Gazprom’s Management Committee has summed up 2002 preliminary results

Today, the extended Gazprom’s Management Committee meeting was held. Heads of Gazprom’s subsidiary gas producing and gas-transporting companies, as well as chief executive officers of Mezhregiongaz, Gazcomplectimpex and other entities, participated in its work.

The Management Committee has considered results of subsidiary companies operation in 2002 and tasks to fulfill the plan of social and economic development and budgets of subsidiary companies in 2003.

The Management Committee has taken into account the information concerning results of Gazprom’s subsidiary companies operation in 2002.

At the same time it has been marked that Gazprom’s subsidiaries have achieved the best production and financial results for the last 10 years.

In 2002 gas production by the Company’s subsidiaries has amounted to 521.9 bcm. That is 1.7 bcm higher than the plan target and exceeds the level of gas production in 2001 by 10 bcm.

Gazprom’s producing enterprises succeeded not only to compensate production decline from the Cenomanian reservoirs of Medvezhye, Urengoiskoye and Yamburgskoye fields, but also notably to increase production due to raising output of Zapolyarnoye field, as well as commissioning of booster compressor stations.

Only the Yamburggazdobycha Company has provided gas production growth with 20.9 bcm.

In 2002, gas condensate and oil production has also exceeded the plan target and has come to 10.6 million tons (422.9 thousand tons more than in 2001).

Plan targets on output of processed production are implemented over the whole mix.

In many respects implementation of production indices has been determined by the fact that for the first time during the last decade Gazprom has fulfilled the scheme to finance capital investments (RR140.8 billion) and to commission new production and transport capacities.

Last year there were commissioned 818 km. of gas mains and diversions, 7 compressor stations, including 4 booster compressor stations with capacity of 352 thousand kW, gas treatment installation having capacity of 16 bcm of gas annually. 149 gas and 3 oil wells were linked up on fields and 45 wells were connected up at underground gas storage facilities.

In 2002 the unique gas-main pipeline the Blue Stream was put in operation to supply Russian gas to Turkey.

Last year, six new fields were discovered: Sredne-Nadymskoye, Yuzhno-Pestsovoye, Chukhoryakhinskoye and Lenskoye in Yamal-Nenets Autonomous Area, as well as Grechanoye and Chernoerkovskoye in Krasnodar area.

Explored reserves growth of hydrocarbons has amounted to over 535 mtoe.

As a result for the first time during the last 10 years hydrocarbon reserves rate of growth has exceeded the level of gas extraction from operating fields.

The greatest increase of hydrocarbon reserves is achieved by Yamburggazdobycha (262.7 mtoe.), Gazflot (167 mtoe.), Urengoygazprom (104 mtoe.).

Gas supplies to Russia’s consumers, independent producers being taken into account, have almost reached 320 bcm (that is 1.5 bcm more than in 2001).

In 2002 the Russian consumers’ debts for gas reduced almost by RR5 billion and as of January 1, 2003 amounted to RR38.6 billion.

97.3% of gas supplied was paid up last year. From this sum 89.1% were paid in cash.

Gazprom has worked out perspective fuel and energy balances and rational schemes of gas supply to some regions of Russia. Their realization on a national scale will permit to save annually up to 40–45 bcm of natural gas.

During the past year it was supplied 51.8 bcm of gas to the CIS and Baltic states. From this volume Gazprom delivered 42.3 bcm of gas. (it is 2.7 bcm more than the similar index of 2001).

Export of gas to remote foreign countries has come to 128.7 bcm. That is 18 bcm more than the volume of supplies in 2001.

The proceeds from realization of gas to consumers of Russia and abroad in 2002 (without the customs duty, the VAT and the excise) under preliminary data have amounted to RR479.3 billion. That is RR14.2 billion more than proceeds of 2001. Costs of subsidiaries have not exceeded the approved limits.

Bulk of accounts of subsidiary companies with budgets of all levels has amounted to RR91.4 billion.

Having considered results of Gazprom’s subsidiary companies operation in 2002, their plans and budgets for 2003, the Management Committee has determined priority guidelines of subsidiary companies operation in the current year.

Stabilization of gas production and consolidation of sources of raw materials, development and improvement of the Unified gas supply network, raising economic efficiency of production, strict observance of economy effort procedure and purpose draft on funds are related to them.

General Directors of subsidiary companies and organizations, heads of Gazprom’s departments and divisions are authorized to guarantee unconditional implementation of the Management Committee Resolution dated 06.12.2002 “On the plan of social and economic development, the Company’s budget for 2003 and the forecast up to 2005” and Board of directors decisions dated 25.02.2003 “On the approval of the budget, the investment program and the program of reduction of Gazprom’s costs for 2003”.

Subsidiary companies should provide strict implementation of plans of capital construction, major overhaul and building.

At the same time special attention should be paid to priority projects to be commissioned and reduction of volumes of uncompleted construction.

Besides, the Management Committee resolution contains a demand to heads of all levels prohibiting derivation of financial resources for purposes which haven’t been stipulated by budgets and balances of payments, as well as attracting credits without Gazprom’s consent.

The Management Committee has indicated to heads of Company’s all entities the necessity of unconditional implementation of plans to reduce expenses. It has also provided measures to strengthen control over financial and economic operation of all Gazprom’s subsidiary companies.

The Management Committee has established the following basic priorities to realize the plan of capital construction in 2003:

• Facilities to synchronize launching gas pipeline Yamal-Europe capacities into operation and gas withdrawal from Zapolyarnoye field;
• Facilities needed to increase daily capacity of gas underground storages up to 550 million cu m in December – February;
• Backfitting of complex gas treatment unit (UKPG-2S) and launching UKPG-3S into operation at Zapolyarnoye field;
• Construction of Aneryakhinskaya formation at Yamburgskoye gas field;
• Construction of Kharvutinskoye dome;
• Launching the booster compressor station at the Yamburgskoye field;
• Putting comprehensive gas treatment unit (UKPG) into operation at the Vyngayakhinskoye field and installation of UKPG-11V unit at the Yen-Yakhinskoye field.

It is planned to hook up altogether 343 new operational wells. In 2003 it is also intended to construct 1588 kilometers of gas pipelines, 5 compressor stations.

The growth of underground gas storage active capacity is scheduled in the volume of 2.7 bcm.

Thus, commissioning of additional capacities in gas production will annually make up 57.5 bcm.

It is forecasted, that increase of hydrocarbon reserves will amount to 348.5 mtoe.

In 2003 it is expected that net profit will come to RR145.7 billion. That is RR30 billion (26%) more than in 2002.

Information Directorate, OAO Gazprom