Gazprom’s Management Committee approved today the Company’s Long-Term Borrowings Strategy up to 2013.

The Strategy aims to 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.

Within the frames of the Strategy, Gazprom will be carrying out a range of measures targeted at:

• Maintaining Gazprom’s current asset liquidity
• Minimizing export proceeds provided as collateral for loans
• Diversifying loan instruments and expanding available segments of the financial market
• Cutting the debt attraction and servicing costs
• Improving the corporate governance quality
• Establishing prerequisites to enhance the Company’s credit rating
• Implementing large-scale investment projects (based on the project financing principles) jointly with Gazprom’s strategic partners

The Strategy reflects main principles and mechanisms for managing the Company’s borrowings and debt portfolio in the changing environment on the financial and commodity markets.

The Strategy stresses that on optimizing its borrowed fund structure in 2003-2004, Gazprom has received an opportunity to mostly complete the debt portfolio restructuring, to finally reject the promissory note issue as a loan instrument and to minimize its short-term borrowings to a required level (less than 25%).

The document envisages that the amount of borrowings for the period concerned shouldn’t exceed the 2004 target. Given the favorable gas pricing growth and main currency rates as well as the propitious market conditions, the loan volumes may drop down to USD 2-4 billion per year. At the same time, total expenditures to be incurred for undertaking debt servicing are forecasted to equal the amount not exceeding relevant expenses targeted for 2004.

The Management Committee decided to submit the issue on the Strategy approval for the Board of Directors’ consideration on February 25, 2004.

Reference:

In 2004 Gazprom plans to borrow a total of RUR 150 billion. Overall expenses to be incurred for decreasing the price of the Company’s debt are estimated at RUR 166.2 billion.

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