Updated August 22, 2008

The Russian company Gazprom plans to invest the record sum of RUR 1 trillion in new projects on gas extraction and transportation.

That is the way the monopoly responds to the Andris Piebalgs's accusations, the EU Energy Commissioner, of the insufficient financing of this activity area.

This news came out when Gazprom's capitalization was demonstrating the severe fall and resulted in the 1,4-1,6% price rise of the monopoly stocks.

On August, 21 within the meeting devoted to the gasification of the Leningrad area held in St. Petersburg, Gazprom's board deputy chairman Valery Golubev declared that in September the monopoly directors' board would again discuss the increase of the investment program for this year.

"The changes to the investment program for 2008 are not approved yet, but the document is already completed and will be discussed in September", he explained. Only 25% of the addenda to the document are significant, as Gazprom's manager assessed. He explained the record investments by the growth of the sold gas's volumes, as well as by the favorable price situation.

According to the 1H results, the deliveries of the Russian gas to the Western Europe grew to 22% to the level of 1H 2007, to 65 bcm.

Thus, the prices grew from $345 to $410 per 1 000 cm.

This is the second growth of indices for this year. In December, 2007 Gazprom approved the investment program for 2008 of RUR 710 billion; however, the oil prices continued growing at the world markets, and by 1Q end the Russian monopoly's sales volumes considerably grew. Therefore, the investment program was changed, and over RUR 820 billion was allocated to the projects on gas extraction and transportation.

But it wasn't enough. By the RAS standards (Russian Accounting Standards), in 1H Gazprom's unconsolidated revenues from gas sales grew by 47% as compared to the analogical period of 2007, and totaled RUR 1,013 trillion.

This sum exactly Gazprom is going to invest in its infrastructural projects.

Denis Borisov from Solid Investment Company assesses the news about the investment program increase as positive under the condition that the monopoly allocates some facilities to the boosting of Yamal's deposits development, to Bovanenkovskoe in particular.

"This year is the record one for Gazprom by the net income level of nearly $40 billion that corresponds to the size of the changed investment program, so the monopoly doesn't require any borrowings for its realization", the analyst says.

He considers that the monopoly is acting logically, as on the background of the positive market situation, it invests additional facilities in the extraction in order to avoid the deficit of gas by 2011-2012.

Valery Nesterov from Troika Dialog agrees that the facilities will be allocated to Yamal's deposits (now 80% of Russia's gas is extracted in the Nadym-Pur-Tazovsky region, however, the deposits are already exhausted here by 70-80%) and the development of the Arctic Regions, Shtokmanovskoe deposit in particular. "The EU is eager to reduce the dependence on Gazprom.

Recently, it was announced about the prelim inary reached agreements on gas deliveries to the EU through Nabucco bypass ing Russia in 2013, and the construction of terminals for the liquefied natural gas in 2015. Still, in the nearest five years Europe has nothing to set against Gazprom expansion. During this period Gazprom has to offer the sufficient gas amount and to prove the reliability of its projects", he says. Andris Piebalgs, the EU Energy Commissioner, has several times underlined that Gazprom needs to pay special attention to the projects on gas extraction and transportation. .

Valery Golubev made his statement during the monopoly's dire period, when Gazprom‘s capitalization fell from $360 billion to $244 billion. His statement did not cause any excitement, still, the monopoly stocks grew by 1,4% on the LSE, on the MICEX and RTS – by 1,6%, at the market indices' growth by 0,5%.