Management Committee approved Comprehensive Program on upgrading and development gas facilities

Background

The need to implement the Comprehensive Program on upgrading and developing Gazprom’s gas facilities for 2004–2008 has arisen as the Company has almost established the gas distribution sub-industry. At present, Gazprom and its affiliated companies control 206 gas distribution organizations operating 75% of Russian gas distribution pipelines (403 thousand km), provide deliveries of 58% of the total gas consumed to 75% of localities (some 158 bcm of gas). At the same time, the Company delivers gas to 56% of apartment buildings and 72% of the country’s industrial companies.

While devising the Program, Gazprom conducted a detailed inventory of its gas distribution facilities and determined the technical status of those. Based on the data obtained, the Company worked out a number of sci-tech organizational and financial measures targeted at maintaining production facilities of gas distribution systems.

The Program implementation will allow Gazprom to tackle the following tasks:

1. Determine the current technical condition of gas distribution systems owned by Gazprom and its affiliated companies.
2. Timely upgrade and develop gas facilities and implement programs on gas deliveries to the RF regions.
3. Implement an integrated technical policy in the gas distribution sector.

The Program envisages for the works to be conducted at all the gas distribution system facilities. While upgrading and developing those, Gazprom will apply cutting-edge technologies and equipment.

In order to successfully implement the Program, Gazprom will have to channel RUR 7.95 billion in investments within a 5-year period, including RUR 4.11 billion for upgrading and RUR 3.84 billion for developing its gas facilities.

The Program will be funded by gas distribution organizations, Gazprom (the capital investment scheme) and independent investors.