Gazprom’s Management Committee today reviewed the paperwork on the Company’s involvement in the Yuganskneftegaz’s 76.79% stake sale tender, presented by Gazpromneft and Deutsche Bank serving as advisor on Gazprom’s oil business strategic development. The Management Committee approved Gazpromneft’s final binding bid made based on the potential purchase economic efficiency.

Simultaneously, the Management Committee acknowledged the expediency of making a borrowing and granting it as a loan to Gazpromneft for its participation in the tender on Yuganskneftegaz’s stake acquisition, with Gazprom’s 2004-2005 budget to be appropriately amended.

The Management Committee adopted the resolution to submit the issue on ratification of transactions related to Gazpromneft’s involvement in the Yugansktransgaz’s 76.79% stake sale tender for Gazprom’s Board of Directors’ consideration.

Reference:

On 29 October 2004, Gazprom’s Board of Directors agreed on the foundation of Gazpromneft, a new Gazprom 100% subsidiary. The Resolution on Gazpromneft’s Incorporation became effective on 1 November, headquartering the company in Saint-Petersburg and naming Sergey Bogdanchikov as its Director General.

Gazpromneft was founded within the 2nd stage of Gazprom’s restructuring that stipulates the consolidation of the Company’s core businesses within independent legal entities.

Under the RF Government’s Directive, Gazprom’s state-controlled stake will be increased from 38.37% to 50% + 1 share through Rosneft’s takeover by Gazprom, with the former company’s oil assets to be handed over to Gazpromneft.

Gazpromneft will be mainly focused on oil and gas condensate production, transmission and storage.

In 2003, Gazprom extracted 11 mln t of oil and gas condensate, with 11.9 mln t of liquid hydrocarbons expected to be withdrawn in 2004.

Rosneft’s oil and gas condensate production accounted for 19.6 mln t in 2003, with 21.9 mln t slated for 2004.

Deutsche Bank is acting as Gazpromneft’s advisor on its business development strategy matters.

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