Over 12 to 14 July, Gazprom’s delegation leaded by Alexander Ananenkov, Deputy Chairman of Gazprom’s Management Committee paid an ordinary working visit to Russian machine building, metallurgical and pipe manufacturing companies involved in the production of self-elevating drilling units, large diameter pipes and other output.

The delegation visited the Large Diameter Pipe Plant (the town of Nizhny Tagil), the Sevmashpredpriyatiye State Production Association, the Zvyozdochka State Machine Building Company (the town of Severodvinsk), the Severstal company (the town of Cherepovets) and the Izhora Pipe Plant (the town of Kolpino, Leningrad region).

While meeting heads of the aforementioned companies, Alexander Ananenkov pointed out that joint activities of Gazprom and Russian metallurgists, pipe manufacturers and machine builders were largely pursueing the objective of manufacturing domestic output that could adequately compete with foreign counterparts. Simultaneously, A. Ananenkov particularly underscored that domestic manufacturers supplying equipment for the Company needed to pay special attention to optimizing pricing specifications. “Within the nearest decades, Gazprom is facing a challenge to extract and deliver gas that would be competitive on foreign gas markets. This challenge will remain unmet unless Russian manufacturers receiving fuel from Gazprom at regulated prices make certain concessions to the Company in terms of output value. This particularly refers to the metallurgical sector since the metal price has grown 70% since the year-start and products supplied to Gazprom are largely made of metal.”

In the course of the business trip to St. Petersburg, Alexander Ananenkov conducted meetings with top executives of the leading Russian pipe and machine manufacturing companies that are providing Gazprom with gas pumping units and related output.

The meetings emphasized that Gazprom and Russian pipe producers, metallurgists and chemists’ joint efforts should result in the manufacture of large diameter pipes to be somewhat better than cross-border analogues. At the same time, large diameter pipe production should not only meet Gazprom’s needs but enable domestic producers to export the output manufactured. The goal is planned to be achieved by 2006. Special emphasis should be currently laid on designing and producing reliable internal and insulating coating for Russia-made large diameter pipes.

The final meeting attended by leaders and experts of Russian metallurgical, pipe manufacturing and machine building companies, addressed the issue of organizing production of pipes and equipment designed for an over 100 Ata pressure and possessing improved hydraulic specifications.

A. Ananenkov pointed out that Russian metallurgists, pipe and machine manufacturers had real opportunities to provide deliveries of high-quality pipe and machine building output indispensable to implement Gazprom’s projects on the Yamal Peninsula, construct the North-European gas pipeline, set up a gas pipeline system in the country’s east and implement programs on upgrading and modernization of Russia’s United Gas Transmission System.

In the course of the visit, the Deputy Chairman of Gazprom’s Management Committee also held a working meeting with Nikolai Kiselyov, Head of the Arkhangelsk Region. The parties confirmed mutual intentions to shortly enter into a new 5-year Cooperation Agreement. The Agreement is planned to particularly focus on initiating the construction of the Nyuksenitsa-Arkhangelsk gas pipeline, intensifying gas consumption in municipalities of the Arkhangelsk Region, constructing the Northern Tyumen Region-Torzhok gas trunk line and identifying mutual interests while developing offshore hydrocarbon fields.

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Gazprom’s representatives regularly undertake circuit meetings to domestic machine building companies supplying equipment for the Company. These meetings primarily target at jointly and promptly meeting challenges related to the enhancement of quality, reliability and optimum value of output delivered to Gazprom.

While giving wide backing to its contracting organizations, Gazprom puts forward a number of requirements to machine builders:

• manufacturing of block-type equipment
• ensuring maximum readiness of factory-tested equipment
• improving reliability
• establishing a repair and maintenance system
• cutting product value and reducing shipment deadlines

Starting 1998, Gazprom and Russian pipe manufacturers have been building up their relationships within Agreements and Programs on sci-tech cooperation, aimed at designing and developing new types of pipes meeting stricter operational requirements, in particular, pipes designed for an 80-120 Ata working pressure.

As a result of Gazprom’s interaction with the Volzhsky Pipe Plant, for the 1st time in Russia, the latter started producing 1,420 mm pipes (some 100 thousand tons manufactured in 2003 and over 200 thousand tons targeted for 2004). In addition, by year-end 2005 and the start of 2006, the Vyksa Steel Works and the Izhora Pipe Plant plan to launch annual production of some 400 thousand tons and 300 thousand tons of large diameter pipes, respectively.

Gazprom, in its turn, is reducing the share of imported large diameter pipes (last year’s parameter of 55% is forecasted not to exceed 37%, this year).

DIVISION OF RELATIONS WITH MASS MEDIA