Gazprom’s Headquarters host a Board of Directors’ meeting.

The Board of Directors examined the presented materials on enhancing the Gazprom Group’s procurement system, to be accomplished, primarily, through a contest-based award of contracts.

The Board of Directors mostly approved the Draft provision on the Gazprom Group’s procurement priorities and commissioned the Company’s Management Committee to amend the document based on the discussions held and to approve it in a preset order.

Reference:

In 2003 Gazprom’s procurement volumes accounted for RR 88.13 million, including RR 68.12 million (77.3%) through Gazkomplektimpex’s centrally controlled supplies initiated in 2002. As a result, Gazprom has got an opportunity to drastically enhance its procurement system by introducing large-scale tender procedures on large combined shipments.

Gazprom’s Draft provision on procurement priorities envisages for an open tender-based award of contracts only. Provided that it is impossible to make up detailed specifications of the goods purchased and it is necessary to analyze the suppliers’ offerings beforehand, the Provision allows for 2-phase open tenders. The Document outlines situations when goods and services can be purchased from a sole supplier.

Under the open tender-based system, Gazprom will purchase pipe products, building materials, metals and metal derivatives, cables, control and measurement equipment, petrochemical materials, machine building products, which is 80% of the Company’s total purchases.

The contest-based procurement is believed to steadily grow from 40% in the 2nd half of 2004 (20% of total annual volumes) up to 50% in 2005 and is expected to reach 80% of Gazprom’s total purchases.

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