OAO Gazprom OGZD Investment, Budget and Cost Reduction Program 2012

  OAO Gazprom (OGZD) - Investment, Budget and Cost Reduction Program 2012

RNS Number : 8665P
OAO Gazprom
30 October 2012




                                   RELEASE

30.10.2012

   Board of Directors approves adjusted Investment Program, Budget and Cost
                          Reduction Program for 2012

The Gazprom  Board  of Directors  approved  the adjusted  Investment  Program, 
Budget (Financial Plan), and Cost Optimization (Reduction) Program for 2012.

According to the  adjusted Investment Program  for 2012, the  total amount  of 
investments will  make up  RUB 974.649  billion, which  is a  RUB 198  billion 
increase if  compared to  the Investment  Program approved  in December  2011. 
Meanwhile, the amount of capital investments will make up RUB 890.007  billion 
(a RUB 180.403 billion increase if compared to the Investment Program approved
in December 2011), of which RUB 888.694 billion and RUB 1.313 billion will  be 
allocated for capital construction and acquisition of non-current assets, thus
showing an increase of RUB 179.13  billion and RUB 1.273 billion  accordingly. 
The amount of long-term financial investments will stand at RUB 84.642 billion
(RUB 17.599 billion up on the Investment Program approved in December 2011).

According to the adjusted Budget for  2012, revenues and gains will total  RUB 
4.972 trillion while  liabilities, expenditures  and investments  - RUB  5.396 
trillion. The  external  financial  borrowings  are  determined  at  RUB  91.4 
billion, showing  a RUB  1.4  billion rise  versus  the amount  of  borrowings 
approved in December 2011, which is explained by the USD appreciation  against 
RUB. The Budget surplus will account for RUB 0.2 billion.

The adjusted Cost Optimization (Reduction) Program for 2012 envisages measures
aimed at cost optimization (reduction) to result in a cumulative effect of RUB
19.3 billion.

The 2012  Investment  Program adjustment  is  mainly  driven by  the  need  to 
increase investments in the top-priority projects for natural gas  production, 
transmission and underground storage.

The Budget adjustment stems from volumetric and price changes in gas marketing
and macroeconomic indicators.

Background

The  adjusted  Gazprom  Investment   Program  for  2012  envisages   increased 
investments in pre-development of the traditional production areas,  including 
the Urengoyskoye and Astrakhanskoye fields.

The investments will  be increased  for the Bovanenkovo  - Ukhta  and Ukhta  - 
Torzhok  gas  trunkline  systems  construction  as  well  as  the  Sakhalin  - 
Khabarovsk  -  Vladivostok  gas  transmission  system  and  the  gas  pipeline 
connecting the Kirinskoye  field onshore  processing facility  (OPF) with  the 
Sakhalin main  compressor station  (MCS). Besides,  additional funds  will  be 
allocated for the Southern Corridor project implementation.

The Investment Program envisages increased investments inthe underground  gas 
storage system development.

As part of  the Eastern  Gas Program, the  investments will  be increased  for 
pre-development of the Kshukskoye, Nizhne-Kvakchikskoye and Kirinskoye gas and
condensate fields.

The increase in the long-term financial investments is caused by, inter  alia, 
the necessity to allocate additional funds to power generation projects.

Pursuant to the adjusted Investment Program for 2012, the following production
projects  will  remain  the  top-priority  investment  recipients  in  capital 
construction: pre-development  of  the Bovanenkovo,  Zapolyarnoye,  Medvezhye, 
Urengoyskoye, Yamburgskoye and other fields.

The gas transmission priorities will include construction of the Bovanenkovo -
Ukhta and Ukhta - Torzhok gas  trunkline, the Gryazovets - Vyborg, Pochinki  - 
Gryazovets and SRTO - Torzhok gas trunklines systems.

In Eastern Russia the Investment Program will still be focused on the Sakhalin
- Khabarovsk - Vladivostok gas transmission system, the Kirinskoye field OPF -
Sakhalin  MCS   gas  trunkline   and   pre-development  of   the   Kshukskoye, 
Nizhne-Kvakchikskoye and Kirinskoye fields.

Funds are earmarked for retrofitting the major gas production and transmission
assets, re-equipping  underground  gas storage  facilities,  constructing  and 
retrofitting gas  processing  capacities, performing  prospecting,  geological 
exploration and production drilling in fields.

The adjusted Investment Program  for 2012 also  envisages the investments  for 
Gazprom's projects implementation as part of the Russian Federation Government
approved Program for Construction of  Olympic Venues and Development of  Sochi 
as a Mountain Climate Resort.

The adjusted long-term financial investment  plan for 2012 prioritizes,  inter 
alia, Gazprom's  participation  in  the  Nord  Stream  and  South  Stream  gas 
pipelines construction as well as financing of the projects implementation  in 
Africa, Bolivia, Latin America, the UK, Vietnam and Uzbekistan.

                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


MSCUROORUOAROAA -0- Oct/30/2012 13:34 GMT
 
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