The Kaliningrad Region hosted today the ceremonial commissioning of the Kaliningrad underground gas storage (UGS) facility, Phase 1.

Taking part in the event were Alexey Miller, Chairman of the Gazprom Management Committee, Sergey Vakhrukov, Russian Deputy Minister of Regional Development, Stanislav Voskresensky, Deputy Presidential Plenipotentiary Envoy to the Russian Northwestern Federal District, Nikolai Tsukanov, Governor of the Kaliningrad Region, heads of Gazprom's structural units and subsidiaries as well as contracting companies.

The Kaliningrad UGS facility commissioning accords with Gazprom's sustained efforts aimed at developing gas supply to and gasification of the Kaliningrad Region. With a view to deliver additional gas volumes to the region, in 2009 the Company increased the throughput of the Minsk – Vilnius – Kaunas – Kaliningrad gas pipeline almost twofold – to 2.5 billion cubic meters a year as well as expanded the Krasnoznamenskaya compressor station.

As part of the Gasification Program, Gazprom has constructed 42 inter-settlement gas pipelines with a total length of 400 kilometers in the Kaliningrad Region starting from 2002, thus allowing to convert 24 boiler houses to gas and prepare over 5,500 household for gas supplies. As a result, the regional gasification level soared 23.2 per cent to 64.2, which is commensurate with Russia's average rate (64.4 per cent).

By now, two gas tanks with a total working capacity of 52 million cubic meters and maximum daily deliverability of 4.8 million cubic meters of gas (average gas consumption in the Region is 5.9 million cubic meters of gas) are ready to operate at the Kaliningrad UGS facility. A total of five independent tanks with an aggregate working capacity of 261 million cubic meters will be constructed at the UGS facility. Later on, the regional consumers will receive up to 12 million cubic meters of gas a day.

“A milestone event took place today: we commissioned the Kaliningrad UGS facility – Gazprom's first one in salt caverns. It is not just another facility on the Russian gas map. It is the experience we will use when constructing similar UGS facilities in Russia.

Such facilities have a number of apparent advantages. For instance, it is possible to promptly switch on the injection mode and change it to the withdrawal mode. This means that we will always have a full storage in Kaliningrad during the autumn-winter period and, therefore, a high degree of gas supply reliability. It is especially important as the Russian Government and Gazprom as well are looking closely after the energy security in the Kaliningrad Region. The Kaliningrad UGS facility commissioning resolves this issue,” said Alexey Miller.

As part of the event, Alexey Miller and Nikolai Tsukanov signed an Agreement of Understanding and Cooperation in relation to the project aimed at building an LNG regasification terminal on the Baltic coast of the Kaliningrad Region.

Pursuant to the Agreement, the Regional Government will provide whatever assistance possible to Gazprom in obtaining the approvals required for the construction as well as in the land allocation issues.

At the moment, an Investment Rationale to be completed in 2014 is being carried out for this project.

In addition, Alexey Miller and Nikolai Tsukanov will visit today an integrated natural gas liquefaction and compression complex of Gaz-Oil (a wholly-owned subsidiary of Gazprom) near Kaliningrad, where pre-commissioning operations are currently underway. The complex includes a CNG filling station that will be the first one in the Kaliningrad Region.

Background

The Cooperation Agreement between Gazprom and the Kaliningrad Region Administration was signed in 2005 for an indefinite term, the Gasification Accord – in 2010. In 2012 Gazprom supplied the Region with 2.17 billion cubic meters of gas.

Underground gas storage (UGS) facilities help smooth out seasonal fluctuations in gas demand, reduce peak loads and provide for flexibility and reliability of gas supply. Being an integral part of the Russian Unified Gas Supply System, UGS facilities are situated in the main gas consuming regions.

Gazprom operates 22 UGS facilities in Russia (Kaliningrad UGS facility inclusive), which comprise 26 gas storage sites: 17 – in depleted gas fields, 8 – in aquifers and 1 – in a salt cavern.

UGS facilities secure about 20 per cent of domestic and export gas supplies during a heating season and up to 40 per cent during cold snaps. On December 20, 2012, during an abnormally cold weather period, Gazprom reached a record withdrawal rate in the entire Russian UGS history – 670.7 million cubic meters of gas per day (with the accumulated gas withdrawal rate amounting to 14.3 per cent of the operating gas reserve), which almost equaled the maximum possible daily deliverability at the beginning of the withdrawal season (671.1 million cubic meters). The peak withdrawal rate from Russian storage facilities exceeded 39 per cent of gas consumption within the Unified Gas Supply System area.

Gazprom is active in building up underground gas storage capacities in Russia. In particular, the following UGS facilities are being retrofitted and expanded: Sovkhoznoye (Orenburg Region), Stepnovskoye (Saratov Region), Kasimovskoye (Ryazan Region), Nevskoye (Novgorod Region), Kaluzhskoye (Kaluga Region) and the Kanchurinsko-Musinsky complex (Republic of Bashkortostan). Construction is underway on the Kaliningrad and Volgograd UGS facilities in rock salt deposits as well as the Bednodemyanovskoye UGS facility in aquifers (on the border between the Penza Region and the Republic of Mordovia).