Open Joint Stock Company Gazprom

OAO GAZPROMNOTES TO THE IAS CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(In millions of Russian Roubles in terms of the equivalent purchasing power of the Rouble at31 December 2001, except as noted)10 PROPERTY, PLANT AND EQUIPMENTWells and Machinery Buildings Total Assetsproduction and and operating Social underPipelines equipment equipment roads assets assets construction TotalAt 31.12.98Cost 992,215 307,256 345,733 467,325 2,112,529 122,183 276,801 2,511,513Accumulated depreciation (421,075) (148,085) (228,721) (218,725) (1,016,606) (21,526) – (1,038,132)Net book value at 31.12.98 571,140 159,171 117„012 248,600 1,095,923 100,657 276,801 1,473,381Depreciation (28,406) (9,018) (19,615) (16,612) (73,651) (3,218) – (76,869)Additions 27,421 17,856 56,296 34,091 135,664 10,125 15,033 160,822Acquisition of subsidiary – – 3,133 5,160 8,293 – 5,324 13,617Disposals (86) (1,013) (4,827) (7,461) (13,387) (13,673) (4,485) (31,545)Impairment charge – – – – – – (24,385) (24,385)Net book value at 31.12.99 570,069 166,996 151,999 263,778 1,152,842 93,891 268,288 1,515,021At 31.12.99Cost 1,018,845 324,625 396,766 496,160 2,236,396 115,863 268,288 2,620,547Accumulated depreciation (448,776) (157,629) (244,767) (232,382) (1,083,554) (21,972) – (1,105,526)Net book value at 31.12.99 570,069 166,996 151,999 263,778 1,152,842 93,891 268,288 1,515,021Depreciation (30,032) (9,787) (23,771) (17,603) (81,193) (3,295) – (84,488)Additions 17,035 13,435 46,840 41,992 119,302 12,406 9,872 141,580Disposals (3) (885) (2,542) (3,369) (6,799) (9,671) (3,505) (19,975)Impairment charge – – – – – – (29,697) (29,697)Net book value at 31.12.00 557,069 169,758 172,527 284,798 1,184,152 93,331 244,958 1,522,441At 31.12.00Cost 1,035,924 336,868 439,690 533,914 2,346,396 116,734 244,958 2,708,088Accumulated depreciation (478,855) (167,110) (267,163) (249,116) (1,162,244) (23,403) – (1,185,647)Net book value at 31.12.00 557,069 169,758 172,527 284,798 1,184,152 93,331 244,959 1,522,441Assets under construction are presented net of a provision for impairment of RR 83,350 and RR61,488 at 31 December 2000 and 1999, respectively. Additions of assets under construction are statednet of transfers to other property, plant and equipment categories.Included in additions above is capitalised interest of RR 18,699 and RR 13,289 for the yearsended 31 December 2000 and 1999, respectively. A capitalisation rate of 8.2% (1999 — 8.1%) wasused representing the average actual borrowing cost of the loans used to finance the projects.Included in the property, plant and equipment above are fully depreciated assets which are stillin service of RR 275,788 and RR 274,237 at 31 December 2000 and 1999, respectively.Depreciation disclosed above includes RR 905 and RR 1,006 for the years ended 31 December2000 and 1999, respectively, which is considered a cost of self constructed assets and thus capitalisedrather than expensed in the consolidated statement of operations. Similarly, RR 11,035 and RR 11,008of depreciation for the years ended 31 December 2000 and 1999, respectively, is capitalised as acomponent of gas inventories and expensed in the consolidated statement of operations when the gasis sold.The Group's gas fields are operated under licenses granted by federal and local authorities.These licenses to develop and extract hydrocarbons expire between 2013 and 2016, however they maybe extended. Management intends to extend the existing licenses on properties expected to producehydrocarbons subsequent to their current expiration dates.F-19