Speech by Alexey Miller at conference call on occasion of New Year’s Eve
We are now starting our celebratory conference call. I am glad to see all of you. 2020 has been a challenging year. Especially in its first half. But the markets steadied later on, and the situation is now more or less stable. There is an upward trend in supplies, and prices are on the upswing as well.
By the end of this year, Gazprom will have produced more than 452 billion cubic meters of gas. This allows us to fully satisfy consumer demand both in the domestic market and abroad. It should be noted that our production capacities exceed the annual production volumes by almost 100 billion cubic meters of gas.
Domestic supplies from Gazprom's gas transmission system are going to total some 223 billion cubic meters of gas this year.
As for exports, I can give you a nice working figure: as of today, exports stand at approximately 179 billion cubic meters of gas. Why is that a nice figure? In fact, this amount ranks fifth in our “table of ranks” for gas export totals.
I would like to point out here that the export conditions have been very favorable for us in the second half of the year. For instance, this October we set an all-time record for supplies to Europe for that month at 17.4 billion cubic meters of gas. If we take the whole year, there has been an upturn in our exports to nine European countries compared to 2019. Among these countries are the Netherlands, Slovakia, and Turkey.
It should also be noted that this year we signed major long-term contracts to supply our gas to Greece and Germany.
Needless to say, we can fully meet the demand for gas in the internal and external markets thanks to our reserves that we continually expand year after year. For 16 consecutive years, our reserve replacement ratio has been exceeding 1.
Speaking of geological exploration and additions to our reserves, I would like to give a mention to the discovery of a new field on the shelf of the Kara Sea. We named it 75 Years of Victory.
Without a doubt, the Yamal gas production center is already becoming one of our main gas production centers. This is why we are making consistent efforts to develop the northern gas transmission corridor. In 2020, we brought new compressor stations into operation and built over 850 kilometers of the linear part in this corridor. As we all know, the northern corridor is playing an increasingly important role in gas distribution in the central part of our country and in gas exports. The corridor will also allow us to provide gas to some massive production capacities, namely the large-scale gas processing and gas chemistry facilities near the settlement of Ust-Luga. It is worth mentioning that this ambitious project is going right on schedule, and the same is true for the construction of the Amur Gas Processing Plant, another major gas processing project, which is based in eastern Russia. The progress of the project is now over 70 per cent, and the first start-up complex with two production trains will go onstream in 2021.
As we are well aware, the Amur GPP is an essential link in Power of Siberia. This December marked the first anniversary of the start of our gas supplies to China via Power of Siberia. Gas is being supplied to China in excess of the planned and contractual amounts. This applies to both annual and daily volumes of gas. There was a day in 2020 when our supplies to China exceeded the contractual amount of Gazprom by 25 per cent.
We have started design and survey works on Power of Siberia 2. It is a crucial project that aims to connect eastern Siberia, whose gas transmission system was established under the Eastern Gas Program, to the Unified Gas Supply System of Russia. Of course, Power of Siberia 2 will allow us to supply gas from the Yamal gas production center in the Yamal-Nenets Autonomous Area to the Asian and European markets.
I would like to say right now that we are a traditional supplier to the European market. In terms of gas supplies, Europe will remain a very important partner to us for many years to come.
As for the Asian market and specifically the Chinese market, you can see that their consumption is constantly growing. Currently, the portfolio of negotiations with our Chinese partners includes such projects as the western supply route, the Far Eastern route, and increased supplies via the Power of Siberia gas pipeline and, once again, via Power of Siberia 2.
I would also like to emphasize in particular that we have resumed the construction of the Nord Stream 2 gas pipeline.
Looking back at the notable and remarkable events that took place in the power industry this year, I would like to highlight the acquisition of REP Holding by Gazprom Energoholding. REP Holding is a company that produces the most powerful gas compressor units – GCU-32 Ladoga.
As for Gazprom Neft, it is worth mentioning the commissioning of two processing complexes: one at Moscow Refinery and the other at a NIS plant in Serbia. These facilities rank among the best in the world in terms of technological effectiveness and refining depth.
Our chief social endeavor is certainly the program for gas supply and gas infrastructure expansion in the constituent entities of the Russian Federation. This year, we reviewed the results for the past five years. New five-year gas supply and gas infrastructure expansion programs have been signed with 67 Russian regions where Gazprom is active.
The amount of funding that Gazprom allocates to these programs has almost tripled. Within the next five years, we will invest RUB 526.1 billion in gas supply programs, build 24,400 kilometers of linear gas pipelines, and, importantly, bring natural gas to another 3,632 localities.
As you know, by now gas grid expansion has been completed to the maximum extent technically possible in 11 constituent entities of the Russian Federation. By the end of 2025, there will be 35 such entities. At that point, the scope of technically possible gas grid expansion will reach 90.1 per cent nationwide. By 2030, we will complete the technically possible nationwide expansion of gas supply networks in accordance with the instruction given by Vladimir Putin, President of the Russian Federation.
Dear friends, colleagues,
I would like to wish you a happy New Year. I hope it will bring you many successes and achievements. Of course, I also hope we will break new records as it has become a tradition for Gazprom. I wish happiness, prosperity, good health, and all the best to you and your families in these challenging times.
And, as we say at Gazprom, let us go on with our work.