Gazprom’s Management Committee examined yesterday the Company’s subsidiaries’ operating results for 2003.

The Management Committee also considered the subsidiaries’ social and economic development as well as financial plans for 2004.

The Management Committee mostly approved the work done by Gazprom’s subsidiaries in 2003.

In 2004 the Company’s subsidiaries will mainly focus on:

• tackling gas production tasks and developing hydrocarbon resources
• developing and upgrading the United Gas Transmission System
• implementing the gas pipeline upgrading programs
• enhancing the economic efficiency of manufacturing by improving the corporate governance, raising labor productivity and cutting expenditures
• strictly observing the corporate policy aimed to save funds and make purpose-oriented fund allotments

Gazprom’s core business units were commissioned to:

• produce proposals on the corporate gas pricing fundamentals, gas transmission and storage tariffs, taking into account the Cost Reduction Program
• devise and take a number of measures aimed at implementing the Program (approved in 2003) on Gazprom’s gas trunk line re-insulation
• implement measures targeted at fulfilling the Plan on synchronized commissioning of new capacities
• produce proposals for developing UGS facilities along major gas transmission routes, outside of Russia, inclusive
• take measures for distributing in the II and III quarters of 2004 the gas volumes envisaged in the gas balance to be injected into UGS facilities since warm weather set in the 2003-2004 autumn-winter heating season, prevented from withdrawing the targeted gas volumes from UGS facilities
• devise and implement a number of measures aimed at upgrading and technically modernizing gas transmission facilities to ensure the soaring Central Asian gas transportation
• ensure for research, design and technology companies to largely shift over to a tender-based elaboration of research & development programs

Reference:

In 2003 Gazprom produced 540.2 bcm of gas, 8.6 up on the target and 18.3 bcm up on the gas production level in 2002. Yamburggazdobycha (26.9 bcm up), Noyabrskgazdobycha (0.56 bcm up) and Astrakhangazprom (0.52 bcm up) largely contributed to building up gas production.

In 2003 Gazprom’s gas condensate and oil production reached 11 million tons, 0.6 million tons up on the target and 0.4 million tons up on 2002. The Company also reached its gas processing product target.

Gazprom’s 2003 gas exports outside the CIS, to the CIS and Baltic States accounted for 132.9 bcm and 42.6 bcm, respectively, 4.3 bcm and 0.3 bcm up against 2002.

The Company delivered 289.1 bcm of gas to Russian consumers, 6.8 bcm up on 2002.

In 2003 Gazprom’s subsidiaries constructed 333 wells, including 272 field-based and 4 UGS facility-based producing wells and 21 field-based and 4 UGS facility-based exploratory wells. At the same time the Company examined the compressor station equipment used at 16 gas transmission and 4 gas production subsidiaries as well as inspected 153 gas pumping units (100% on the target).

In 2004 Gazprom plans to produce 542 bcm of gas, 10.6 million tons of gas condensate and 780 thousand tons of oil. Nevertheless, due to warm weather conditions during the 2003-2004 autumn-winter heating season, Gazprom is expected to non-withdraw some 6-8 bcm of gas from UGS facilities. That is why the Company will reduce gas injections into UGS facilities during the summer period and in case gas volumes targeted for the II and III quarters of 2004 remain undistributed, the Company will alter its gas production plans for 2004.

Gazprom’s Capital Construction Plan for 2004 envisages launching 336 producing gas wells, constructing 1,538 km of gas pipelines, 3 comprehensive gas treatment units, 14 compressor stations with total installed capacity of 1,251 thousand kW. The active capacity of UGS facilities is planned at 1.65 bcm of gas, with 55 wells launched.

DIVISION OF RELATIONS WITH MASS MEDIA