducing the Blue Stream Gas Pipeline ecologic monitoring system. The National Ecology Award was established with the view of identifying and remunerating the most efficient projects on power and resource saving technologies and production.
On October 27, in the presence of the Russian and Ukrainian Presidents Vladimir Putin and Leonid Kuchma, Alexey Miller and Yuri Boiko, CEOs of Gazprom and Naftogaz Ukrainy, respectively, entered into an Agreement on Interaction at the investment stage of activities by the International Consortium for the Ukrainian Gas Transmission System Management and Development. Signing the Document would allow the parties to continue the construction and further operation of the Bogorodchany-Uzhgorod gas trunk line and would establish environment for gas transmission in the time and amount determined by an Inter-Governmental Agreement dated 18 August 2004.
On October 28, Gazprom and the Kostroma Oblast Administration signed the cooperation Agreement for five years.
On October 28, Gazprom and the Ivanovo Oblast Administration signed the cooperation Agreement for five years.
On October 29, within a working meeting between Alexey Miller, the Gazprom Management Committee Chairman and Alexander Zhilkin, Acting Governor of the Astrakhan Region Astrakhanregiongaz was resolved to become the parent gas distribution company in the region, with an integrated gas distribution network to be formed and a common gas transmission tariff to be set before June 1, 2005.
On October 29, the Board ordered to ensure the implementation of the Main Principles of Gazprom’s Cost Optimization (Reduction) Program Formulation while drafting similar programs for 2005 and subsequent years. The Board agreed upon Gazprom’s acquisition of another 9 per cent of shares in Latvijas Gaze’s charter capital.
On November 10, Alexey Miller, the Gazprom Management Committee Chairman approved Russia’s gas quotas for 2005. The document signed stipulated further growth of the Gazprom Group’s natural gas production to amount to 547 bcm in 2005, 5 bcm up on this year’s target.
In November, the Gazprom Management Committee addressed paramount measures to be stepped up for the Yuzhno-Russkoye field commissioning. The Management Committee ordered Severneftegazprom to start developing the Yuzhno-Russkoye oil and gas field in 2004 and bring it on stream in 2007.
On November 12, Sanya City (China) hosted the 1st meeting of the Joint Coordinating Committee (JCC) of Gazprom and the China National Petroleum Corporation (CNPC).
On November 16-19, New Delhi hosted the 10th meeting of the Inter-Governmental Russian-Indian Commission for Commercial, Economic, Scientific, Technical and Cultural Cooperation, holding sessions of the Commission’s various working groups. In addition to the participation in the Inter-Governmental Commission’s meetings, Gazprom’s representatives held talks with Gas Authority of India Limited on a wide spectrum of businesses in the gas industry as well as initialed a Strategic Cooperation Agreement projected to be concluded within the Russian Federation President Vladimir Putin’s visit to India.
On November 17, within the Meetings: Culture and Economics – Austria and Russia Exhibition, the Austrian National Library hosted a Presentation of the Golden Map of Russia. Masterpieces of the Russian Art Arts Album published by the State Tretyakov Picture Gallery in partnership with the Fatherland’s Treasures Museum-Supporting Foundation and with Gazprom’s financial backing.
On November 19, the Yamal-Nenets Autonomous Area, 140 km north-east of the town of Noyabrsk, hosted the Yety-Purovskoye gas field inauguration. The Yety-Purovskoye field commissioning would make it possible to bring the Vyngayakhinskoye and Yety-Purovskoye fields to a 20 bcm/y of gas design capacity in 2006.
On November 19, Gazprom issued its non-audited consolidated interim condensed financial information prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” (IAS 34) for the six months ended June 30, 2004.
On November 23, the Russian Federation Embassy in Berlin hosted a Presentation of the Golden Map of Russia. Masterpieces of the Russian Arts Album published by the State Tretyakov Picture Gallery in partnership with the Fatherland’s Treasures museum-supporting Foundation and with Gazprom’s financial backing.
In November, Gazprom and NOVATEK completed the deal for purchasing Purgazdobycha’s 100 per cent stake by Gazprom. Purgazdobycha holded the license for development of Western Tarkosalinsk field.
On December 1, the town of Sosnogorsk (Komi Republic) hosted the inauguration of a gas processing unit at the Severgazprom’s Sosnogorsk Gas Processing Plant (GPP). Having a 3 bcm/y capacity, Sosnogorsk GPP’s new gas processing unit counts on state-of-the-art technologies meeting global standards. The unit would annually produce 60,000 tons of propane, 120,000 tons of propane-butane and 25,000 tons of stabilized condensate. With the unit brought into operation, the towns of Ukhta and Sosnogorsk would have a great deal better environment and lower carbonic oxide (from 475 down to 76.8 t/y) and nitric dioxide (from 199.6 down to 72.1 t/y) emissions.
On December 2, Prague’s Rudolfinum Concert Hall hosted the Golden Map of Russia. Masterpieces of the Russian Art Album Presentation and donation to Czechia’s museums, educational institutions and libraries. The Album was first published by the State Tretyakov Picture Gallery in partnership with the Fatherland’s Treasures museum-supporting Foundation and with Gazprom’s financial backing.
On December 3, in New Delhi, within the Russian Federation President Vladimir Putin’s official visit to India, Alexey Miller, the Gazprom Management Committee Chairman and Proshanto Banerjee, Chairman & Managing Director of the state-run company Gas Authority of India Limited (GAIL) signed an Agreement on Strategic Cooperation. Under the Agreement, Gazprom and GAIL’s major businesses would include the study and implementation of projects on natural gas deliveries to India as well as the intensification of joint activities at Block 26 in the Bengal Bay. In addition, the Agreement stipulated cooperation between the companies in the oil sector. In the frames of the visit, Alexey Miller, Chairman of the Gazprom Management Committee participated in the meeting with Mani Shankar Aiyar, Minister of Petroleum and Gas. Gazprom’s delegation conducted the meeting with ONGC Group top management. The meeting resulted in signing the Memorandum of cooperation intentions between the companies.
In December, Gazprom’s Extraordinary Shareholders’ Meeting held in absentia resolved to amend the corporate Articles of Association. In accordance with its Resolution, the Meeting abolished those provisions of the Articles governing the procedure of buying out shares from other stockholders by the member owning a more than 30 per cent stake of Gazprom. In addition, Gazprom’s shareholders are now exempted from the liability to buy out shares when acquiring an over 30 per cent stake and every 5 per cent of shares to follow. The decision to amend Gazprom’s Articles of Association had stemmed from the RF Government’s proposal to boost the State portion in Gazprom’s authorized capital by transferring to the latter a 100 per cent stake of the Rosneft state-run company. At present, Gazprom is more than 30 per cent State-owned. Article 80 of the Joint Stock Companies Law allows shareholders to be exempt from the liability to buy out shares provided respective amendments are made to a firm’s corporate documentation.
On December 6, in Ankara, Alexey Miller, the Gazprom Management Committee Chairman and Mehmet Bilgic, General Manager of the BOTAS Petroleum Pipeline Corporation inked a Memorandum on cooperation deepening in the gas sector.
In December, Alexey Miller, the Gazprom Management Committee Chairman and Anatoly Kvashnin, Plenipotentiary Envoy of the Russian Federation President to the Siberian Federal District (SFD) signed a Memorandum on major businesses in expanded gas deliveries to SFD’s cities, towns and rural settlements.
In December, Alexey Miller, the Gazprom Management Committee Chairman and Eivind Reiten, Hydro's President and CEO have signed a Memorandum of understanding. The Memorandum stipulates the survey study of potential joint involvement in oil and gas projects being performed, largely, for the purpose of analyzing the outlook of cooperation between Gazprom and Hydro in the Shtokman gas condensate field development and LNG production.
On December 20, the town of Novy Urengoy (Yamal Nenets Autonomous Area - YaNAA) hosted the inauguration of the Pestsovaya area at the Urengoyskoye oil and gas condensate field. On bringing the field to its nominal capacity the annual extraction will be at 27.5 bcm of gas.
In December, the Gazprom Management Committee addressed the corporate gas export strategy implementation in Europe. Gazprom’s core business departments were entrusted with developing a program on synchronized commissioning of resource and transmission capacities for 2006 to 2010 on the platform of forward-looking gas scheming to 2015. By 2010, annual gas pipeline exports to Europe are projected to jump to not less than 180 bcm.
On December 20, the Gazprom Management Committee endorsed the Corporate Identity Guidelines. The Guidelines represent a list of key elements constituting the corporate visual image (trademark, logo, colors, etc.). Gazprom’s core business units were entrusted with drafting a Directive stipulating the common corporate identity development within Gazprom’s Administration. The next step in this direction would be compiling a similar book for Gazprom’s subsidiaries. The common corporate identity was being developed within the 2nd stage of Gazprom’s restructuring that stipulated the consolidation of the Company’s core businesses within separate legal entities and reinforcement of Gazprom’s vertical integration.
On December 20, Gazprom and the Tomsk Oblast Administration signed a five-year Agreement for cooperation.
In December, the Board of Directors approved Gazprom’s 2004 updated budget (financial plan) and investment program. Under the updated budget, Gazprom’s overall earnings & budget revenues, commitments, expenditures & investments and budgetary surplus were scheduled at RUR 1,238.2 bln, RUR 1,427 bln and RUR 1.1 bln, respectively. In accordance with the updated investment program, capital and long-term financial investments climbed RUR 13.2 bln and RUR 11.3 bln to RUR 205.5 bln and RUR 31.3 bln, respectively, thus, growing by a total of RUR 24.5 bln to RUR 236.8 bln. Capital investment growth was primarily driven by an unplanned increase in metal output prices.
In December, Alexey Miller, the Gazprom Management Committee Chairman signed an executive order to set up an East-Oriented Project Management Division within the Company’s Administration. Over 2004, Gazprom has done a big scope of fruitful work to establish partnership, mutually beneficial and long-term prospect-oriented relations with Asia Pacific, entering into strategic cooperation agreements with the largest Chinese and Indian oil and gas corporations as well as finalizing the preparation of a program on comprehensive field development in Eastern Siberia and the Far East. The Asia Pacific region, and China in the 1st place, is experiencing a real fuel boom, with energy consumption growing more intensively than in any other part of the world. Taking this fact into account (when developing the Company as a global energy firm) Gazprom’s east-oriented oil and gas strategies had been identified as a top priority business. In this regards, the newly established Division would be tasked with promoting Gazprom’s projects eastwards.
In December, Alexey Miller, the Gazprom Management Committee Chairman and Jim Mulva, Chairman and CEO of ConocoPhillips have signed a Memorandum of Understanding. The Memorandum stipulates a preliminary feasibility study to be performed for a liquefied natural gas production and transmission project targeted at the Shtokman gas condensate field output marketing in the USA and other countries on both sides of the Atlantic.
On December 23, Gazprom, Urengoygazprom, Wintershall AG and Achimgaz signed a set of fundamental documents to jointly develop Play A1 of Urengoy’s Achimov deposits. The ceremony was intended to promote a heads of agreement between Gazprom, Urengoygazprom and Wintershall AG and an agreement on strategic cooperation between Gazprom and BASF AG. By signing the documents, Russia and Germany confirmed the finalization of the 1st project stage relating to scrupulous engineering works and endorsed the initiation of the 2nd stage covering the project trial operation. The project would be implemented by Achimgaz.
On December 23, the Board agreed on the deal to buy into a Stimul 49 per cent stake. Thus, given last year’s June acquisition of Stimul’s 12.8 per cent of shares, the Gazprom Group’s total share in the company would grow to a 100 per cent stake.
In December, Gazprom and the Saint-Petersburg Administration signed the Agreement for cooperation in 2005.
In December, Gazprom and the Yamalo-Nenets Autonomous Okrug Administration signed the Agreement for cooperation in 2005.
In December 30, at the Gazprom Headquarters, Gazprom and Beltransgaz had entered into a Gas Sales and Transit Agreement over 2005. In pursuance of the Agreement, Gazprom would provide Belarus with 19.1 bcm of gas worth US$ 46.68 per 1,000 cu m, with additional supplies up to 1.4 bcm to be effected to the Republic provided there was enough gas transmission capacity available.
In December, the Competition’s Committee summed up the results of the Annual Corporate Report Competition held by Expert Magazine. Gazprom won the nominee Genre classic in 2003.