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Gazprom provides 2016 overview

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World Pipelines,

A working meeting has taken place between Vladimir Putin, President of the Russian Federation, and Alexey Miller, Chairman of Gazprom’s management committee.

Miller briefed Putin on Gazprom’s 2016 performance. He focused primarily on gas production, domestic supplies and exports, along with the implementation of the Russian regions gasification programme.

According to Miller, Gazprom produced slightly over 419 billion m3 of gas in 2016, with domestic gas supplies growing by 2.3%. There was also an increase in gas deliveries in the power industry, which is an essential sector in Russia’s economy. The upwards trend in both power and gas consumption indicates the country’s economic growth throughout 2016.

Consumption in Europe

Gas exports to Europe hit a record in 2016, increasing by 12.5% to fall just short of 180 billion m3. Gazprom’s share in the European gas market added 3% in just over a year, reaching 34%. Moreover, the company delivered 49.8 billion m3 of gas to Germany.

Miller predicts that the record-setting trend will continue in 2017, highlighting that over the last two weeks, Gazprom’s gas supplies to Europe have steadily exceeded 600 million m3/d. On 19 January, the company set a record for daily gas exports, with 627.2 million m3 of gas exported.

Nord Stream

The Nord Stream gas trunkline is operating at maximum capacity. It is transporting 167.4 million m3/d of gas, exceeding the design capacity of 11.1%.

This proves that there is, without a doubt, a demand for the Nord Stream 2 project.

Consumption in Russia

Miller explained that gas has been supplied to Russian consumers on a steady basis. By the autumn/winter period of 2016, Gazprom had injected the maximum possible amount of gas, 72.1 billion m3. The company’s daily deliverability also set a record for the gas industry, with 801.3 million m3 of gas.

The company is not reaching its maximum potential with regards to gas production or gas withdrawal from UGS facilities, while still meeting consumption peaks. Gazprom has an adequate reserve margin, with its annual production potential exceeding the average annual output by 150 billion m3 of gas.

In 2016, Gazprom actively pursued gasification programmes according to Putin’s instructions. The company built over 1800 km of gas pipelines and brought pipeline gas to over 270 Russian population centres. These efforts will continue in 2017.

Expanding Russia’s natural gas network

Putin asked what Gazprom’s plans are with regards to expanding its natural gas network in Russia, to which Miller responded that the company plans to keep the rates unchanged.

Last year, the company allocated RUB 25 billion to finance gasification programmes. Miller highlighted that, generally, Gazprom can allocate more and in the past the company provided RUB 27, 29 and 30 billion in financing to that end. However, this naturally depends on the regional authorities, as the implementation of gasification programmes falls within the framework of synchronisation programmes.

At present, he stated that Gazprom is working with regional authorities to agree on a programme through 2020 and it is close to completing negotiations. The gasification results will be at the very least at the same level as in 2016.

The Bovanenkovskoye field and Bovanenkovo-Ukhta pipeline

Putin congratulated Miller on the Bovanenkovskoye field before Miller highlighted that over the past seven years, Gazprom has gradually built up production capacities at the Bovanenkovskoye field.

In 2012, the company began delivering gas from the field, with supplies totalled 4.9 billion m3. The Bovanenkovo-Ukhta gas pipeline was also constructed and Gazprom ramped up the production capacities. Today, it produces 264 million m3/d from the field.

Miller stressed that these efforts will continue as the company is set to create gas production facility No. 3 at Bovanenkovskoye by 2019 and increase the field’s annual output to 115 billion m3 of gas by 2022.

The Bovanenkovo-Ukhta 2 gas pipeline was put onstream, which undoubtedly reshapes the geography of gas flows across Russian regions. The northern corridor is now becoming fundamental to gas supplies throughout European Russia and the Bovanenkovo-Ukhta 2 gas pipeline is becoming a part of a new long distance route for gas exports from Yamal to Germany across the Baltic Sea, Miller highlighted.

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