Gazprom’s Headquarters are hosting an ordinary meeting of the Company’s Board of Directors.

The Board addressed the Main Principles of Gazprom’s Cost Optimization (Reduction) Program Formulation.

The Board ordered to ensure the implementation of the Main Principles of Gazprom’s Cost Optimization (Reduction) Program Formulation while drafting similar programs for 2005 and subsequent years.

Reference:

Starting 2002, Gazprom has been annually drafting and implementing cost optimization (reduction) programs. The 2003 Cost Reduction Program prescribed corporate expenses being cut by RUR 40 billion and was a success. Targeting at a RUR 30 billion cost reduction, the 2004 Program pursues the objective of integrating cost optimization steps that will allow the Company to cut corporate expenses against the figures fixed in Gazprom and its subsidiaries’ budgets.

Cost reduction programs for 2005-2006 will be mainly focused on:

• Enhancing the gas-pumping equipment efficiency
• Reducing technological gas consumption and non-operational losses
• Raising the pipeline network efficiency
• Cutting power consumption and its supply costs
• Achieving more beneficial terms of procurement and contracting works by means of contest-based procedures.

The Main Principles of Gazprom’s Cost Optimization (Reduction) Program Formulation represent basic provisions establishing common rules of cost reduction measures preparation and efficiency measurement.

DIVISION OF RELATIONS WITH MASS MEDIA