06/02/2019

Press release: Gazprom maintaining effective cost optimization efforts

The Gazprom Board of Directors took note of the information on the Gazprom Group’s cost optimization (reduction) efforts in 2018 and its priorities in this area for 2019.

It was stressed that cost reduction was one of Gazprom’s key activities in boosting its operational and investment efficiency. Last year, as before, the Company followed its comprehensive approach to controlling cost growth rates.

Gazprom continued to optimize its operating and investment costs when planning its 2018 expenditure budget. The Company’s structural subdivisions and core subsidiaries were instructed to keep their expenditures within fixed limits. These limits did not, for the most part, exceed the 2017 expenditure budget. The projects in Gazprom’s investment program were ranked based on their importance for the Company’s sustainable development.

As a result, the Company made substantial savings, formed a significant liquidity cushion, and provided timely funding for all its strategic investment projects.

In 2018, Gazprom also achieved considerable economic benefits through its Operational Efficiency and Cost Reduction Program. Such programs are adopted annually and contain a list of measures in a variety of areas.

Among the main priorities of the 2019 Program are optimization of estimated project costs in the preparation of design documentation, reduction of expenses in the procurement of materials and equipment, energy conservation, and energy efficiency. The economic benefits from these activities are expected to exceed RUB 174 billion.

Gazprom adheres strictly to the instructions of the Government of the Russian Federation on reducing operating costs. These instructions were taken into account in approving Gazprom’s key performance indicators (KPIs) for 2018 and in preparing KPIs for the current year.

The Management Committee was tasked with continuing the Company’s cost optimization efforts in 2019.

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