Speech by Alexey Miller, Chairman of Gazprom Management Committee, at conference call on occasion of New Year’s Eve.
Esteemed colleagues, dear friends,
As per tradition, we take stock of our work at the end of every year, and 2021 has once again turned out to be a record-breaking year for us. New records in production, new records in gas supplies, new records in financial performance.
Together, we confidently reaffirmed our leadership in the global energy market this year.
Global gas consumption grew by 150 billion cubic meters this year. Gazprom satisfied over a third of this additional demand by producing additional amounts of gas. By the end of this year, we will have produced 62.2 billion cubic meters more gas than last year, reaching 515 billion cubic meters in annual output. This is the best figure in the last 13 years.
Needless to say, our key priority is the provision of stable and reliable gas supplies to Russian consumers. The amount of gas supplied to the domestic market will have grown by 29.7 billion cubic meters in 2021 compared to last year. As you are well aware, this is a vital contribution to the socioeconomic development of our country.
On top of that, we meet our contractual obligations reliably, in full and always on time. Apparently, we are going to reach the fourth-largest result for gas supplies beyond the FSU this year. I would like to reiterate the crucial point that, in such a challenging year with such enormous highs in winter and summer, we have to this day managed to fulfill all of our obligations to our European consumers. I am pleased to say that the biggest growth in our supplies took place in the countries that are our largest consumers.
This indicates that our main clients – our key partners – are oriented towards buying Russian gas. They realize the long-term nature of our partnership, which will remain long-term in the future.
Of course, our chief objective is to get through the autumn/winter period. This task is not getting any less challenging with years, as demand keeps growing along with needs. Peaks keep getting higher as well. We meet the requirements posed by the economy, the utilities sector, the social sphere and exports, and we tackle these challenges in a timely manner.
We are consistently expanding our underground gas storage (UGS) facilities. As you know, we injected 72.6 billion cubic meters of gas into our UGS facilities by the start of the withdrawal period this year and set a new record for their potential daily deliverability prior to withdrawal at 847.9 million cubic meters.
However, now we have to talk about not only the autumn/winter peak but also about the summer peak. For the first time, the Company has decided to adopt a special program to prepare for the summer maximum as soon as the autumn/winter maximum passes. Similarly, we will prepare a plan of activities for our subsidiaries and make systematic preparations for the summer peak.
In order to meet this peak demand, our resource base needs to be larger than the annual production volumes. Our production capacities need to be sufficient so that we can always provide uninterrupted supplies in the areas covered by the Unified Gas Supply System even if the average temperature across the Russian Federation drops to minus 25 degrees Celsius. And we know that the Company was fully ready for the current autumn/winter period. We know without a doubt that we will handle the winter peaks. Actually, the same is true for the summer peaks.
Production increases are important. Our main production region, Nadym-Pur-Taz, is a fairly old one. Over the past years, we created a new gas production region in the Russian Federation: the Yamal gas production center.
It should be noted that our reserve replacement ratio has been exceeding 1 for 17 consecutive years, allowing us to fulfill all obligations to our partners. But it is Yamal that has become the focus of our construction efforts. It is Yamal’s Bovanenkovskoye field that has become one of our essential fields. It is a regulator field that helps us cover the winter peaks, or the “seesaw of Gazprom” as we call them. We are also currently working to develop another major field in Yamal: Kharasaveyskoye. The construction project for the gas pipeline between Kharasaveyskoye and Bovanenkovskoye is at 40 per cent already.
To bring gas from Yamal means to further enhance the northern gas transmission corridor, which is becoming the main, backbone corridor for delivering gas to our consumers in terms of imports and exports alike.
The year 2021 was marked by the launch of new compressor stations in the section between Ukhta and Gryazovets and the creation of gas transmission capacities stretching to the Slavyanskaya compressor station. Gas from Slavyanskaya is already flowing into the Nord Stream 2 gas pipeline. As you know, the first string of Nord Stream 2 is already under working pressure, and the second string will undergo the same procedure before the end of this year.
The additional opportunities offered by offshore gas pipelines are absolutely clear to us. They allow us to perform transit-free supplies, which are undoubtedly advantageous to us, as they mean much shorter distances plus transportation tariffs that we pay to ourselves.
Nord Stream 2 is, without a question, a megaproject. It bears repeating that we have built this gas pipeline by ourselves, on our own. Indeed, we have been supported by a few reliable partners, including financial ones. But it should be understood that the works and the pipes were all entirely Russian. We worked in very challenging circumstances – under pressure, in fact. And yet we did it with no fuss. We handled every problem and tackled every outstanding issue. Crucially, we have never had any doubt that we would build this gas pipeline.
2021 also saw the completion of our work on another route – the TurkStream offshore gas pipeline. We put in operation the onshore gas transmission capacities in Bulgaria and Serbia. Today, TurkStream brings gas not only to Turkey but also to another eight European countries. It is thanks to TurkStream that Greece is going to hit an all-time record for the purchases of Russian gas by the end of 2021.
Processing is an essential line of work for us. Taking into account the development of new fields in Eastern Siberia and the increasing amounts of ethane in the gas from our old fields in the Nadym-Pur-Taz region, Gazprom has made some consequential and major investment decisions. They include the construction of the Amur Gas Processing Plant and a production cluster located in Ust-Luga, on the coast of the Baltic Sea. This cluster, which is unique on a global scale, encompasses processing, gas chemistry, natural gas liquefaction, and supplies of dry stripped gas to consumers. It is the only complex of this kind in the world.
Despite the enormous scale of the Amur Gas Processing Plant and the severely difficult circumstances of the pandemic, we were right on schedule when we brought the first start-up complex of the Amur GPP into operation. Vladimir Putin, President of the Russian Federation, launched the Amur GPP in real time via a video link.
Also in the Amur Region, we started producing helium, a strategic commodity which is highly sought after in medicine and in advanced high-tech sectors.
The Power of Siberia gas pipeline is being expanded both in terms of transmission capacity and resource base. In 2023, Power of Siberia will start receiving gas from the Kovyktinskoye field. The gas pipeline between the Kovyktinskoye and Chayandinskoye fields is 70 per cent ready.
It is very heartening to see entire cities on the Russian map where Power of Siberia supplies gas to meet the needs of our consumers. We have made real strides in advancing gas infrastructure expansion in this region.
Of course, we are also happy to see the growing rates of gas consumption in China. Since November, our daily gas supplies have been exceeding the daily contractual obligations to our Chinese partners by more than one-third. The very fact of growing demand is encouraging. Crucially, our supply volumes are already in excess of the contractual and design amounts.
Speaking of Amur, we should highlight a notable example of import substitution. Gazprom Energoholding has launched the Svobodny TPP, which was built using exclusively equipment of Russian make.
This is undoubtedly a significant achievement that was made possible not just by us and by Gazprom Energoholding, but also by our contractors. It is the result of joint goal-setting in import substitution, drafting of specifications, concerted efforts in R&D, and so on. The work that we are doing under import substitution programs in the Far East for the purposes of the Amur GPP and the town of Svobodny is of course vitally important.
I would like to highlight another record, which is incredibly impressive. By the end of 2021, Gazprom Neft will have produced more than 100 million tons of oil equivalent for the first time in history. This is the strategic target that we set for that company, and it has now been attained.
As for social priorities, dear colleagues, they mean the world to us. Needless to say, the top social priority is the gas infrastructure expansion program. And Russian President Vladimir Putin has set new goals and objectives before us. The first of our chief goals is to complete the additional social gas grid expansion before 2023. We need to bring gas to the households that are yet to receive gas despite being based in the localities that are already provided with pipeline gas. More than half a million applications have already been received. I am sure that we will complete this task within such short timeframes.
We have signed five-year programs for gas supply and gas infrastructure expansion with 68 regions. By the end of 2025, as many as 35 regions of the Russian Federation are to have their gas grid development completed to the maximum extent technically possible. By 2030, all Russian regions are expected to reach that goal.
We absolutely believe, we simply know that we are going to fulfill these goals and objectives.
By the end of this year, we will have built 2,700 kilometers of the linear part under the gas supply and gas infrastructure expansion programs. We will have brought gas to another 342 localities across the country, making it possible for people to burn gas in stoves at their homes.
Esteemed colleagues,
I firmly believe that all strategic goals set before us by the Government will be achieved. The team of Gazprom and the Gazprom Group has a wealth of expertise and experience.
As you know, we implement the most ambitious projects on the planet. In many areas of our core activities, we are ahead of the rest of the world. In some areas, we are two whole generations ahead. This is why our leading positions in the global rankings are currently solid as a rock.
I would like to thank you all for your committed work and for your responsible and proactive attitude.
Here we are talking, working together, and understanding the way we feel. We can feel that the work is going swimmingly. We can feel its rhythm. We can feel that we are in sync.
I wish you all and your loved ones a happy New Year!
In 2022, we will have even more work to do than we have had in 2021, which is why I wish you new records, new successes, and new achievements. May your homes always be full of warmth, comfort, family happiness, and prosperity. I would also like to wish you good health. Take care of your health and that of your families and loved ones. Dear colleagues, please take care to keep our teams and our employees healthy.
I wish you a happy New Year and a merry Christmas! Let us move only forward, towards new victories! And in conclusion, as we usually say at Gazprom, let us go on with our work.
