London hosted today a TV Conference by Gazprom’s representatives, dedicated to the publication of Gazprom’s consolidated accounts for 2003 filed in accordance with the International Financial Reporting Standards.

The Conference was opened by Andrey Kruglov, Deputy Chairman of Gazprom’s Management Committee and Head of the Company’s Finance and Economics Department. A. Kruglov outlined Gazprom’s 2003 operating highlights and challenges to be met in the short and long term.

According to A. Kruglov, corporate business expansion largely drove operational expenses in 2003. Gazprom keeps on managing its operational costs. In particular, the Company is setting up norms and standards of expenses incurred by its subsidiaries and associated undertakings and is working on the cost structure optimization.

Speaking of the increase in Gazprom’s net debt for 2003, A. Kruglov underscored that it had been Gazprombank’s broader scope of operations that mostly contributed to the above-mentioned.

Simultaneously, increased advance payments made by Gazprom stemmed from the need to prepay contract orders fulfilled for the Gazprom Group by various Russian industrial companies.

The Deputy Chairman of Gazprom’s Management Committee also reported on the Company’s achievements in changing the loan portfolio structure. As of today, long-term and cost-effective borrowings account for 62% of the total loans taken by Gazprom.

In addition, A. Kruglov laid special emphasis on the causes of increased main operational costs and identified other expenses.

Addressing other operational expenses, A. Kruglov pointed out that the bulk of these were lease and insurance costs as well as a non-refundable value added tax. While “Other Expenses” were generally on a decline, lease costs were instead on a rise.

“Gazprom’s top management has scrutinized the Company’s financial operations. Further promotion of business is closely linked with the corporate shareholders and investors’ interests,” – A. Kruglov was quoted as saying.

DIVISION OF RELATIONS WITH MASS MEDIA