Gazprom Says Debt Still at "Comfortable Level"

Gazprom's Board of Directors endorsed the work being done to manage the Company's debt portfolio after examining its debt strategy, debt structure, cost, and the mechanisms to mobilize financial resources, concluding that its debt load it still at comfortable levels.

The board noted that key debt ratios are on a par with the world's leading oil and gas companies, and are comfortable for Gazprom.

In particular, the rate of total debt/EBITDA (earnings before interest, taxes, depreciation and amortization) is maintained at a low level.  In the first six months of 2012 it was 0.9 and is expected to remain at that level.

This evidence as EBITDA / interest payments remains high: in the first half 2012 EBITDA exceeded interest expense by 56 times. In turn, the ratio of debt to equity is still low, and for the period was 21%.

In recent years, during ongoing instability in the world economy and financial markets, Gazprom's flexible borrowing policy varied depending on market conditions. The company will refinance its obligations and control strategic borrowing policies. In addition, the flexibility to manage liquidity, possibly prepaid credits, places temporarily free funds on deposit. In a period of sustained surplus, the company's measured approach could attract foreign loans.  According to Gazprom, this will keep credit ratings at the investment level.

In the future, Gazprom plans to expand the practice of using an internal corporate loans and cash pooling mechanism (a system of centralized management of cash flows) with priority to external borrowing. In addition, the company intends to gradually centralize foreign borrowing, which will minimize the cost of borrowed funds. The Board will submit for approval the 'Principles of long-term debt of OAO Gazprom' for the period up to 2020.