On 8 July 2005 ??? Gazprom issued its audited 2004 IFRS consolidated financial statements.

The table below presents the profit and loss account for the years 2004 and 2003. All amounts are presented in million Russian Roubles, unless otherwise stated.

For the year ended 31 December
			2004		2003
Sales (net of value added tax (VAT), excise tax and customs duties)			976,776		819,753
Operating expenses			(708,943)		(593,415)
Operating profit			267,833		226,338
Net finance income			10,628		2,141
Share of net income of associated undertakings		8,151			3,478
Gain on available-for-sale investments			1,253		5,017
Profit before profit tax and minority interest			287,865		236,974
Current profit tax expense			(57,949)		(42,368)
Deferred profit tax expense			(21,939)		(32,449)
Profit tax expense			(79,888)		(74,817)
Profit before minority interest			207,977		162,157
Minority interest			(2,293)		(3,062)
Net profit			205,684		159,095

In 2004 sales of goods, products, works, services (net of VAT, excise tax and customs duties) increased by RR157,023 million, or 19%, to RR976,776 compared to 2003. More detailed information on sales for 2004 and 2003 is presented in the table below.

in million Roubles (unless otherwise stated)	For the year ended 31 December
	2004		2003
Sales of gas
Europe
Net sales (net of excise tax and customs duties)	448,250		416,268
Volume in bcm	153.2		140.6
Average price, RR/mcm (including excise tax and customs duties)	3,967.4		4,037.9
Former Soviet Union
Net sales (net of VAT, excise tax and customs duties)	68,763		46,582
Volume in bcm	65.7		44.1
Average price, RR/mcm (including excise tax and customs duties, net of VAT)	1,345.8		1,336.7
Russia
Net sales (net of VAT and excise)	250,445		187,612
Volume in bcm	305.7		309.1
Average price, RR/mcm (including excise tax, net of VAT)	826.2		669.9
Total sales of gas
Net sales (net of VAT, excise tax and customs duties)	767,458		650,462
Volume in bcm	524.6		493.8
Sales of gas condensate and oil and gas products (net of VAT, excise tax and customs duties)	122,248		92,180
Gas transportation sales (net of VAT)		29,027	28,226
Other sales (net of VAT)	58,043		48,885
Total sales (net of VAT, excise tax and customs duties)	976,776		819,753

In 2004 net sales of natural gas increased by RR116,996 million, or 18%, to RR767,458 million compared to 2003.

In 2004 net sales of natural gas to Europe increased by RR31,982million, or 8%, to RR448,250 million compared to 2003. This was primarily due to a 9%, or 12.6 bcm, increase in sales volumes. The increase in sales volumes was primarily due to increased volumes sold to Germany, France, Italy and Great Britain under existing and new contracts on gas supplies.

Net sales of natural gas to the FSU countries increased by RR22,181 million, or 48%, to RR68,763 million in 2004 compared to 2003. This is explained primarily by the increase in volumes of gas sold to the FSU countries, in particular due to a 8.3 bcm increase in sales volumes to Ukraine and a 5.1 bcm increase in sales volumes to Kazakhstan.

In 2004 net sales of natural gas in the domestic market increased by RR 62,833 million, or 33%, to RR250,445 million compared to 2003. This was due to the increase in domestic gas tariffs set by the Federal Tariffs Service which was slightly offset by the 1%, or 3.4 bcm, decrease in sales volumes.

In 2004 total excise taxes on natural gas sales decreased by RR150,348 million, or 98%, to RR3,703 million compared to 2003. The decrease was due to the fact that excise tax on natural gas produced after 1January 2004 was abolished. This decrease was offset by the RR148,183 million increase in customs duties to RR177,526 million in 2004 compared to RR29,343 million in 2003.

In 2004 sales of gas condensate and oil and gas products increased by RR30,068 million, or 33%, to RR122,248. This increase was primarily due to increased volumes and prices for sales on the domestic market and consolidation of additional petrochemical companies in the six months ended 31December 2003. Sibur and our other petrochemical companies accounted for 59% and 63% of sales of gas condensate and oil and gas products in 2004 and 2003, respectively.

Operating expenses increased by RR115,528 million, or 19%, to RR708,943 million in 2004 compared to 2003. These expenses accounted for 73% and 72% of sales in 2004 and 2003, respectively.

This increase in operating expenses was primarily due to higher cost of purchased gas (RR40,880 million), taxes other than income tax (RR37,192 million), higher staff costs (RR22,731 million), materials (RR20,495 million), insurance (RR10,726 million) and depreciation (RR10,616 million) which were partially offset by the release of provision for impairment of assets and lower cost of processing services. The increase in taxes other than income tax was primarily due to changes in tax legislation related to natural resources production tax. The increase in the cost of purchased gas was primarily related to purchases of gas in Central Asia and in Europe for resale to customers in Western Europe and FSU. The increase in staff costs was primarily due to the increase in average base salaries and other payments, and the increase in the average number of employees. The increase in the cost of materials was primarily related to the acquisition of controlling interests in a number of petrochemical companies in 2003-2004 and higher prices of materials. The increase in insurance expense was primarily due to decrease of our interest in insurance company OAOSogaz in 2004 which resulted in de-consolidation of OAO Sogaz.

In 2004 release of provision for impairment of assets amounted to RR22,452million compared to the expense of RR15,298million in 2003. The release was primarily due to the reassessment of impairment provision against accounts receivable due from NAK Naftogaz Ukraine related to gas sales in 1997-2000, which resulted in net release of RR19,312million. The provision for impairment was reassessed as the result of the agreements signed with NAK Naftogaz Ukraine in August 2004.

Profit tax increased by RR5,071 million, or 7%, to RR79,888 million in 2004 compared to RR74,817 million in 2003. Overall effective tax rate decreased from 32% in 2003 to 28% in 2004.

In 2004 net profit increased by RR46,589 million, or 29%, to RR205,684 million compared to 2003.

DIVISION OF RELATIONS WITH MASS MEDIA