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. Last Updated: 07/27/2016

Gazprom Expects $8Bln Profit in 2003

Gazprom expects its consolidated net profit to more than double to 250 billion rubles ($8.2 billion) this year.

CFO Boris Yurlov told reporters Thursday the gas giant would likely see an unconsolidated net profit under Russian accounting standards of around 200 billion rubles, "providing market conditions remain favorable." Consolidated figures would add at least another 50 billion rubles to that figure, he said.

Gazprom netted 99.8 billion rubles in the first five months of the year, equal to its net profit for all of 2001, he said.

He gave no figures for total revenues, but the company has said it is expecting a record $15 billion from exports this year, mainly to Western Europe.

Yurlov said the profit gains were due to higher prices on international markets and a major cost-cutting campaign. The company expects to lower its costs by 40 billion rubles this year, and expenditures to date this year are already down 23.4 billion rubles, he said.

In the two years since controversial former CEO Rem Vyakhirev was replaced in a Kremlin-orchestrated boardroom coup with Alexei Miller, the new management team has introduced more stringent control over the company's finances, he said.

Whereas previous company budgets could "fit on a few pages," now they are voluminous, he said, shaking a book-sized document.

He also said Gazprom had made significant progress restructuring its debt portfolio, replacing cheaper short-term debt with long-term credits.

Long-term debts have grown to $10.9 billion from $8.5 billion, while the total debt has been dropped to $13 billion from $13.5 billion, Yurlov said.

Putting the company's fiscal house in order has opened up new lines of credit, evidenced by the company's $1.75 billion eurobond late last year, the biggest ever for a Russian company. "Now there are no obstacles to borrowing," Yurlov said.

Gazprom needs annual capital investments of $5 billion to $6 billion to maintain and raise production and plans to borrow about $4 billion of that. Priorities include upgrading its pipeline network and developing new fields.

In total, the company intends to borrow $8.3 billion over the next three years, with about a fourth of that coming from eurobond issues and the rest from loans and domestic ruble bonds.

Upgrading the pipeline network by 2008 is expected to cost $7.8 billion, which the company will finance with secured loans.

Gazprom's annual general shareholders meeting is scheduled for Friday.