Gazprom’s Headquarters hosted today a meeting of the Working Group for Gazprom’s intra-corporate governance structure improvement, presided by Alexander Ananenkov, Deputy Chairman of Gazprom’s Management Committee.

The meeting addressed fulfillment of a plan on key measures aimed at improving Gazprom’s governance structure, ratified by Alexey Miller, Gazprom’s Management Committee Chairman on 27 February 2004. The Working Group discussed proposals on enhancing the operating efficiency of Gazprom’s subsidiaries in the natural gas production and transmission sectors. In particular, the parties deliberated on measures targeted at establishing independent units within the subsidiaries simultaneously dealing with gas production and processing and gas transmission and underground storage.

The meeting also addressed issues related to setting up a specialized company engaged in liquid hydrocarbon production. The parties underscored that the projected company was expected to become the largest oil producer in Russia, possessing over 2 billion tons of liquid hydrocarbon commercial reserves.

At the same time, the meeting laid special emphasis on resolving the major task of Gazprom’s restructuring – improving the financial flow transparency, reducing expenses and enhancing the corporate operating efficiency, in general. As it was pointed out, the intra-corporate governance structure will be improved on a phase-by-phase basis and this move will pursue the objective of reinforcing Gazprom’s vertical integration.

At the end of the meeting, heads of the sub-committees received instructions to keep on devising detailed plans of Gazprom’s intra-corporate governance structure improvement.

The next ordinary meeting of the Working Group is slated for the forthcoming week.

Reference:

Gazprom’s intra-corporate governance structure is being improved within the 2nd phase of the Company’s restructuring mainly targeted at enhancing Gazprom’s operating efficiency as a vertically integrated organization and optimizing its subsidiaries’ core businesses.

Gazprom has so far practically met the major challenges targeted for the 1st phase of its restructuring – improving the governance structure, regulatory procedures and budgeting system of the parent company.

The intra-corporate structural changes are expected to result in the completion of work aimed to unbundle financial flows in the extraction, transmission, processing, underground storage and marketing of gas and liquid hydrocarbons.

In addition to the concentration of core businesses, Gazprom’s internds to single out maintenance agencies, distribution networks, social infrastructure facilities and separate technological and commercial communications services.

Said changes will allow Gazprom to have absolutely transparent gas transmission, production and marketing expenses, which is important for setting reasonable transmission tariffs. By consolidating its core businesses, the Company will raise the efficiency and quality of all its subsidiaries’ operations.

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