At today’s Gazprom’s Management Committee meeting, a draft budget (financial plan), draft program of financial borrowings, draft program of costs cut and draft program of corporate investments for 2004 were discussed.

Total revenues/ incomes and expenditures of Gazprom in 2004 are expected to reach RR 1,164 billion and RR 1,397 billion, respectively.

In 2004, borrowings in the amount of RR 150 billion are provided. At the same time, total repayments including those from credits repayment, bond issue redemption, acceptance of bills, and payment of interests and coupons, are envisaged in the amount of RR 172.9 billion.

Total budget deficit could reach RR 43.2 billion.

The Draft Payment Balance for 2004 takes into account costs reduction in the amount of RR 30 billion. Of that amount, operating expenditures and investments are set to be cut by RR 20 billion and RR 10 billion, respectively. Expenses will be primarily reduced in the following areas: implementation of advanced technologies and energy-saving programs, keeping of non-core and social assets, administration and operating costs, and construction costs.

The Management Committee has approved in principle the investment program of Gazprom for 2004 in the amount of RR 232.34 billion. Of that amount, investments account for RR 212.34 billion, and long-term financial investments amounts to RR 20 billion.

In the corporate investment program, investments in the gas transmission sector accounts for 54% and those in gas production exceed 26%.

Gazprom’s investment policy for the next year was developed based on the major investment projects whose implementation is aimed to resolve the below-mentioned strategic tasks:

• To maintain annual gas production at the level of 542 bcm and to build-up gas production in consecutive years;
• To interruptedly supply gas to Russian consumers, primarily, to citizens, and to respect long-term export commitments;
• To build-up resource base and fulfill licensing agreements;
• To ensure reliable operation of the gas transmission system;
• To strengthen the company’s standing on the international markets;
• To stabilize financial state of the company and to create conditions for the company’s capitalization build-up.

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