Gazprom generates positive free cash flow for eleventh consecutive year

Andrey Kruglov, Deputy Chairman of the Management Committee, Gazprom

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Press Conference

 

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The Gazprom's Financial and Economic Policy Press Conference was held at the Company’s office in Moscow today in the lead-up to the annual General Shareholders Meeting. The Press Conference featured Andrey Kruglov, Deputy Chairman of the Management Committee, Elena Vasilieva, Deputy Chairwoman of the Management Committee and Chief Accountant, Alexander IvannikovKaren Oganyan, and Vitaly Khatkov, Heads of Departments, and Mikhail Rosseev, Deputy Chief Accountant.

It was noted at the Press Conference that in 2016 Gazprom had delivered solid financial results despite a number of unfavorable macroeconomic factors. For the eleventh consecutive year the Company generated a positive free cash flow, which amounted to RUB 202 billion in 2016. Gazprom’s net profit rose to RUB 952 billion, adding 21 per cent compared to 2015.

These gains can be largely attributed to Gazprom’s conservative financial strategy, which envisages, in the first place, stringent limits for operating expenses, strict ranking of investment projects during budgeting, thorough control and optimization of costs, and efficient debt management and currency risk mitigation.

This approach allows the Company to maintain the balance between funding investment projects largely from the operating cash flow, keeping the debt load and liquidity cushion at a comfortable level, and ensuring that the Company’s shareholders receive dividends equal to or higher than the previous year’s amount.

It was stressed at the Press Conference that the Company needs a stable tax regime to plan its business activities. However, in recent years taxation parameters for the oil and gas industry have changed every year, with a persistent upward trend for the severance tax on gas produced by the Gazprom Group.

An emphasis was placed at the Press Conference on the Company’s efforts in improving its corporate governance taking into account global best practices. One of the important outcomes of 2016 was that the Moscow Exchange confirmed that Gazprom had fulfilled all quality requirements for corporate governance to retain its position on the top-tier quotation list. In 2017, the Company will continue its efforts aimed at increasing its performance transparency.

The Press Conference also touched upon other issues related to Gazprom's current and future financial and economic performance.

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