Power industry

Events

Core business

Gazprom holds leading positions in the Russian power market. The Company’s share in the domestic electricity and heat generation is 15 and 22 per cent accordingly.

Power generation cannot be called a non-core activity for Gazprom. The Company’s strategic goal is to become a global energy company covering the whole value chain – from upstream to downstream – both for gas and liquid hydrocarbons, as well as producing a wide range of deliverables including electricity.

Gazprom is Russia’s largest owner of power generating assets

Gazprom is Russia’s largest owner of power generating assets

Gazprom is one of the main suppliers of fuel to power plants. The gas and power industries integration is a worldwide trend conspicuously exemplified by the mergers between E.ON (energy) and Ruhrgas (gas), or between Gaz de France and Suez in Europe.

Equity stakes in Russian generating companies enabled Gazprom to get access to an important market segment and to manufacture products with a higher added value. Besides, investments into the power industry enhanced the Company’s competitive capacity and operational flexibility.

Efficient structure

Between 2007 and 2008, as a result of the reform in RAO UES of Russia and the participation in additional share issues by generating companies, Gazprom Group became the largest owner of generating assets in Russia.

The Group consolidates controlling stakes in Mosenergo, Wholesale Generating Company No. 2 (OGK-2) and Territorial Generating Company No. 1 (TGC-1).

Gazprom’s generating assets (Mosenergo, TGC-1, OGK-2) are consolidated on the balance sheet of a special-purpose subsidiary – Gazprom Energoholding.

Gazprom Energoholding is responsible for determining a development strategy for the power generation business and exerting control over its implementation (including such elements of the strategy as fuel supplies, heat and power marketing and new generating capacities) as well as presenting the Group’s standpoint on the Russian power industry development in a dialogue with public authorities.

The special-purpose company Mezhregionenergosbyt deals with the optimization of power supplies to Gazprom Group’s companies. Being one of the major energy traders in Russia, the company operates in 47 Russian constituent entities. In 2012 the company (jointly with its subsidiaries) sold over 60 billion kWh of power.

Generating facilities of Gazprom Group’s gas production and gas transmission subsidiaries (except for facilities that are part of the Unified Gas Supply System) are leased to a corporate network company – Gazprom Energo. Currently, Gazprom Energo operates over 10 thousand facilities in 42 Russian constituent entities.

Generating assets

Gazprom Group’s generating facilities (as of December 31, 2013)

Company name

Installed capacity

 

Power, MW

Heat, thousand Gcal/h

Mosenergo

12,262

34,809

TGC-1

7,238

14,234

OGK-2

17,995

4,473

MOEK

193

17,529

Novo-Salavatskaya CHPP

541

1,619

Total

38,235

72,664

The high efficiency of Gazprom’s power generation business is underpinned, first of all, by state-of-the-art combined cycle gas turbine units, combined heat and power plants as well as hydro power facilities.

Electricity produced by Gazprom Group’s generating companies, billion kWh

Heat produced by Gazprom Group’s generating companies, million Gcal
(TGC-1 data is included starting from 2010, as Gazprom Group obtained control over the company in late 2009. OGK-2 and OGK-6 data is included starting from 2H 2008)

The Group’s power plants are located in rapidly developing Russian regions and this guarantees solvent demand for heat and electricity. The geographic location of TGC-1 generating facilities enables electricity exports to Finland and Norway.

The power business development in international markets is one of Gazprom’s marketing strategies. The most favorable countries for Gazprom Group to develop its power generating projects are Germany, the UK, Turkey and the Balkans.

In this regard, Gazprom is considering various projects for purchasing and/or constructing combined cycle power plants in these countries as well as concluding tolling agreements on economically viable conditions.

In addition, between 2006 and 2012 ArmRosGazprom implemented the Hrazdan-5 project in Armenia. The project was aimed at creating a 460 MW combined cycle power unit based on a 300 MW steam turbine unit partially constructed in the 1980s and a state-of-the-art gas turbine unit manufactured by Alstom.

In January 2012 the fifth power unit at the Hrazdan Thermal Power Plant was brought into pilot operation. Upon its commissioning Gazprom Group obtained a considerable share in the Armenian power market and got the opportunity to supply electricity to the neighboring countries in the region.

Investments

Gazprom’s power business development is directly connected with investment programs implemented in heat and power generation. Gazprom Group is the largest and most reliable investor into Russia’s power industry. All investment projects in the power industry are delivered in line with the obligations the Group assumes when acquiring the relevant assets.

In 2012 the generating companies of Gazprom Energoholding completed a number of large-scale projects. Russia’s most powerful combined cycle gas turbine (CCGT) unit PGU-800 with a capacity of 800 MW was commissioned at the Kirishi State District Power Plant (SDPP) (OGK-2).

The PGU-450 CCGT unit with a capacity of 450 MW was put onstream at the Pravoberezhnaya CHPP (TGC-1) in Saint Petersburg. TGC-1 also commissioned a new hydro electric unit (30 MW) at the Lesogorsk HPP (Leningrad Region).

Pravoberezhnaya CHPP

Pravoberezhnaya CHPP

In addition, OGK-2 completed the upgrade of the PSU-330 steam power unit at the Novocherkassk SDPP (total unit capacity – 300 MW, of which 36 MW are new).

In January 2013 the Adler TPP (OGK-2) was commissioned: two CCGT units with an aggregate capacity of 360 MW. 

Adler TPP premises. January 21, 2013

Adler TPP premises. January 21, 2013

Taking into account the power facilities commissioned in the past years, by early 2013 Gazprom Group brought into operation a total of 5.1 GW of capacities, which is 57 per cent of the total scope of obligations Gazprom Group assumed in entering the power industry.

Currently, some 4 GW of generating capacities are being built in the Central, Northwestern, Urals and Southern Federal Districts. By 2016 the Group’s companies are to commission a total of 9 GW of new capacities in Russia, with the investment amount to be in excess of RUB 350 billion.