Gazprom supplying gas to Europe in line with contractual obligations

Gazprom supplying gas to Europe in line with contractual obligations
Gazprom supplying gas to Europe in line with contractual obligations

Vladimir Putin and Alexey Miller. Photo by

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

Alexey Miller reported to Vladimir Putin that European consumers were receiving gas supplies entirely in line with contractual obligations. The total accumulated gas supplies for export exceeded the planned amount by 3 billion cubic meters by early September.

According to the Hydrometcenter forecasts, the upcoming wither in Russia will be colder than usual. In this regard, Gazprom’s prioritized activity now is gas injection into underground gas storage (UGS) facilities. The Company raised the planned amount of working gas for injection into Russian UGS facilities to 72 billion cubic meters. This is the maximum amount that will be pumped in Russian UGS facilities in the entire history of the gas industry. Now the gas storages contain 63.5 billion cubic meters of working gas. It is planned to complete the injection within the next six weeks.

Gazprom is also filling up UGS facilities in Europe. The Company has already pumped 3.8 billion cubic meters into European gas storages. Overall, it’s planned to pump 5 billion cubic meters.

The Power of Siberia (eastern route of Russian gas supplies to China) is progressing according to schedule. The negotiations have been initiated concerning gas supplies from Western Siberia to China via the western route.

Alexey Miller stressed that Gazprom was ready to meet the growing demand in the Chinese market, in the east, and in the European Union as well.

The meeting paid special attention to the regional gasification in Russia.

Verbatim transcript of meeting

Vladimir Putin: Mr. Miller, it’s September already, so the preparations for the winter period is a very topical issue now. First and foremost, it concerns the so-called centralized power generation, primary gas source, fuel oil and so on up the chain, thermal generation and electric power generation. Let’s begin with Gazprom – how it’s getting ready for this season and, secondly, what are the obtained results, how the Company works.

Alexey Miller: Mr. Putin, the Company is operating in a sustainable way, we are on the schedule. The expected volume of production this year – 463 billion cubic meters. Gazprom’s production capacities account for 617 billion cubic meters. On the whole, we are able to meet consumers’ demand within and beyond the country this year.

We are active within the gasification program which is currently running in 67 constituents of the Russian Federation. First priority is given to gas supply to the population and eastern regions of the country. By the end of this year the average gasification level in Russia will exceed 65 per cent, while in the rural area it will be above 54 per cent. Furthermore, the rural gasification will grow 20 per cent since the inception of the gasification program.

As for the gasification in eastern Russia, we are currently implementing it in Kamchatka, the Primorye Territory and the Khabarovsk Territory. The two latter Russian constituents are receiving gas due to the completion of the Sakhalin – Khabarovsk – Vladivostok gas pipeline. As soon as the construction of the Power of Siberia gas pipeline begins, we will set to the gasification of the Republic of Sakha (Yakutia) and the Amur Region on a completely new scale.

Vladimir Putin: Is Power of Siberia progressing on schedule?

Alexey Miller: Yes, absolutely on schedule. We are in close contact with our Chinese colleagues. We synchronized our schedules. Besides, we have initiated talks on gas supplies from Western Siberia to China via the western route.

Vladimir Putin: If you enter into a relevant agreement, what will be the gas amount?

Alexey Miller: We are going to sign a contract to supply 30 billion cubic meters of gas for 30 years, and various volumes within new contracts for the western route have been announced at the talks. A possibility of supplying 60 to 100 billion cubic meters of gas to China is being considered.

Vladimir Putin: I suppose, the western route is easier to implement than the eastern route.

Alexey Miller: Yes, certainly, as for the western route, it has its own advantages. Firstly, the existing gas transmission system in Western Siberia will be involved. Secondly, there is no need to create gas chemical or processing capacities for the Western Siberian gas, therefore, the investments required for the western route will surely be smaller than for the eastern route.

On the other hand, the potential is huge. It is even greater than in Eastern Siberia and, by all means, we can rapidly boost the volumes of gas supply via the western route to respond to growing demand in the Chinese market.

Vladimir Putin: Anyway, let us return to Russia – the preparations for winter.

Alexey Miller: Of course, our priority today is injecting gas into the underground storages. We always get ready for the winter period in close cooperation with the Hydrometcenter. It concerns both daily and monthly regimes as well as forecasts for the autumn and winter periods. I should say that the Hydrometcenter forecast for the coming winter states that it will be colder than usual.

As for the last winter, I mean the winter of 2013–2014, the average climatic norm of Russian winter was lowered. The Hydrometcenter forecast for the previous winter actually proved true. In the winter 2013–2014, on January 30 we set an all-time record of gas supply to consumers in the Russian Federation throughout the entire history of the gas industry. Almost two billion cubic meters of gas a day was supplied to our consumers – the accurate figure is 1 billion 990 million. This was caused by the anomalously low temperature – an average of 25 degrees below zero across the country in all major gas consumption areas. This led to such a dramatic peak demand.

Vladimir Putin: What is the current situation?

Alexey Miller: Moreover, the peak demand in the previous winter was 13 per cent higher than the winter before. Thus, we boosted the volumes of working gas pumped into the UGS facilities to 72 billion cubic meters.

Vladimir Putin: In Russia?

Alexey Miller: In the Russian Federation. It is the maximum volume injected in the Russian Federation throughout the entire history of the gas industry. By now, 63.5 billion cubic meters has been injected into UGS facilities and we need to inject a bit over 8.5 billion cubic meters more. For about six weeks we’ll be done with the gas injection process completely. It will allow us to increase the maximum daily deliverability of our UGS facilities by eight per cent during the autumn–winter peak season, i.e. December to February.

There is no doubt that we also pay attention to injecting Gazprom’s gas into European storages. At present, we have already injected 3.8 billion cubic meters, we are planning to pump 5 more billion. Certainly we pay close heed to the European market, we see the role and importance of Russian natural gas there. Today the Russian gas consumption in Europe accounts for 30 per cent, and imports exceed 64 per cent.

Vladimir Putin: There was information that Gazprom had stopped supplying gas to our European consumers. What is the real state of things?

Alexey Miller: Gazprom secures the reliability of daily gas supplies to European consumers. We fully meet our contractual obligations. The so-called additional volumes were meant. There is no doubt that as soon as the injection period, the period of active replenishment of our UGS facilities with the required volumes of gas ends, we’ll be able to meet the extra demand of our European consumers from then on.

Vladimir Putin: So, if I got you right, it means that within your contracts you’ve entirely fulfilled your obligations, but could not fully satisfy extra demands.

Alexey Miller: Yes, Mr. Putin, exactly, the additional requests were meant. In general, by early September the aggregate volume of gas for export was 3 billion cubic meters higher than planned.

Vladimir Putin: Then a logical question arises concerning export supply in the western and eastern directions. In case we increase the supply to our eastern neighbors, that is, Chinese consumers, will there be any risks with regard to the growing demand in Europe? Will Gazprom be able to supply its consumers in this case?

Alexey Miller: Yes, we are ready to fully satisfy both the growing demand in the Chinese market, in the eastern direction and in the European Union as well.

Vladimir Putin: Thank you.

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