Gazprom’s Board of Directors has convened on a meeting at the Company’s Headquarters.

The Board heard a report on Gazprom’s mid- and long-term gas production strategies and tasked the Management Committee with further optimizing approaches to identifying strategic gas extraction priorities pending approval by the Board in the autumn of this year.

Reference:

Gazprom’s strategic objective is solidifying the Company’s leading role both on the domestic and global gas markets, providing secure natural gas and other fuel deliveries to Russian and foreign customers and bolstering the corporate capitalization growth. To meet the challenges set, Gazprom needs to resolve a whole range of problems relative to the resource base and gas production efficient development.

In 2002, Gazprom’s Board of Directors and Management Committee set the strategic task of building up gas extraction. Between 2002 and 2004, Gazprom brought on steam seven gas treatment units with the 142.5 bcm/y total nominal capacity and 13 booster stations with 1,056 MW in overall installed capacity.

As a result, gas extraction stopped tending to a constant fall. Over 2001, 2002, 2003 and 2004, Gazprom produced 512.0, 521.9, 540.2 and 545.1 bcm of gas, respectively, and 547 bcm is slated for this year.

The Russia’s Energy Strategy to 2020 stipulates the expansion of the feedstock base and achievement of the following extraction levels in Russia:

• 645-665 bcm in 2010 (including 550-560 bcm to be produced by Gazprom);
• 710-730 bcm in 2020 (including 580-590 bcm to be produced by Gazprom);

To meet the aforementioned challenges, Gazprom intends to promote gas extraction both in the conventional gas production provinces (Western Siberia) and new ones, the Yamal Peninsula, Arctic offshore, Eastern Siberia and the Far East inclusive.

At present, Gazprom is developing documents and projects on gas production in new oil-and-gas-bearing areas and is endeavoring to identify the field development timing and to finalize the respective investment decision-making process over 2005 through 2006.

Said documents and projects include:

• General Scheme for the Russian gas industry development;
• Program for the Russian Federation offshore hydrocarbon extraction up to 2030;
• Fundamentals for the Yamal Peninsula-based Bovanenkovo field and supporting gas transmission infrastructure financing;
• Program on setting up an integrated gas production, transmission and supply network in Eastern Siberia and the Far East, taking into account potential gas exports to China and other countries of Asia Pacific.

The General Scheme for the Russian gas industry development will include proposals on:

• the optimum gas extraction amounts ensuring the country’s energy safety and gas market needs;
• the sequence of new field commissioning;
• the synchronized bringing into operation of gas and condensate production, transmission, processing and storage facilities.

Gazprom together with the Industry and Energy Ministry plan to submit the General Scheme for the RF Government’s approval over the 1st half of 2005.

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