HISTORICAL RECORDS: GAZPROM’S LIGHT CONTINUES TO SHINE THROUGHOUT 2017

Alexey Miller

New Year’s Eve is a time of joy and happy recollections of the year that has just wrapped up. Everyone should just enjoy this period and promise to themselves that the year to come will bring even more in terms of self improvement and satisfaction. And, as surprising as it may seem, this also applies to CEOs. The only difference is that while the average Joe just commemorates the ending of another year by summing up his life experiences and boosting his expectations, some people have it harder at the end of the year. On a personal level it may be the same exact feeling, but when you are part of an industry that spans across the entire planet, the perspective changes radically. Not to mention that this wasn’t exactly the beast year to be an oilman. A lot of people just gave up, they threw the towel and that was it. But it was harder still for the people that did not walk away. These people had to stick it out and face the music when the end of the year reports finally hit their desks. What if the bottom line shows that you did well? Do you pat yourself on the back and call it a day? Or you march forward and keep fighting the good fight? Alexey Miller, CEO of Gazprom, was called upon to give a speech regarding exactly this type of situation. Let’s see if he and Gazprom made the cut.

Not surprisingly, 2016 was a good year for Gazprom. Keeping in mind the challenges that the community had to face, the Russian giant kept its head high and proudly announced that they have met every single goal they had seat for the year. And they even beat some personal records. We are not speaking about numbers, we’re speaking about facts. And fact of the matter is that Gazprom has improved the reliability, sustainability and safety of gas supplies to consumers in Russia and beyond. The group is now in charge of the supply for the autumn and winter periods in Belarus, Armenia and Kyrgyzstan, not only Russia, where their USG facilities already reached an all time high of 72.1 billion cubic metres of gas. So the seasonal peak loads will not represent an issue, seeing as their production was ramped up to over 419 billion cubic metres. Europe can rest assured seeing as Gazprom’s gas supplies reached 614.5 million cubic metres per day, an amount never seen before in the region. Germany stands out as one of the biggest customers, with deliveries expected to be close to 50 billion cubic metres this year. In terms of successful projects we could mention the Eastern Gas Program, highlighting Power of Siberia, their most dauntless enterprise, totalling 445 kilometres of the gas pipeline’s linear section. The ongoing program also includes the Chayandinskoye, Kirinskoye, Yuzhno-Kirinskoye, Kshukskoye and Nizhne-Kvakchikskoye fields. Another decisive project is the Amur gas processing plant that upon completion will feature a gas capacity of 42 billion cubic metres, the highest in Russia.

Things are going north regarding the resource base, with a new gas production centre and new oil province in Yamal and production capacities at Bovanenkovskoye up to 264 million cubic metres of gas per day. The Arctic Gate oil loading terminal adds another entry to the list of accomplishments, this one being brought to reality by Gazprom Neft, the most efficient gas company in Russia, with an increase of 8% in hydrocarbon output.

The northern corridor is being steadily built and will feature the enviable gas trunklines: Bovanenkovo – Ukhta 2 and Ukhta – Torzhok 2. The first of the two most advanced trunklines is almost completed and this means that 2017 will see a new powerful gas transmission corridor on Russia’s gas scheme. By strengthening the Unified Gas Supply System, the capacities for gas deliveries through the Nord Stream 2 offshore gas pipeline will also increase. This project is right on track and will be brought online by late 2019 with an estimated total of 110 billion cubic metres of gas per year to be supplied across the Baltic Sea by the Nord Stream and Nord Stream 2. Seeing as all the main tendering procedures have been completed in 2016 for Nord stream 2, the European market can also look forward to the TurkStream, the other project that has all the necessary approvals and permits and a start date for pipe-laying in the Black Sea for the second half of 2017. The linear part and the compressor stations have been completed and thus Russia is ready to start delivering gas via the TurkStream.

Another important business segment for the company was the power industry with two new modern power units brought on stream in Troitsk SDPP and Novocherkassk SDPP with a combined capacity of approximately 1 GW. The national Gasification Program was not neglected, producing roughly 170 gas pipelines and providing gas for about 3,800 population centres. Since the Russian President gave the order, the program has amounted to more than 29,000 kilometres of gas pipeline. Russia’s gas penetration for 2016 has exceeded 66.5% with two thirds of the country’s consumers receiving pipeline gas. A 1.6 fold increase was observed in providing gas to rural areas, proving once again that people are the main beneficiaries of these advancements. It seems that this has been a good year for Gazprom and they will continue their successful run. If they beat the crisis, then so can everybody else. Just keep at it and hope for the best. After all, the year is just beginning.

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