Investment Program

The Gazprom Management Committee has approved the updated key figures of the Gazprom Investment Program and draft Budget (Financial Plan) for 2007.

Pursuant to the draft Investment Program, the total investments are earmarked at RUR 762.3 bln, which is RUR 232.92 bln up on the Investment Program approved in January 2007. Therefore the capital investments will be at RUR 319.78 bln (RUR 40.78 bln less as compared with the Investment Program approved in January 2007); long-term investments will make up RUR 442.52 bln (RUR 273.7 bln up on the Investment Program approved in January 2007).

According to the updated draft Budget overall cash income & revenues will make up RUR 2,277 trln, which is RUR 289 bln less as compared with the Budget approved in January 2007. Liabilities, expenditures and investments will increase by RUR 93 bln and account for RUR 2,749 trln. The total financial borrowings are projected at RUR 421.2 bln. The increase in borrowings is driven by the need to finance the acquisition of new assets. Financial borrowings for the current production and operating activities will remain unchanged at RUR 90 bln.

The necessity to update the Investment Program and Budget was driven mainly by the share acquisition of Sakhalin Energy, Beltransgaz and Mosenergo. Additionally, the Investment Program modification stamps in particular from the need to adjust a list of investment projects and investment scope. The Budget adjustments can also be explained by lower gas marketing volume due to the anomalously warm winter 2006-2007, change in macroeconomic rates.

The Gazprom Investment Program covers the most promising investment projects.

The major gas production projects are as follows: constructing infrastructure for the Kharvutinskaya area of the Yamburgskoye field, the Bovanenkovskoye and Kharasaveyskoye fields, developing the Shtokman and Prirazlomnoye fields. Facility construction will continue on the Yen-Yakhinskoye, Urengoyskoye, Zapolyarnoye and other fields.

The major gas transmission projects are: constructing the Northern Tyumen Oblast - Torzhok gas pipeline, expanding the Urengoy gas transmission hub, expanding northwestern Russia’s gas transmission network also aimed at delivering gas via the Nord Stream gas pipeline as well as constructing gas branch pipelines and gas distribution stations and upgrading gas transmission facilities.

Capital investments will also be channeled to reconstruct primary gas production facilities, technically reequip underground gas storage facilities, carry out engineering & design and geological exploration and conduct production drilling in fields.

The long-term financial investments plan for 2007 contemplates financing upstream projects abroad (in the Republics of Tadzhikistan and Kyrgyzstan, Block 112 of the Republic of Vietnam, India’s Bengal Bay and the Ustyurt region of the Republic of Uzbekistan).

Additionally, the plan embraces granting long-term loans to Gazprom’s subsidiaries operating on the Yuzhno-Russkoye field, in the Krasnoyarsk Krai, Venezuela and the Caspian Sea offshore.