Gazprom to Continue Effective Cost Optimization Efforts in 2018

The Gazprom Board of Directors took note of the information about the Gazprom Group's cost optimization (reduction) efforts in 2018.

It was stressed that over the years the Company had sustained a comprehensive approach to cost reduction. The work in this area involves a number of main activities.

One of those activities is cost optimization at the budgeting stage, which is achieved by, inter alia, seeking additional cost reduction opportunities. A conservative approach to budget planning helps restrain cost escalation and ensure excellent financial stability.

When drafting its investment program, Gazprom performs a thorough assessment of the cost efficiency of its projects and the initial need for investment. The investment portfolio is managed in such a way so as to ensure the timely implementation of all major projects and the fulfillment of obligations for reliable gas supplies during peak demand in winter.

Gazprom and its subsidiaries achieve significant additional savings through cost optimization in individual business segments. At present, Gazprom is implementing the Operational Efficiency and Cost Reduction Program for 2018, which contains a list of specific measures in such fields as FEED, non-core asset optimization, energy saving and energy efficiency, and procurement.

The Gazprom Group places special emphasis on procurement planning and implementation. Careful analysis and monitoring is performed at every stage, from determining the need for goods, works and services to executing contracts. This allows the Company to find additional options for cost reduction with regard to both current expenses and investment projects.

The Management Committee was instructed to carry on with the cost optimization efforts in 2018 and to report the results of those efforts to the Board of Directors in the second quarter of 2019.

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