Gazprom’s Management Committee examined today the preliminary outcomes of implementing the Company’s Plan for Social and Economic Development, Balance of Payments and Cost Reduction Program for 2003.

In 2004, the Gazprom Group’s gas production is expected to reach 540 bcm, i.e. by 18 bcm more as compared to 2002, and by 8.3 bcm ahead of the plan.

The gas production growth will be basically attributable to advanced commissioning of gas production capacities at the Zapolyarnoye oil and gas condensate field where within the first 10 months of 2003 gas production grew by 25.7 bcm, as compared to the same period of 2002.

Gas condensate and oil production is expected to amount to 10.9 million tons in 2003, i.e. by 0.3 mln t higher than in 2002, and by 0.5 mln t ahead the target.

Gazprom plans to process 33.6 bcm of natural gas and 10 mln t of gas condensate and oil in 2003. Gas refineries are expected to produce 5 mln t of sulfur, 1.8 mln t of gasoline, 1.5 million tons of diesel fuel, 2 mln t of liquefied gas and 381 thou. t of fuel oil.

Gazprom’s gas exports to Western Europe and the CIS and Baltic states in 2003 will account for 132 bcm (+3.4 bcm on 2002) and 42.8 bcm (+0.5 bcm), respectively.

Gazprom will deliver 294.8 bcm (+12.5 bcm) of gas to Russian consumers via the United Gas Transmission System. By November 1, 2003, Russian gas consumers’ indebtedness to Gazprom diminished from RR 38.6 billion (as of the beginning of the year) to RR 36.4 billion.

In 2003, Gazprom consecutively developed its hydrocarbon base and spent some RR 9 billion for this purpose. Thus, the additions to the Company’s hydrocarbon reserves will reach 431.7 mln t of fuel equivalent against 348.5 mln t planned, with gas reserves addition of 428.6 bcm. Gazprom discovered 2 new fields in the Ob and Taz Bays: Kamennomysskoye-Morye and Obskoye. The promising results were obtained for other areas of the Yamal-Nenets Autonomous Region as well as the Krasnoyarsk region (the Beryambinskaya area) and in the Krasnodar Area (the Yuzhno-Chernoerkovskaya area).

While preparing for the 2003-2004 autumn-winter heating season, Gazprom fulfilled the RF Government’s task of accumulating not less than 62 bcm of gas in Russia’s UGS-facilities ahead of time. In 2003, the company launched the Karashurskoye UGS (the Udmurt Reserving Complex of UGS facilities) and the Musinskoye UGS (the Kanchurin-Musinsk Complex of UGS-facilities in Bashkortostan).

In 2003, Gazprom is expected to put into operation 740 km of gas mains and branches, 11 compressor stations and 3 complex gas treatment units with annual capacity of 41.25 bcm of gas. The Company will also bring on stream 299 gas wells and increase the UGS facilities’ capacity by 1.69 bcm.

In order to ensure the reliability of gas production, transportation and storage facilities Gazprom overhauled over 1 thousand km of gas pipelines, 161 lines of underwater crossings, 723 gas-pumping units as well as examined through intelligent pigging over 18,000 km of gas pipelines.

At the same time, Gazprom plans to fully fulfill its Investment Program. Of the total RR 210.1 billion assigned for the Program implementation, RR 193.7 billion for capital investments and RR 16.4 billion – for long-term financial investments. Production capacities are commissioned in line with the approved plan for 2003.

Under the Investment Program, RR 3.5 billion will be channeled to supply gas to Russia’s regions. Gazprom is expected to put into operation 1,440 km of gas distribution pipelines and to deliver gas to over 300 new settlements.

According to the preliminary results, the Company will accomplish the Cost Reduction Program for 2003 on schedule. Expenses will be decreased by RR 40.1 billion. At the same time, Gazprom is working hard on divesting non-core corporate assets.

The Gazprom Group’s net profit in 2003 is expected to account for RR 208.3 billion inclusive RR 177.3 billion of the parent company, i.e. will surpass the scheduled income by RR 56 billion and RR 46 billion, respectively.

From January to December 2003, the market price of Gazprom’s American Depository Receipts (ADR) at the London Stock-Exchange has grown 2.1-fold, or by 114%. As far as the Russian internal market is concerned, the Company’s shares have increased in price by 59% within the analogous period.

As a result, since the beginning of 2003 Gazprom’s capitalization has grown up to USD 33.6 billion, or by 78%, while the Russian Trade System (RTS) index reflecting the development of the Russian stock market as a whole has increased by only 49% over the same period.

The Management Committee pointed out that the Gazprom’s preliminary results for 2003 confirm the Company’s sustainable position. Gazprom has all prerequisites to cope with major tasks aimed at further increasing gas production and fulfilling its commitments on gas supply to domestic and foreign gas consumers.

DIVISION OF RELATIONS WITH MASS MEDIA