SURGUTNEFTEGAS: RESULTS OF TECHNICAL RE-EQUIPMENT AND IMPORT SUBSTITUTION PROGRAMS

Surgutneftegas has been steadily pursuing the policy of technical re-equipment and production upgrade.

In 2004, the Company performed 319 operations aimed at technical re-equipment of primary production, which resulted in cost savings of RUR 5.6 bn.

In 2004, in cooperation with leading designers and manufacturers of oil and gas industry equipment and technology, the Company tested 37 items of new equipment and technology including those used for sidetracking, hydrofracs, and oil transportation.

The 2005 plans call for 219 operations to introduce new equipment and technology, which will allow us to save as much as RUR 6 bn.

In line with its import substitution program, the Company has expanded its list of spare parts and materials manufactured by Russian and CIS plants under the Company’s orders from 106 items in 2003 to 653 items in 2004. Thus, the economic effect of the import substitution program has increased from RUR 60 mn to RUR 364 mn.

As part of its import substitution program, in 2005 the Company is planning to place orders to domestically manufacture 850 items of spare parts and expendable materials. The economic effect is expected to amount to RUR 420 mn.

Press Service of OJSC “Surgutneftegas”