9 Sep 2010 20:06

Gazprom boosting 2010 investment program despite revenue decline

MOSCOW. Sept 9 (Interfax) - Gazprom is increasing the investment program in 2010 by 13% or 103 billion rubles despite the fact revenue is 4% or 150 billion rubles below original target according to preliminary data, the company said in a statement.

The Gazprom management board examined the issue of amending the budget based on the results of the first half. The board of directors will now examine the financial documents.

"Fine tuning the budget parameters results from changes in the volume and price of gas sold and the macroeconomic indicators," the statement says.

Gazprom previously revised the target for exports to Europe this year to 145 billion-140 billion cubic meters, down from 168 bcm originally. It revised the forecast for the contract price of gas to $308 per 1,000 cubic meters from $326.

The investment program is being increased in order to raise investment in key projects, specifically gas transportation and creation of new gas centers in eastern Russia.

Capital expenditure will increase for the workup of the Kirin gas and condensate field, the gas condensate horizons in the Zapolyarnoye field and for field works aimed at offsetting declining output at producing fields.

The draft investment program calls for investing in priority gas transportation projects, particularly the Gryazovets-Vyborg and Pochinki-Gryazovets gas pipelines and the Ukhta-Torzhok trunk gas pipeline system. Investment will also increase for reconstruction of gas transportation fixed assets, technical re-equipment of underground storage facilities and construction and reconstruction of gas processing capacity.

The draft investment program for 2010 calls for raising the long-term financial investment in construction of the Nord Stream gas pipeline, implementation of South Stream and Gazprom operations in Libya and Algeria.

Detailed information on Gazprom's budget parameters are presented in the table below (bln rubles):

2010 2010* 2009
Revenue 3640 3790 3300
Spending 3780 3880 3680
Investment program 905,23 802,4 761,53
Capital expenditure 751,84 663,56 483,48
Financial investment 153,39 138,84 278,05
Financial borrowing 90 90 304,9
Surplus 0,5 0,5 0,5

*Before revision.