Gazprom to create conditions for gasification of over 200 population centers in 2017

RELEASE

The Gazprom Management Committee took notice of the information regarding the progress with the Russian Regions Gasification Program.

It was noted that increasing the gas penetration level was among the top priorities of Gazprom's activities. By bringing gas to new population centers on an annual basis, the Company creates the conditions for improving the quality of people's life and contributes to economic growth and investment attractiveness of Russia's regions.

Gazprom to create conditions for gasification of over 200 population centers in 2017
Gazprom to create conditions for gasification of over 200 population centers in 2017

Operations at Novopskov – Aksai – Mozdok gas trunkline

Annual gasification programs for the constituent entities of the Russian Federation are based on general gas supply and gasification schemes. These documents assess the projected demand for gas and determine the main directions for the development of gas supply in each region, including the involvement of the local resource base and the implementation of energy saving programs. With the general schemes developed for 80 regions, Gazprom updates them on a periodic basis. This year, the Company completed the preparation of the general schemes for gas supply to and gasification of the federal districts. This helps optimize the regional schemes by using free capacities in neighboring constituent entities of Russia.

In 2005–2016, Gazprom allocated over RUB 295 billion for developing the Russian regions' gasification. During that period, over 28 thousand kilometers of gas pipelines were built, and the gas penetration level in Russia rose from 53.3 to 67.2 per cent, with the increase from 60 to 70.9 per cent in urban areas and from 34.8 to 57.1 per cent in rural areas.

Gazprom fulfilled all its obligations, namely, provided the conditions for gasification of about 815 thousand households and apartments and 5,060 boiler houses in 3,880 population centers. However, a number of regions are falling behind the schedule in preparing consumers to receive gas. These regions are the Republics of Adygea, Altai, Bashkortostan, Dagestan, Ingushetia, Karelia, North Ossetia-Alania, Karachay-Cherkessia, the Kamchatka, Krasnodar, Perm, Stavropol and Khabarovsk Territories, the Volgograd, Kaliningrad, Kostroma, Moscow, Novgorod, Orel, Pskov and Saratov Regions.

The growth in outstanding debt payable by consumers for gas deliveries negatively affects the gasification pace. In the first nine months of 2017, the outstanding debt added RUB 3.6 billion totaling more than RUB 164 billion. The payment discipline and timely preparation of consumers are taken into account by the Company when determining the amount of investments to be allocated for the construction of gas supply facilities in each region.

Gazprom continues to make extensive gasification efforts. In 2017, the Gasification Program covers 68 regions. It is planned to connect to gas about 75.8 thousand apartments and households and 160 boiler houses in more than 200 population centers. The amount of the Company's investments earmarked for gasification purposes in 2017 was increased from the previously planned RUB 25.7 billion to RUB 29.45 billion. The adjustment is due to the projects implemented in the east of Russia.

By actively implementing the Eastern Gas Program, i.e. establishing new gas production centers and building gas trunklines, Gazprom sets the stage for bringing gas to consumers in Eastern Siberia and the Far East. In 2005–2016, the Company constructed 30 gas pipelines with a total length of some 430 kilometers, created the conditions for gasification of 21.4 thousand households and apartments and 80 boiler houses in 42 population centers in the Far Eastern Federal District.

Pipeline natural gas is of paramount importance for proper functioning of priority development areas (PDA). Gazprom is currently running projects for the gasification of the Mikhailovskaya and Nadezhdinskaya (Primorye Territory) PDAs, as well as the Komsomolsk (Khabarovsk Territory) and Gorny Vozdukh (Sakhalin Region) PDAs. In August 2017, gas was fed to the Zvezda shipyard (resident of the Bolshoy Kamen PDA) in Primorye.

The Power of Siberia gas trunkline will pave the way for the gasification of Yakutia and the Amur Region. Gazprom and the Government of the Republic of Sakha (Yakutia) signed the Program for gas supply to and gasification of the region until 2026. A similar document is being prepared jointly with the Amur Region Government. Meanwhile, the Company is designing a gas branch and a gas distribution station, as well as an inter-settlement gas pipeline to be laid to the Vostochny Cosmodrome.

Gazprom to create conditions for gasification of over 200 population centers in 2017
Gazprom to create conditions for gasification of over 200 population centers in 2017

Developing gas resources and shaping gas transmission system in Eastern Russia

The meeting paid attention to the Kamchatka Territory. Gazprom is supplying gas to consumers in Petropavlovsk-Kamchatsky and the Elizovsky and Sobolevsky Districts and is implementing a gasification project for residents of the Kamchatka PDA (Zelenovskiye Ozerki industrial park). Further gasification of the region will depend on the development of the Company's resource base in the Peninsula.

At present, Gazprom is also reviewing gasification-related issues in respect of the Siberian Federal District, including the Irkutsk Region and the Krasnoyarsk Territory.

The Company's relevant units were tasked to continue the gasification efforts in Russia's regions.

The issue about the Russian Regions Gasification Program, including individual issues related to the gasification of the Kamchatka and Krasnoyarsk Territories, will be submitted to the Gazprom Board of Directors for consideration.

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