Yesterday, Gazprom’s Management Committee (MC) took as a basis the Draft provision on procurement priorities for the Gazprom Group of companies, to be accomplished, primarily, on a contest basis.

The Draft Provision envisages the Company’s procurement priorities determined through open tenders. 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.

Under the Document, goods and services can be purchased from a sole supplier only under the following circumstances:

1. Due to technical complexity and specific nature, goods can be purchased from an eligible supplier only
2. Tenders and other awards of contracts are inexpedient due to the Company’s urgent necessity to purchase goods, caused by emergencies (breakdowns, catastrophes and other unforeseen circumstances).

The MC members pointed out that the contest-based procurement would steadily increase from 40% in the 2nd half of 2004 up to 50% in 2005 and would reach 80% of the total procurement amount in 2006.

The MC would submit the Draft Provision for Gazprom’s Board of Directors’ approval.

Reference:

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

Gazprom set up the Tender Committee and the Contest Commission focusing on selecting contracting organizations and suppliers of goods and services for the Gazprom Group’s needs through a contest-based system.

Gazprom’s import of drilling and field equipment, gas-pumping units, compressor units, control systems and pipes, has tended to reduce recently. While in 2001 Gazprom imported 17.6% of the above-mentioned products, inclusive 14.4%, from abroad, in 2003 the Company purchased 15.9% and 6.4%, respectively.

In 2003 Gazprom imported 6.8% of engineering and construction products, inclusive 5.2%, from abroad, as well as 9.1% and 1.2% of pipes, respectively.

Less than 10% of 4040 gas-pumping units mounted at the compressor stations of the gas mains have been manufactured abroad.

Gazprom has invested some RR 10 billion in the design and development of domestic equipment over the past 10 years only.

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