11 milestones of 2011
December 27, 2011
The year of 2011 was eventful for Gazprom and most of the events may be considered as historical. The Company put onstream a number of crucial gas transmission facilities: Nord Stream, Sakhalin – Khabarovsk – Vladivostok, Dzhubga – Lazarevskoye – Sochi. Record results were obtained in a number of activities. Thus, Russian underground gas storage (UGS) facilities accumulated the operating gas reserve of 65.2 billion cubic meters – the maximum amount in the history of the domestic gas industry. The maximum daily deliverability of UGS facilities by the beginning of the withdrawal season and the average daily deliverability between December and February were raised to 647.7 and 522.1 million cubic meters accordingly. RUB 29.07 billion were allocated for the Russian gasification program. Over 1.7 GW of power generating capacities were built. The dividend amount was increased to RUB 3.85 per share. In 2011 Gazprom replenished natural gas reserves with a record amount of 686.4 billion cubic meters through geological exploration, thus showing a 33.8 per cent excess over the extraction level. Besides, in 2011 Gazprom produced more than 513.2 billion cubic meters of gas according to latest updates and surpassed by 4.6 billion cubic meters the same parameter of 2010 – 508.6 billion cubic meters. In 2011 Gazprom supplied non-FSU countries with 150 billion cubic meters of gas which is 11.4 billion cubic meters (8.2 per cent) more as compared to 2010. Gas supplies to FSU countries grew by 3.08 billion cubic meters and totaled 71.1 billion cubic meters. The Company’s forecasts say that Gazprom Group’s financial results – proceeds from sales, currency receipts, EBITDA and net profit will be record high in 2011 over the entire corporate history. For instance, the EBITDA are forecast to surpass the 2010 amount (USD 45 billion) by almost USD 15 billion (or approximately 33 per cent) and will rise to some USD 60 billion. The net profit will grow to almost USD 40 billion that is approximately 25 per cent higher than in 2010 (USD 32 billion).
The above mentioned and other events vividly demonstrate the rapid and sustainable development of Gazprom. The Company is successfully pursuing the outlined strategy and is firmly approaching a leadership position in the global energy market.
Putting onstream Haidach UGS facility Phase 2 in Austria
In May Gazprom, RAG and WINGAS (joint venture of Gazprom and Wintershall) completed in Salzburg (Austria) the Haidach UGS facility construction, the largest one in Austria and the second largest in Central Europe. Commissioning of the second phase of the UGS facility increased its total working gas capacity to 2.8 billion cubic meters and daily deliverability – to 28 million cubic meters. At the same time, the volume of natural gas stored by Gazprom in Haidach reached 1.9 billion cubic meters which makes up two-thirds of the UGS capacity.
Gazprom and Wintershall also continued cooperation within gas production projects. In October Germany hosted the signing of the Framework Agreement on asset swap between Gazprom and Wintershall. The Agreement provides for the possibility that the companies jointly develop two blocks of the Achimov deposits in the Urengoy field and that Gazprom receives equivalent stakes in Wintershall's oil and gas exploration and production projects in the North Sea.
The joint efforts of Gazprom and Wintershall exemplify successful cooperation across the entire value added chain.
Building a key energy facility for 2014 Olympic Games
Dzhubga – Lazarevskoye – Sochi, the first submerged gas pipeline for gas supplies to Russian consumers, was put onstream in June. It is of utter importance for energy supply to the 2014 Olympic Games.
The gas pipeline stretches nearly 150 kilometers offshore and has the annual throughput capacity of 3.8 billion cubic meters. The gas pipeline will allow for active development of gas supply to Sochi and the Tuapse District of the Krasnodar Krai, increasing the living standards of the population and giving a powerful impetus to the resort business development, particularly enabling transition of the Black Sea health resorts to year-round operation.
The Adler TPP will be the largest consumer of the gas trunkline. The 360 MW thermal power plant will become a key power generating facility in Sochi and adjacent areas. The TPP will satisfy more than one-third of the forecasted peak demand during the 2014 Olympic Games.
Paying out record high dividend
In June Gazprom’s shareholders approved the dividend of RUB 3.85 per share based on the Company’s operating results in 2010. This was the record high dividend in the entire history of Gazprom. Dividends amounted to 25 per cent of Gazprom’s net profit in 2010 calculated according to the Russian Accounting Standards.
The dividends were calculated on the basis of the dividend policy that regards the current operational climate of Gazprom, for instance, its shareholdings in large oil and power generating public companies, and is targeted at improving the transparency and predictability of dividend payments.
Entering practical stage in negotiations on gas pipeline construction to Republic of Korea via North Korea
Alexey Miller and Choo Kangsoo, President – CEO of Kogas signing Roadmap on project for natural gas supply to the Republic of Korea
In August Dmitry Medvedev, President of the Russian Federation and Kim Jong-Il, Chairman of the North Korean National Defense Commission came to the agreement concerning the project for natural gas supplies from Russia to the Korean Peninsula via a pipeline.
In pursuance of these agreements, Gazprom and the North Korean Oil Industry Ministry signed the Memorandum of Understanding in September. In the same month, Gazprom and the South Korean Kogas signed the Roadmap on the project for the gas pipeline construction. The gas pipeline will help diversify natural gas sources for the growing South Korean economy being currently fed with liquefied natural gas (LNG) only and making the country the world’s second largest LNG importer after Japan.
Bringing Sakhalin – Khabarovsk – Vladivostok GTS into operation
Sakhalin main compressor station – initial part of Sakhalin – Khabarovsk – Vladivostok gas transmission system
In September Gazprom commissioned the Sakhalin – Khabarovsk – Vladivostok gas transmission system (GTS), a key element of the Unified Gas Supply System of Russia being built in its eastern part, as well as launched gas supplies to the Primorye Krai. The GTS commissioning triggered large-scale gasification of Russia’s Far East and created conditions for gas supplies to Asia-Pacific.
The GTS first startup complex stretches 1,350 kilometers and has the annual capacity of 6 billion cubic meters. The GTS was built within a record short period of two years and fully within the deadline set by the Russian Government. At full capacity, the GTS will be able to annually convey some 30 billion cubic meters of Sakhalin gas.
Signing Shareholder Agreement for South Stream offshore section
Henri Proglio (EDF), Harald Schwager (BASF), Vladimir Putin, Alexey Miller and Paolo Scaroni (Eni)
In September the Shareholder Agreement for the offshore section of the South Stream project was signed. According to the document, German Wintershall Holding and French EDF each acquired a 15 per cent stake in the project through a 30 per cent reduction of Eni's stake. As a result, the shareholding structure of the South Stream project offshore section was as follows: Gazprom – 50 per cent, Eni – 20 per cent, Wintershall Holding and EDF – 15 per cent each. Therefore, the project gained the support of major players of the European energy market.
In November the Banatski Dvor UGS facility was put onstream. Constructed by Gazprom and state-owned Srbijagas, it is one of the largest UGS facilities in Southeastern Europe. The UGS facility enhances the security of Russian gas export to Hungary, Serbia, Bosnia and Herzegovina. In fact, the Banatski Dvor UGS facility commissioning means the launch of the first facility within the South Stream project.
In December Turkey granted the permit for the South Stream gas pipeline construction via the country’s exclusive economic zone. In the same month Gazprom and Botas signed addenda to the contracts for gas supply to Turkey in 2012. The addenda allow increasing the supply amounts.
Commissioning new production capacities in Nadym-Pur-Taz region and Kamchatka
Comprehensive gas treatment unit of Nydinskaya area of Medvezhye field
Gas production was launched from the Nydinskaya area in the Medvezhye field, from the Valanginian deposits of the Zapolyarnoye field and the Turonian deposits of the Yuzhno-Russkoye field. A comprehensive approach to development of traditional production areas through involvement of satellite fields and accessing the productive strata lying below the Cenomanian deposits enables Gazprom to build up its production capacities.
In October Gazprom launched gas production from the Nizhne-Kvakchikskoye field located on the western coast of Kamchatka. The Company also brought the Kshukskoye field to its design capacity of 175 million cubic meters per year. Later on, gas production from these fields is expected to total 750 million cubic meters per year.
Launching commercial gas supplies via Nord Stream gas pipeline
Gas metering station near Greifswald, from where commercial gas deliveries through Nord Stream started
In November the first string of the Nord Stream gas pipeline was commissioned. For the first time the Russian and European gas transmission systems were directly connected.
The annual design capacity of the first string is 27.5 billion cubic meters of gas which is a half of the total design capacity of the entire gas pipeline. By the end of 2011, more than 900 kilometers (more than 76 per cent) of the second string have been built. The second string will be commissioned in 2012.
Nord Stream is a fundamentally new route for Russian gas export to Europe. The target markets for gas supplies via Nord Stream are Germany, the UK, the Netherlands, France and Denmark. The gas pipeline is about 1,224 kilometers long and runs from the Portovaya Bay across the Gulf of Finland and the Baltic Sea waters directly to the German coast (Greifswald). The main aim of the gas pipeline is to provide the long-term energy security of Europe. Nord Stream AG is the company set up for the gas pipeline construction and operation. The company’s shareholders are Gazprom (51 per cent), E.ON Ruhrgas and Wintershall Holding (15.5 per cent each), Gasunie and GDF SUEZ (9 per cent each).
Defining new terms and conditions for gas supply to and transit across Belarus. Taking full ownership of Beltransgaz
Alexey Miller and Vladimir Mayorov, Director General of Beltransgaz at Beltransgaz headquarters
In November Gazprom and Beltransgaz signed the contracts for gas supply to and transit across Belarus between 2012 and 2014. The documents take into consideration the entry of Russia and Belarus into the Common Economic Space and the Customs Union on equal terms for Russian and Belarusian business entities.
In the same month Gazprom and the State Property Committee of the Republic of Belarus entered into the purchase and sale agreement for a 50 per cent stake in Beltransgaz. Taking into consideration Gazprom's 50 per cent stake in Beltransgaz acquired in 2007–2010, Gazprom became the owner of a 100 per cent stake in Beltransgaz, which would be renamed Gazprom transgaz Belarus.
Allocating record high investments for gasification of Russia
In 2011 Gazprom’s investments in gasification of Russian regions reached a record high level – above RUB 29 billion. As part of the Gasification Program, in 2011 Gazprom constructed 244 inter-settlement gas pipelines with the total length of nearly 2,500 kilometers for gas supply to more than 390 population centers in 49 regions of the Russian Federation.
Constructing more than 1.7 GW of generating capacities
In 2011 Gazprom built more than 1.7 GW of generating capacities. This is more than RAO UES of Russia had built over the entire period of its existence.
In particular, in April Gazprom commissioned a combined cycle gas turbine unit (CCGT-450) at the Yuzhnaya CHPP of TGC-1 in Saint Petersburg. This solves the problem of energy shortages in Saint Petersburg and the Leningrad Oblast, increase the reliability and offers wider opportunities for heat supply to the city's southern districts as well as allows meeting energy demands for developing the industrial and business complex of the ring motorway.
In June Gazprom commissioned power unit No.8 (CCGT-420) at CHPP-26 of Mosenergo. CCGT-420 of CHPP-26 is a combined cycle gas turbine unit featuring high efficiency and cost-effectiveness. It meets the specifications that make it the most up-to-date and efficient power unit in Russia. The new unit generates both power and heat for the residents of Moscow and its satellite cities and towns.
Gazprom website Editorial Board