29 Oct 2013 14:13
PRESS RELEASE
October 29, 2013
Board of Directors approves adjusted versions of the 2013 Investment Program, Budget and Cost Reduction Program
Gazprom's Board of Directors has approved the adjusted versions of the company's Investment Program, Budget (Financial Plan), and Cost Optimization Program for the year 2013.
According to the new Investment Program, the total amount of investments will reach 1 trillion 26 billion and 100 million rubles (1,026,100,000,000) rubles, which is 320.7 billion rubles more than the investment program approved in December 2012. Meanwhile, the adjusted amount of capital investments will make up 782.1 billion rubles - an increase of 123.65 billion rubles when compared with the Investment Program approved in December 2012. The capital investments include construction cost of 775.2 billion rubles (an increase of 120.06 billion rubles) and 6.9 billion rubles for the purchase of non-current assets by Gazprom (an increase of 3.6 billion rubles). Long-term investments will account for 244.01 billion rubles, which is 197.05 billion rubles more than the investment program approved in December 2012.
The adjusted version of the 2013 budget allocates 5.07 trillion rubles as the estimated total income from operating and investing activities, and 5.53 trillion rubles as the estimated amount of payments on all types of activity. External financial borrowings are estimated at 229.2 billion rubles (an increase of 139.2 billion rubles when compared with the borrowings approved in December 2012). Surplus funds (taking into account exchange differences, intercompany borrowings and opening balances of Gazprom in the beginning of 2013) are estimated at 0.5 billion rubles.
The adjusted version of the 2013 Cost Optimization (reduction) Program includes activities aimed at optimizing (reducing) costs and saving up to 19.55 billion rubles.
The 2013 Investment Program was adjusted mainly due to the need to increase the amount of long-term investments in the development of the electricity business of Gazprom Group and investments in priority strategic projects on gas production and transportation.
The Budget was adjusted as a result of changes in gas sales volumes and prices, as well as in macroeconomic factors.
Background
Gazprom's adjusted Investment Program for the year 2013 provides for increased investments in priority strategic projects on gas transportation, notably the construction of the second string of the Bovanenkovo - Ukhta gas trunkline system and implementation of the Southern Corridor project.
The new Investment Program also allocates funds for engineering preparations for the construction, purchase of pipes and equipment for the Izobilny CS - Nevinnomissk gas pipeline. Construction of the gas pipeline will be synchronized with the development of the Severo-Stavropolskoye UGS facility in southern Russia and it will help enhance the security of gas supply from the underground storage facility during seasonal peak demand and also increase supply security along the South Stream gas pipeline.
The adjusted 2013 Investment Program provides for increased investments in underground storage and processing facilities, reconstruction of gas transportation facilities, design and survey work in future years to meet design deadlines for the South Stream project and facilities in eastern Russia.
In the area of gas production, there are plans to increase investment in the development of Kshukskoye and Nizhne-Kvakchikskoye gas-condensate fields as part of implementation of the Eastern Gas Program. There are also plans to construct wells at Urengoiskoye and Yamburgskoye fields. Besides, increased investments in modernization and reconstruction of the Orenburg gas field are expected.
The increase in long-term investments was mainly due to the need to allocate additional funds for the development of electricity projects. This, in particular, refers to the financing of the activities of Gazprom Energoholding, TGK-1, OGK-2 and Mosenergo. Besides, additional investments will be allocated to projects on developing the natural gas vehicle market and to comprehensive modernization of the refining capacities of Gazprom neftekhim Salavat.
Information Directorate, OAO Gazprom
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