The Management Committee approved Gazprom’s 2004 draft budget (financial plan) updated based on the first half achievements, taking into account changes in the corporate budget drafting scenarios. The Management Committee also endorsed an investment program of Gazprom for 2005 and approved its major parameters specified at the end of the first half.

The updated draft budget and investment program are pending approval by the Board of Directors.

Under the specified draft budget, Gazprom’s overall income & revenues will account for RUR 1,654.2 bln, RUR 170.9 bln up on the financial plan forecast prepared in March 2005. At the same time, total expenses, financial borrowings and budgetary surplus will make up RUR 1,792 bln, RUR 110 bln (as previously) and RUR 0.992 bln, respectively.

In accordance with the updated draft investment program, capital and financial investments are projected to climb RUR 49.55 bln to RUR 237.45 bln and RUR 42.85 bln to RUR 67.55 bln, respectively.

Thus, total investments will grow RUR 92.4 bln to RUR 305 bln.

The capital investment growth is primarily driven by the need of launching construction works to ensure the commissioning of paramount facilities over 2006. In addition, appropriate amendments were made to the investment program due to the upcoming construction of the onshore Gryazovets – Vyborg section of the North-European gas pipeline (to be initiated in the autumn of this year) and of pipelines to the city of Arkhangelsk and town of Severodvinsk as well as due to additional expenditures earmarked for gas supplies to Russia’s regions.

The 2005 investment program is targeted at meeting Gazprom’s long-term challenges including guaranteed gas deliveries to consumers of the Russian Federation and fulfillment of contractual gas export commitments, which is directly linked with the implementation of the Russia’s Energy Strategy to 2020.

Reference:

Over the first half of 2005, Gazprom supplied all its customers with 282.8 bcm of gas, which is 1.2 bcm up on the target. The growth stemmed from increased gas exports to West Europe (by 4.9 bcm) and the CIS countries (by 1.8 bcm). Based on the top management’s report, gas sales ascended RUR 47.8 bln versus the schedule.

Gazprom’s overall earnings over the first half of 2005 amounted to RUR 720.7 bln, a RUR 44.1 bln increase on the targeted 6.5 percent.

The Company’s sales profit reached RUR 148.9 bln, which is RUR 38.2 bln more compared to the schedule.

Gazprom’s net profit for the January-June 2005 period totaled RUR 88.4 bln, or jumped 2.1fold versus the target.

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