Alexey Miller briefs Vladimir Putin on Gazprom’s performance in 2016

A working meeting took place today between Vladimir Putin, President of the Russian Federation, and Alexey Miller, Chairman of the Gazprom Management Committee.

Alexey Miller briefed Vladimir Putin on the Company’s performance in 2016, focusing on gas production, domestic supplies and exports, and the implementation of the Russian Regions Gasification Program. The meeting also touched on gas deliveries to consumers in the current autumn/winter period and the development of the Yamal gas production center and the northern gas transmission corridor.

Alexey Miller briefs Vladimir Putin on Gazprom’s performance in 2016 
Alexey Miller briefs Vladimir Putin on Gazprom’s performance in 2016 

Vladimir Putin and Alexey Miller. Photo by www.kremlin.ru

Gazprom website Editorial Board

Shorthand record

Vladimir Putin: Mr. Miller, let us talk about last year’s results and your plans for this year.

Alexey Miller: Mr. Putin, I can report that Gazprom produced slightly over 419 billion cubic meters of gas in 2016. Our domestic gas supplies grew by 2.3 per cent. I would like to note that an increase in gas deliveries was observed in the power industry, which is an essential sector of the Russian economy; consumer and household supplies added 5.7 per cent. The upward trend in power and gas consumption is indicative of the country’s economic growth throughout 2016.

Our gas exports to Europe hit a record in 2016, going up by 12.5 per cent and falling slightly short of 180 billion cubic meters. This is a historic high for the Soviet Union and modern Russia alike. On top of that, Gazprom’s share in the European gas market added 3 per cent in just over a year, reaching 34 per cent.

The highest growth in absolute terms was demonstrated by Gazprom’s number one market, our largest export market, Germany, which added 10 per cent, or 4.5 billion cubic meters of gas. We delivered 49.8 billion cubic meters of gas to Germany.

We can also see that the record-setting trend continues in 2017. Over the past two weeks, our gas supplies to Europe have steadily exceeded 600 million cubic meters per day. Mr. Putin, I am happy to say that today, on January 20, we have a new historic record for daily gas exports, as we exported 627.2 million cubic meters of gas yesterday, on January 19. That has never happened before.

Meanwhile, the Nord Stream gas trunkline is operating at maximum capacity. It has been conveying 167.4 million cubic meters of gas per day for over 10 days now, exceeding the design capacity by 11.1 per cent. We conducted tests and received technical approvals; the pipeline’s current capacity is even higher than the design one. This proves without a doubt that there is demand for the Nord Stream 2 project and that consumers are, of course, in favor of the project.

Gas is supplied to Russian consumers on a steady basis in this winter season. By the autumn/winter period, Gazprom injected the maximum possible amount of gas – 72.1 billion cubic meters. Our daily deliverability also set a record for the gas industry with 801.3 million cubic meters of gas. It should be noted that the temperatures during the autumn/winter peaks have been lower than the climate normal throughout Russia, as the past October, November and December were colder than usual for Gazprom’s consumers.

The Company does not even reach its maximum potential in gas production or gas withdrawal from UGS facilities while meeting consumption peaks during autumn/winter periods. We have an adequate reserve margin: our annual production potential exceeds the average annual output by 150 billion cubic meters of gas.

In 2016, we actively pursued gasification programs in accordance with your instructions. The Company built over 1,800 kilometers of gas pipelines and brought pipeline gas to over 270 Russian population centers, which increased the countrywide gas grid coverage to 67.2 per cent as of January 1, 2017. These efforts will continue in 2017 as well.

Vladimir Putin: What are your plans regarding the expansion of the natural gas network across Russia?

Alexey Miller briefs Vladimir Putin on Gazprom’s performance in 2016 
Alexey Miller briefs Vladimir Putin on Gazprom’s performance in 2016 

Vladimir Putin and Alexey Miller. Photo by kremlin.ru

Alexey Miller: We plan to keep the rates unchanged. Last year, we allocated RUB 25 billion to finance gasification programs. Generally, we can, of course, allocate more and in the past the Company provided RUB 27, 29 and 30 billion in financing to that end. Naturally, it depends on the regional authorities, as the implementation of gasification programs falls within the framework of synchronization programs.

At present, we are working with the regional authorities to agree on a program through 2020 and we are close to completing the negotiations. The gasification results will be at the very least at the same level as in 2016. I hope they will be even better.

Vladimir Putin: Once again, I would like to congratulate you, Mr. Miller, on your remarkable achievements at the Bovanenkovskoye field.

Alexey Miller: Thank you very much, Mr. Putin.

Vladimir Putin: The actual work started in 2009 after the Order of the Government was signed. Seven years have passed.

Alexey Miller: Over the past seven years, we have gradually built up the production capacities at the Bovanenkovskoye field. In 2012, we started to deliver gas from the field and the supplies totaled merely 4.9 billion cubic meters. The Bovanenkovo – Ukhta gas pipeline was constructed. Step-by-step, we ramped up our production capacities and today we produce 264 million cubic meters daily from the field.

These efforts will continue. We will create gas production facility No. 3 at Bovanenkovskoye by 2019 and increase the field’s annual output to 115 billion cubic meters of gas by 2022.

The Yamal gas production center is becoming Russia’s main such center, with Bovanenkovskoye producing 4.9 trillion cubic meters. As I informed you, Mr. Putin, the field will be productive over the next 70 years in accordance with the development plan.

Alexey Miller briefs Vladimir Putin on Gazprom’s performance in 2016 
Alexey Miller briefs Vladimir Putin on Gazprom’s performance in 2016 

Alexey Miller. Photo by kremlin.ru

In line with the synchronization plan for production and transmission capacities, the Bovanenkovo – Ukhta 2 gas pipeline was put onstream. Undoubtedly, this crucial step reshapes the geography of gas flows across Russian regions: the northern corridor is 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.

As for our obligations, the obligations of the Russian Federation for the construction of gas transmission capacities and the creation of a resource base for the Nord Stream 2 gas pipeline, we perform them on schedule, on time.

Vladimir Putin: Very good.

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