On 21 November 2003 OAO Gazprom issued its unaudited consolidated interim condensed financial information prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” (IAS 34) for the three and six months ended 30 June 2003. 

The table below presents the unaudited IFRS consolidated interim condensed statement of operations for the three and six months ended 30 June 2003 and 2002.  Amounts for the three and six months ended 30 June 2002 are expressed in terms of the equivalent purchasing power of the Russian Rouble as of 31 December 2002.  As the characteristics of the economic environment of the Russian Federation indicated that hyperinflation had ceased, effective from 1 January 2003 we no longer apply the provisions of International Accounting Standard 29 “Financial Reporting in Hyperinflationary Economies” (IAS 29).  All amounts are presented in million Russian Roubles, unless otherwise stated.

For the six months ended 30 June 2003 sales (net of excise tax, value added tax and customs duties) increased by RR115,290 million to RR421,827 million, or 38% compared to the six months ended 30 June 2002.  Total sales for the three months ended 30 June 2003 increased by 42% to RR189,577 million compared to the three months ended 30 June 2002.  More detailed information on our sales for the three and six months ended 30 June 2003 and 2002 is presented in the table below.

Net sales of gas increased by RR86,322 million, or 33% to RR346,401 million in the six months ended 30 June 2003 compared to the six months ended 30 June 2002.  This increase was primarily due to higher prices and volumes for sales both in Europe and Russia in the three and six months ended 30 June 2003. 

Average price of gas exported to Europe increased by 32% and 21% in the three and six months ended 30 June 2003, respectively, compared to the same periods in 2002.  The increases in the average prices of gas exported to Europe followed the increase in U.S. dollar oil prices in 2002.  Sales volumes to Europe increased by 8% and 10% in the three and six months ended 30 June 2003, respectively, compared to the same periods in 2002, primarily related to sales under existing long-term contracts.  The increase in average constant RR prices for domestic gas sales in the three and six months ended 30 June 2003 compared to the same periods in 2002 followed the increase in domestic gas tariffs set by the Federal Energy Commission. 

Sales of gas condensate and oil and gas products increased by RR17,280 million, or 79% in the six months ended 30 June 2003 compared to the six months ended 30 June 2002, primarily due to higher oil products prices and the fact that OAO AK Sibur (“Sibur”) increased its level of operations.

Our operating expenses increased by 22% to RR279,374 million in the six months ended 30 June 2003 as compared to the six months ended 30 June 2002.  This increase was primarily due to higher transit costs (RR12,297 million), staff costs (RR11,159 million), costs of refined product processing (RR7,367 million), costs of purchased gas (RR5,850 million) and depreciation (RR4,083 million).  Increases in these items more than offset decreases in cost of materials (RR4,330 million), taxes other than on income (RR4,150 million), and provisions (RR2,367 million).  The increase in transit costs was primarily due to the increased volumes of gas sales to Europe, new transit contracts for gas from Central Asia and higher transportation tariffs in Poland.  The increase in processing costs was primarily related to the increased level of operations at Sibur. 

Our profit tax expense decreased by RR30,194 million to RR40,236 million in the six months ended 30 June 2003 compared to the six months ended 30 June 2002.  The decrease primarily resulted from the fact, that as from 1 January 2003 we no longer apply the provisions of IAS 29, which in prior periods increased the book value of our fixed assets compared to their tax basis and resulted in a deferred tax expense.

Net profit for the three and six month periods ended 30 June 2003 amounted to RR47,789 million and RR 103,761 million, respectively. 

Our net debt balance (defined as the sum of short-term borrowings and current portion of long-term borrowings, short-term promissory notes payable, long-term borrowings and long-term promissory notes payable as well as restructured tax liabilities net of cash and cash equivalents and balances of cash and cash equivalents restricted as to withdrawal under the terms of certain borrowings and other contractual obligations) decreased by RR12,210 million or 3%, from RR401,673 million as of 31 December 2002 to RR389,463 million as of 30 June 2003.  This was primarily due to the decrease in short-term borrowings (including promissory notes) more than offsetting the increase in long-term borrowings (including promissory notes).

More detailed information on the IRFS consolidated interim condensed financial information for the three and six months ended 30 June 2003 as well as our “Management’s discussion and analysis of financial results for the six months ended 30 June 2003” can be found on Gazprom’s web site(www.gazprom.ru).

PRESS SERVICE OF ???GAZPROM

Contacts:                         +7 (095)719-34-43

fax:                                  (095) 719-83-44

e-mail:                             pr@gazprom.ru

https://                            www.gazprom.ru