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. Last Updated: 07/27/2016

Gazprom Presents Results of First Independent Audit

LONDON -- Russian gas giant Gazprom on Wednesday presented an independent audit of reserves and a first ever set of international accounting standard results in a bid to maintain Western interest in its future.

Nonpayment of bills by domestic customers and former Soviet states coupled with the effect of ruble devaluation on foreign-currency debt have created mountainous problems for the world's biggest natural gas producer.

But Gazprom officials visiting London sought to reassure bankers, shareholders and potential industry partners of a bright future, pressing ahead with a $3 billion to $4 billion a year investment program aimed at pulling it out of the morass of Russia's economic problems and into Western gas markets.

"In spite of the difficulties facing the Russian economy we are not without optimism, and I think that optimism is well founded," deputy chairman Sergei Dubinin said at a news conference.

Director Alexander Semeniaka added: "We are going into the 21st century as the owner of big reserves in the fuel of the 21st century."

Gazprom produces about 54 percent of world annual gas output and puts its total gas reserves at 33.4 trillion cubic meters - 22 percent of total estimated world reserves.

An appraisal by U.S.-based oil experts Degolyer and MacNaughton presented to analysts Wednesday estimates its "proven and probable" gas reserves at 18.8 trillion cubic meters, based on the 66 percent of its assets surveyed so far.

The study estimates $227 billion of future net revenue, giving a discounted present value of $62 billion.

Gazprom said sales in the first half of 1998 dropped to 65.77 billion rubles from 74.95 billion a year earlier, dragging down pretax profit to 4.38 billion rubles from 7.96 billion and increasing the net loss to 5.438 billion rubles from 2.572 billion.

The company reiterated a 1999 gas output forecast of 543 billion cubic meters, down from 553.6 billion in 1998.

The first half 1998 accounts revealed the extent of problems caused by nonpayment in Russia and the surrounding states.

Accounts receivable net of a provision for doubtful debts increased by 23 percent, to 132.8 billion rubles during the six months to June 30, 1998. In the same period, taxes payable grew by 17.7 percent and borrowings by 13 percent.

Russia's lower house of parliament has passed amendments to a key bill on gas supplies, increasing the state's stake in gas monopoly Gazprom and restricting foreign shareholdings in the company.

The amendments, passed at the same time as the State Duma approved the bill as a whole in a second reading late Wednesday, increase the federal government's stake to 35 percent from 25 percent plus one share.

The permitted foreign stake shrinks to 20 percent from 25 percent minus one share.