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June 4, 2013

Gazprom making strong contribution to meeting growing demand for gas in Europe

The Gazprom headquarters hosted today the Press Conference “Gas Export and Enhancing Reliability of Gas Supply to Europe” organized within the series of meetings among Gazprom's top executives and media representatives on the threshold of the Company's annual General Shareholders Meeting. Taking part in the Press Conference were Alexander Medvedev, Deputy Chairman of the Gazprom Management Committee, Director General of Gazprom Export and Pavel Oderov, Head of the International Business Department of Gazprom.

It was noted that in 2012 the total volume of Gazprom's natural gas supplies beyond the FSU under long-term contracts had amounted to 138.8 billion cubic meters. More than 8 per cent of this amount was delivered via the Nord Stream gas pipeline. Today the major purchasers of the Russian blue fuel are Germany, Turkey and Italy. 64.4 billion cubic meters of natural gas was supplied to the CIS and the Baltic states in 2012. The proceeds from gas supplies to Europe amounted in 2012 to USD 55.9 billion, to the CIS and the Baltic states – USD 19.86 billion.

It is anticipated that in 2013 Gazprom Group might supply Europe with 152 billion cubic meters of natural gas, and the CIS and the Baltic states – with 74.8 billion cubic meters.

According to consensus forecasts, by 2025 the gap between domestic production and consumption in Europe will amount to 145 billion cubic meters, and by 2030 – surpass 200 billion cubic meters. In this respect, Gazprom is obviously set to play an even bigger role as the lead supplier of natural gas to Europe and the holder of immense resources with proven records of reliable gas supplies for over 40 years.

In order to enhance the energy security of Europe and diversify the natural gas export routes, Gazprom is implementing the South Stream project. The commissioning of the gas pipeline as well as the startup of commercial gas supplies are scheduled for late 2015. With a view to boost direct supplies of Russian gas to European consumers, the possibility of constructing the Yamal – Europe-2 gas pipeline and extending the Nord Stream project is being worked on.

Along with the diversification of transmission routes, Gazprom intensely utilizes the available underground gas storage (UGS) facilities in Europe in order to optimize its gas supplies. Particularly, Gazprom participated in creating such UGS facilities in Europe as the Rehden UGS (Germany), the Haidach UGS (Austria) and the Banatski Dvor UGS (Serbia) facilities; the construction of the Katharina UGS facility in Germany and the Bergermeer UGS facility in the Netherlands is underway. Moreover, Gazprom Group is performing feasibility studies concerning its possible participation in projects in Austria, the UK, France, Romania, Slovakia, Turkey, the Czech Republic, Belgium and other countries. By early winter 2012/2013 Gazprom owned 4.5 billion cubic meters of gas storage capacities in Europe. By 2015 Gazprom Group plans to increase its underground gas storage capacities beyond the CIS to 4.9 billion cubic meters of working gas.

Alexander Medvedev highlighted that Gazprom considered the NGV market as a promising business activity targeted at increasing the economic efficiency of Russian gas sales. The imposition of even stricter environmental regulations, a steady rise in prices of the vehicle fuel produced from petroleum as well as the availability of gas reserves for many years ahead are still the main reasons for the NGV market evolution. In addition, by 2030 the potential of the European NGV market may account for 45 billion cubic meters of extra demand. By now, the companies of Gazprom Group have already launched pilot NGV projects in Germany, Poland and the Czech Republic.

Answering questions from the media about the possibility of price changes under export contracts, Alexander Medvedev noted that Gazprom supplied natural gas in line with price formulas that were individual for every previously signed long-term export contract and were taking into account fluctuations of oil and derivative prices. In addition, the spot gas trading in continental Europe remains insignificant in terms of volumes and insufficiently liquid. At the same time, Gazprom is ready to be flexible and take into consideration all the market changes.

In addition, the Press Conference addressed the issues concerning Gazprom's further build-up of liquefied natural gas export as well as the talks over export contract prices and the ongoing dialogue with the European Commission.




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