The Gazprom Headquarters has hosted a session of the Working Group for Gazprom intra-corporate governance structure improvement led by Alexander Ananenkov, Head of the Working Group and Deputy Chairman of the Gazprom Management Committee.

The session examined the implementation process of the Gazprom wholly owned subsidiaries such as Gazprom-UGS, Gazprompererabotka, Gazprompodzemremont-North, Gazprompodzemremont-South, Gazpromtransgaz-Kuban. In addition, Gazprom will become a 100 per cent stockholder in Gazpromtrans.

The Working Group heard reports of the Heads of gas transportation and gas producing companies about the Plan of measures for restructuring as well as discussed restructuring measures for subsidiaries.

The meeting specified a registration period for companies established by splitting-off from core gas transportation and production businesses.

The participants discussed detailed plan for contract relations and financial flows reorganized and Gazprom subsidiaries split-off at the stage of restructuring.

The meeting made a decision to strengthen the Coordination Subgroup following reorganizing process.

Reference:

Gazprom intra-corporate governance structure is being improved within the 2nd phase of the Company’s restructuring mainly targeted at enhancing Gazprom operating efficiency as a vertically integrated organization and optimizing its subsidiaries’ core businesses.

The intra-corporate structural changes are expected to result in the work completion aimed to unbundle financial flows in the extraction, transmission, processing, underground storage and marketing of gas and liquid hydrocarbons.

The basic principle of intra-corporate structure improvement intends to single out Gazprom multi-field companies and optimizing core businesses as separate legal entities of services and social infrastructure.

On March 29, 2006, the Gazprom Board of Directors approved proposals on the reorganization of the subsidiaries where Gazprom is the only stockholder. The reorganization process will result in the foundation of the Gazprom wholly owned subsidiaries (specialized core business companies): Gazprom-UGS, Gazprompererabotka, Gazprompodzemremont-North, Gazprompodzemremont-South, Gazpromtransgaz-Kuban. In addition, Gazprom will become a 100 per cent stockholder in Gazpromtrans.

The reform implementation scheme contemplates reorganizing existing subsidiaries and includes two stages:

• setting apart of core businesses and assets – non-core businesses and assets of the existing subsidiaries (donor companies) are unbundled into core business legal entities (buffer companies);
• consolidation of core businesses and assets – the unbundled buffer companies are consolidated by business type through their merger to a relevant specialized core business company.

In future, there are plans to create legal entities consolidating other types of services for Gazprom (for example, customer service, fuelling stations etc.).