A meeting of the Board of Directors is underway at the Company’s headquarters.

The Board of Directors took notice of the information on a series of the Company’s cost optimization measures taken in 2009 and tasked the Management Committee to proceed with the said measures in 2010.

Background:

Gazprom is taking various cost optimization measures. The key ones are as follows: reducing the budget costs with due regard to investment projects and targets priority, compiling and executing cost optimization (reduction) programs, as well as taking specific anti-crisis measures.

Having concentrated its resources on the top-priority projects of the 2009 Investment Program approved in December 2008, Gazprom reduced capital investments by 31 per cent as compared to the Program targets in the environment of the global financial and economic crisis in 2009. In particular, the commissioning of the first start-up complexes of the Bovanenkovo field and the Bovanenkovo – Ukhta gas trunkline system was rescheduled from the third quarter of 2011 to the third quarter of 2012 due to a drop in gas demand. In addition, having taken into account the current market situation, Gazprom cut investments in gas production, processing and underground storage facilities, as well as in the Comprehensive Program for Reconstruction and Technical Re-Equipment of Gas Transmission Capacities over 2007 to 2010.

The annual Cost Optimization (Reduction) Program, together with the specific anti-crisis measures, actually yielded RUB 22.2 billion of cost saving which is much higher than the amount of RUB 11.3 billion planned for 2009. This was mainly achieved owing to the results of the tenders for the supply of materials and equipment, completion of work and rendering of services.

In addition, Gazprom took cost optimization measures in capital construction and repair of production facilities and equipment. For instance, efforts were made to cut down the prices for domestically manufactured materials and equipment, the expenses for contracting companies, as well as the costs of materials and equipment transportation and storage. A number of construction projects were submitted for revision in 2010–2011 in order to find the ways of decreasing the estimated costs.