Alexander Ananenkov, Acting Chairman of Gazprom’s Management Committee conducted today a meeting dedicated to the issue of preparatory activities for the upcoming 2004-2005 autumn-winter heating season.

The meeting was attended by heads of Gazprom’s core business departments as well as general directors of more than 35 Gazprom’s gas production, transmission, distribution and other subsidiaries. Reports on the Company’s readyness for the upcoming autumn-winter period were delivered by the heads of Gazprom’s Gas Transportation, Underground Storage and Utilization Department, Gazprom’s Gas, Condensate and Oil Production Department, Gazprom’s Central Dispatch Management Center, Noyabrskgazdobycha, Urengoigazprom, Orenburggazprom, Tyumentransgaz, Lentransgaz, Permtransgaz, Severgazprom, Gazkomplektimpex, Yamalgazinvest and Regiongazholding.

The participants emphasized that over the 7 months of 2004 Gazprom had extracted 318 bcm of gas, 4.8 and 2.3 bcm up on the same period in 2003 and the target, respectively. The production build-up largely stemmed from the Zapolyarnoye field (14.8 bcm) commissioning. Gas condensate and oil production accounted for 6,902.9 thousand tons.

As of 1 August 2004, Gazprom provided Russian consumers with 220.1 bcm of gas, an increase of 2.1 bcm, as compared to last year’s same period. West Europe received 83.3 bcm, 5.3 and 1.2 bcm up on the target and the same period of 2003. Gas deliveries to the CIS and Baltic States accounted for 60 bcm. Over the 7 months of this year, Gazprom transported 23.2 bcm of gas originating from Central Asia.

Just like in the past, Gazprom’s key objective will be channeling uninterrupted natural gas supplies to its top priority customers, namely the residential sector and households, who received 45.3 bcm of gas (households, 28.3 bcm) before 1 August.

The reporters also emphasized that key production equipment was being prepared under schedules set. As of 1 August 2004, a larger scope of preventive repairs was completed during the targeted production suspension: 40 gas treatment units underwent repairs.

Over the reporting period, the Company overhauled 323 wells, which accounts for 61% of the annual target (104.5% on the timetable). The quantity of wells refurbished over the 7 months of 2004 exceeds by 1.2-fold the same parameter of 2003. The fulfillment rates of a well overhaul annual program are 10% faster than in 2003, which makes it possible to predict its complete finalization in 2004.

To ensure secure operations of its gas production subsidiaries in the 2004 autumn-winter heating season, Gazprom intends to bring on stream a 27.5-bcm comprehensive gas treatment unit, 2 primary gas treatment units with a total annual capacity of 25 bcm, 4 booster stations. The Company also plans to launch 336 gas wells, upgrade 52 absorbers, overhaul 530 wells and conduct preventive repairs of gas production facilities.

Over the 7 months of this year, 863.8 km of gas pipelines (53.7% on the annual target) were overhauled and over 10,000 km of gas mains (52.7% on the annual target) were inspected.

The meeting underscored that under a directive of the RF Government Gazprom will ensure before 20 October 2004 stock-piling of not less than 62 bcm of commercial gas reserves in underground storage facilities. In the meantime, gas is being injected into UGS facilities in anticipated rates. From the beginning of the spring-summer season Russian UGS facilities received over 30 bcm of gas, 0.88 bcm up on the target. The amount of commercal gas injections, at present, accounts for over 44 bcm.

Gas deliveries to Russian consumers in the 4th quarter of this year are expected to amount to 108.7 bcm, 3.1 bcm up on the same period of 2003.

Gazprom’s gas distribution businesses are operating 428 thousand km of distribution lines and are providing gas to 22.8 million apartments and 190.9 thousand companies. Bashtransgaz and Tomsktransgaz have so far recorded the highest parameters while preparing for the upcoming autumn-winter heating season.

Due to the foundation of Mezhregiongazholding, a big scope of work is being performed to consolidate corporate assets in the gas distribution sector. In this connection, in addition to the task to finalize all the preparations for the winter, Gazprom’s affiliates received instructions to conduct inventory of gas infrastructure subject to the consolidation as well as to prepare facilities and produce technical documentation to be put under control of the newly established company.

The meeting laid special emphasis on the challenges to be faced by Gazprom in 2005, in particular, on the task to build up gas production to 545.2 bcm. To fulfil the objectives set, Gazprom needs to finalize all the measures fixed, bring into operation in 2004 a gas treatment unit at the Pestsovaya area of the Urengoiskoye field, another gas treatment unit at the Yety-Purovskoye field, a booster station designed for the 2nd phase of the Komsomolskoye field as well as to launch planned wells.

Due to heavy loading of the United Gas Transmission Syatem (UGTS), the parties outlined the need to develop its capacities. For the time being, daily requests for gas supplies to West Europe exceed last year’s parameters by 100 mln cm.

At the end of the meeting heads of subsidiaries were commissioned to strictly fulfil key tasks on preparaory work for the 2004-2005 autumn-winter heating period, including to ensure supplies of goods and equipment as well as financing of measures aimed to prepare the UGTS facilities for the forthcoming winter.

DIVISION OF RELATIONS WITH MASS MEDIA