Gazprom instructed to proceed to pre-investment phase in Power of Siberia 2 project
Message to the Media
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 ongoing activities in the autumn/winter period, the Company's main accomplishments in 2019 and its plans for 2020. Particular attention was paid to the potential for enhancing gas supplies to Eastern Siberia and the work on the Power of Siberia 2 project.
Vladimir Putin: Good afternoon, Mr. Miller. How are you doing?
Alexey Miller: Mr. President, we are currently going through the autumn/winter period. As usual, we are fully meeting the needs of our consumers in Russia and abroad.
Since the beginning of the withdrawal period, Gazprom has injected 72.232 billion cubic meters of gas into UGS facilities, and the daily deliverability has reached a record 843.3 million cubic meters of gas.
As of today, Gazprom's production capacities amount to 545 billion cubic meters of gas, which means that, taking into account the reserves we have in our underground facilities...
Vladimir Putin: Annual capacities?
Alexey Miller: Indeed, annual production capacities. Taking into account the production capacities we possess and the gas reserves we have in our UGS facilities, we are currently, i.e. in the first quarter, capable of doubling the amount of gas supplied to Russian consumers. This is our factor of safety. There is no doubt that before the end of the autumn/winter period we will certainly fulfill all of our obligations to our consumers.
As for last year's production volumes, we produced 500.1 billion cubic meters of gas and exported 199.3 billion cubic meters. The latter figure is slightly lower than in 2018, which was marked by a record 201.8 billion cubic meters. We also preserved our share in the European market at 35.6 per cent.
Speaking of current market trends, there is a moderate downturn. Nevertheless, we remain optimistic about the third and fourth quarters, and we believe that the preparations for the winter season will be carried out as planned, so it seems a bit early to draw preliminary conclusions based on the first few months of this year.
As concerns our plans for 2020, the planned investment program totals RUB 1.080 trillion. Thanks to the financial capabilities and sustainability of the Company, we will be able to implement the program in full. The net debt/EBITDA ratio is 1.3, which is a very good indicator in terms of investment rating. As of this date, we see no impending challenges to the execution of our obligations regarding the financing of the investment program in 2020.
We plan to build 1,942 kilometers of gas trunklines, bring 114 wells onstream, and put into operation three comprehensive gas treatment units with a capacity of 27.5 million cubic meters of gas. We are also going to raise the amount of gas in UGS facilities by 180 million cubic meters.
As for the linear part, of course, there is the construction of a gas pipeline that will feed gas into Nord Stream 2 (Gryazovets – Volkhov – Slavyanskaya compressor station) and the continuing pre-development of a new field in the Yamal Peninsula – Kharasaveyskoye, which is another major asset that we are currently working on for the new gas hub in Yamal.
In September last year, you instructed us to consider the possibilities for supplying gas from the resources available in the Irkutsk Region, the Krasnoyarsk Territory, the Yamal-Nenets Autonomous Area, and the Yamal Peninsula to consumers in Eastern Siberia. We have accomplished the work, Mr. President, and I can report to you that on the basis of, principally, the resources of Yamal and the Nadym-Pur-Taz region in the Yamal-Nenets Autonomous Area, together with the resources of the Kovyktinskoye field and the Krasnoyarsk Territory, we will be able virtually in the nearest future to fully meet the demand for gas in such areas of Eastern Siberia as the Krasnoyarsk Territory, the Irkutsk Region, the Republic of Buryatia, and the Transbaikal Territory. And without a doubt, we will be able to solve the environmental problems that still exist in some of Eastern Siberia's large industrial hubs.
With the aforementioned resource base, our domestic gas supplies can fully satisfy the needs of these constituent entities of the Russian Federation. And as for the instruction to explore the possibilities for transiting gas to China across Mongolia via Power of Siberia 2, I can report that the amount of supplies via this route may total up to 50 billion cubic meters per year. We are ready to continue this work accordingly.
Vladimir Putin: You mean western China, right?
Alexey Miller: Yes, gas will be brought to western China, and will then serve the needs of consumers in China's main gas consumption centers.
To continue our work, I would like to ask you to issue a relevant instruction with regard to both the linear part and the resource base creation program for the project; we need this instruction in order to commence the pre-investment phase and the design-and-survey works.
I would like to mention that you have always set the task for us regarding the linear part, and it is a totally independent goal to connect the existing gas transmission facilities in Eastern Siberia and the gas transmission facilities and gas supply systems in European Russia. Without any doubt, this will make it possible to provide reverse-flow and forward-flow gas supplies in both directions, and will enhance the reliability of gas supplies in Russian regions even more.
Vladimir Putin: What is the status of the work on connecting capacities in Eastern Siberia and European Russia?
Alexey Miller: A preliminary feasibility analysis has been carried out; it has shown that the project is feasible and cost-effective. Accordingly, I would like to ask you to issue an instruction to start the pre-investment phase, in order to commence the development of a feasibility study and the design-and-survey works for the Power of Siberia 2 gas pipeline.
Vladimir Putin: Yes, of course. Agreed.