The Board of Directors took notice of the information regarding the status and size of Gazprom's loan portfolio, the amount and conditions of the guarantees issued as well as the debt financing strategy.

It was noted that Gazprom was pursuing its loan portfolio management policy in an efficient way that was clearly confirmed by changes in the key debt ratios. For instance, it is expected that the total debt to EBITDA (earnings before interest, taxes, depreciation and amortization) ratio will drop down to approximately 1 by early 2011 versus the early 2010 (1.49).

Background:

According to the latest published data on Gazprom's consolidated financial statements in compliance with IFRS, Gazprom Group's total debt dropped by 17 per cent down to RUB 1.35 trillion as at June 30, 2010. Out of this amount the short-term loans accounted for 22.5 per cent. The bulk of the Group's debt was owed by Gazprom – 70 per cent and Gazprom neft Group – 15 per cent.

Over the first half of 2010 the total debt of Gazprom Group decreased by RUB 276 billion mainly due to the deconsolidation of the Soyuz and Gazenergoprombank banks, increased control over the borrowings in the Group's subsidiaries, early repayment of expensive loans through internal resources and flexible management of liquidity.

The analysis and management of Gazprom's loan portfolio, monitoring and forecasting of the consolidated debt load, performed in line with the global practice, relies on the relative debt ratios. Over the first half of 2010 the total debt to EBITDA ratio reduced from 1.49 to 1.09. In addition, EBITDA was 19.9 times higher than the interest expenses as at June 30, 2010 and 14.7 times as at December 31, 2009. Over the first half of 2010 such a crucial debt load indicator as the debt to equity ratio fell from 28.8 to the Company's record-low level of 22.3.

When managing the loan portfolio of Gazprom, the Company's executives take account of the need to maintain credit ratings at the investment level and implement the resolution by the Board of Directors on Gazprom's Strategic Development Targets dated July 12, 2006.

Since 2006 all of the three primary international rating agencies – Fitch Ratings, Moody's and Standard&Poor's – have maintained Gazprom's credit ratings at the investment level enabling to attract relatively cheap loans and a large number of investors. By now, Gazprom's ratings correspond to the sovereign ones.

Amid the global crisis and during the post-crisis period Gazprom promptly responded to rapid changes in financial markets and flexibly diversified the debt management policy according to the market situation. This made it possible for the Company to secure access to the majority of borrowing instruments and retain credit ratings at the investment level. The Company has taken great efforts to refund short-term loans and decrease the debt amount.

The strategic principles of debt financing in Gazprom include, inter alia, diversification of sources, application of a wide spectrum of borrowing tools, reduction of the debt cost and smothering the repayment profile, minimization of the secured loan share, balancing the currency composition of the debt and profit amounts, expansion of the pool of banks and investors.

The outlined principles also stipulate more intense efforts on project financing and utilization of hedging tools related to currency and interest rates.