Gazprom generates positive free cash flow for eleventh consecutive year

The Gazprom's Financial and Economic Policy Press Conference was held at the Company’s office in Moscow today in the lead-up to the annual General Shareholders Meeting. The Press Conference featured Andrey Kruglov, Deputy Chairman of the Management Committee, Elena Vasilieva, Deputy Chairwoman of the Management Committee and Chief Accountant, Alexander IvannikovKaren Oganyan, and Vitaly Khatkov, Heads of Departments, and Mikhail Rosseev, Deputy Chief Accountant.

The Gazprom's Financial and Economic Policy Press Conference was held at the Company’s office in Moscow in the lead-up to the annual General Shareholders Meeting

The Gazprom's Financial and Economic Policy Press Conference was held at the Company’s office in Moscow in the lead-up to the annual General Shareholders Meeting

It was noted at the Press Conference that in 2016 Gazprom had delivered solid financial results despite a number of unfavorable macroeconomic factors. For the eleventh consecutive year the Company generated a positive free cash flow, which amounted to RUB 202 billion in 2016. Gazprom’s net profit rose to RUB 952 billion, adding 21 per cent compared to 2015.

Gazprom's Financial and Economic Policy Press Conference held in Moscow in lead-up to annual General Shareholders Meeting

Andrey Kruglov

These gains can be largely attributed to Gazprom’s conservative financial strategy, which envisages, in the first place, stringent limits for operating expenses, strict ranking of investment projects during budgeting, thorough control and optimization of costs, and efficient debt management and currency risk mitigation.

This approach allows the Company to maintain the balance between funding investment projects largely from the operating cash flow, keeping the debt load and liquidity cushion at a comfortable level, and ensuring that the Company’s shareholders receive dividends equal to or higher than the previous year’s amount.

The Gazprom's Financial and Economic Policy Press Conference was held at the Company’s office in Moscow in the lead-up to the annual General Shareholders Meeting

The Gazprom's Financial and Economic Policy Press Conference was held at the Company’s office in Moscow in the lead-up to the annual General Shareholders Meeting

It was stressed at the Press Conference that the Company needs a stable tax regime to plan its business activities. However, in recent years taxation parameters for the oil and gas industry have changed every year, with a persistent upward trend for the severance tax on gas produced by the Gazprom Group.

An emphasis was placed at the Press Conference on the Company’s efforts in improving its corporate governance taking into account global best practices. One of the important outcomes of 2016 was that the Moscow Exchange confirmed that Gazprom had fulfilled all quality requirements for corporate governance to retain its position on the top-tier quotation list. In 2017, the Company will continue its efforts aimed at increasing its performance transparency.

The Press Conference also touched upon other issues related to Gazprom's current and future financial and economic performance.

Gazprom website Editorial Board

 

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Gazprom and Serbian Ministry of Mining and Energy sign roadmap to develop Serbia’s gas transmission capacities

A working meeting between Alexey Miller, Chairman of the Gazprom Management Committee, and Aleksandar Vucic, President of the Republic of Serbia, took place in Belgrade today.

The parties expressed deep appreciation for their bilateral relations, noting the continuously developing partnership in a number of areas, including gas storage. In early June 2017, a memorandum was signed to expand the Banatski Dvor UGS facility. The facility's capacities will be increased from 450 to 750 million cubic meters.

The meeting also touched upon the persistently growing demand for Russian gas in Serbia. According to estimates, Gazprom’s gas exports to the country between January 1 and June 26, 2017, added 47.7 per cent against the same period of 2016.

In light of the increasing gas demand, the parties discussed the development prospects for Serbia’s gas transmission capacities. As part of the meeting, Alexey Miller and Aleksandar Antic, Minister of Mining and Energy of the Republic of Serbia, inked a roadmap in the presence of Serbian President Aleksandar Vucic. The document provides for a number of measures to implement a plan aimed at expanding the Serbian gas transmission system.

Gas transmission in Serbia

Gas transmission in Serbia

Background

Gazprom’s partner in Serbia is Srbijagas, a state-owned company focused on gas transportation, storage and distribution in Serbia.

In 2015, Gazprom and Srbijagas signed the Memorandum of Understanding promoting cooperation in the areas of underground gas storage, use of gas as a vehicle fuel, and small-scale LNG, including as part of scientific & technical cooperation. On June 3, 2017, Gazprom and Srbijagas inked the Memorandum of Understanding to conduct the technical and financial feasibility studies for the expansion of the Banatski Dvor UGS facility.

In 2013, a long-term contract was inked for Russian gas supplies to Serbia for the period of 10 years. In 2016, Gazprom exported to Serbia 1.75 billion cubic meters of gas, a 4.3 per cent increase from 2015.

 



Gazprom and Srbijagas address cooperation issues

A working meeting between Alexey Miller, Chairman of the Gazprom Management Committee, and Dusan Bajatovic, Director General of Srbijagas, took place in Belgrade today.

The parties addressed the ongoing bilateral cooperation, including, inter alia, joint efforts in the expansion of the Banatski Dvor UGS facility, promotion of the use of gas as a vehicle fuel in Serbia, and scientific & technical partnership between the companies.

Gas transmission in Serbia

Gas transmission in Serbia

Background

Gazprom’s partner in Serbia is Srbijagas, a state-owned company focused on gas transportation, storage and distribution in Serbia.

In 2015, Gazprom and Srbijagas signed the Memorandum of Understanding promoting cooperation in the areas of underground gas storage, use of gas as a vehicle fuel, and small-scale LNG, including as part of scientific & technical cooperation. On June 3, 2017, Gazprom and Srbijagas inked the Memorandum of Understanding to conduct the technical and financial feasibility studies for the expansion of the Banatski Dvor UGS facility.

In 2013, a long-term contract was inked for Russian gas supplies to Serbia for the period of 10 years. In 2016, Gazprom exported to Serbia 1.75 billion cubic meters of gas, a 4.3 per cent increase from 2015.

 



Pipe-laying of TurkStream gas pipeline in deep water commenced

Gazprom today started laying the TurkStream gas pipeline in the deep-water area off the coast of Anapa. The operations were launched with the command given by Russian President Vladimir Putin during his visit to the Pioneering Spirit pipe-laying vessel.

Pipe-laying of TurkStream gas pipeline in deep water commenced

Pioneering Spirit pipe-laying vessel

Pipe-laying of TurkStream gas pipeline in deep water commenced. Photo by RIA Novosti

Photo by RIA Novosti

Pipe-laying of TurkStream gas pipeline in deep water launched with command given by Russian President Vladimir Putin (left) during his visit to Pioneering Spirit pipe-laying vessel. Photo by RIA Novosti

Vladimir Putin and Alexey Miller. Photo by RIA Novosti

Vladimir Putin and Alexey Miller, Chairman of the Gazprom Management Committee, explored the machinery and equipment of the vessel, including its gas pipeline construction facility used for welding and applying protective coatings to pipes.

Pipe-laying of TurkStream gas pipeline in deep water launched with command given by Russian President Vladimir Putin (center) during his visit to Pioneering Spirit pipe-laying vessel. Photo by RIA Novosti

Photo by RIA Novosti

Pipe-laying of TurkStream gas pipeline in deep water launched with command given by Russian President Vladimir Putin (center) during his visit to Pioneering Spirit pipe-laying vessel. Photo by RIA Novosti

Photo by RIA Novosti

Pipe-laying of TurkStream gas pipeline in deep water launched with command given by Russian President Vladimir Putin (center) during his visit to Pioneering Spirit pipe-laying vessel. Photo by RIA Novosti

Photo by RIA Novosti

“Pioneering Spirit, the world's largest construction vessel, will have an important task to solve, namely to build the deep-water section of the TurkStream gas pipeline. This is a new direct and reliable route for Russian gas supplies to Turkey and further to southern and southeastern Europe.

For Turkey natural gas is the key energy source accounting for 38 per cent in the country’s electricity generation and used for heating and cooking in upward of 12 million households. TurkStream will substantially increase energy security in the region.

Natural gas is of equal importance to southern and southeastern Europe. The declining indigenous gas production and the necessity to reduce coal's share in electricity generation across the Balkan countries create the potential for sustainable growth in natural gas demand in that part of Europe,” said Alexey Miller.

Pipe-laying of TurkStream gas pipeline in deep water launched with command given by Russian President Vladimir Putin (right) during his visit to Pioneering Spirit pipe-laying vessel. Photo by RIA Novosti

Photo by RIA Novosti

Pipe-laying of TurkStream gas pipeline in deep water commenced. Photo by RIA Novosti

Photo by RIA Novosti

Pipe-laying of TurkStream gas pipeline in deep water commenced

TurkStream gas pipeline

Background

TurkStream is the project for a transit-free export gas pipeline stretching across the Black Sea from Russia to Turkey and further to Turkey's border with neighboring countries. The first string of the gas pipeline is intended for Turkish consumers, while the second string will deliver gas to southern and southeastern Europe. Each string will have the throughput capacity of 15.75 billion cubic meters of gas per year. On October 10, 2016, Russia and Turkey signed the Intergovernmental Agreement on the TurkStream project. South Stream Transport B.V., a wholly-owned subsidiary of Gazprom, is responsible for the construction of the gas pipeline's offshore section. On May 7, 2017, the Audacia vessel started the construction of the TurkStream gas pipeline near the Russian coast.

Allseas Group is the world's leading company in offshore pipe-laying and subsea construction. The company is focused on comprehensive project implementation, including design, material and equipment procurement, construction, and commissioning.

Pioneering Spirit is the world’s largest construction vessel, the dimensions being 477 meters in length and 124 meters in width. The vessel is designed to lay pipelines in deep-water areas, as well as to install and dismantle large oil and gas offshore platforms.

 



Accreditation of journalists for Gazprom’s General Shareholders Meeting scheduled for June 26 and 27

Dear members of the media and representatives of investment and finance companies,

Gazprom’s annual General Shareholders Meeting will take place at Gazprom’s office in Moscow (16 Nametkina Street, Conference Hall, Bldg 2) on June 30, 2017, at 10:00 am Moscow time.

Members of the media will have the opportunity to take photos and videos of the Meeting’s opening ceremony. The Meeting will also be broadcast live from the Conference Hall by the Press Center. After the Meeting (around 4:00 pm) journalists and representatives of investment and finance companies will have a chance to participate in the final Press Conference.

The accreditation procedure for journalists and representatives of investment and finance companies will take place on June 26 and 27 from 10:00 am to 6:00 pm at Gazprom’s office in Moscow at 16 Nametkina Street, Bldg 2, Room 334. /Travel route: ride the first car of the subway train going from downtown to the Noviye Cheryomushki subway station and take trolley bus No. 60 to the Novocheryomushkinskaya Ulitsa bus stop. Admittance to the building will be by passports and press passes/.

Accreditation via phone, fax or e-mail is not allowed.

Due to the limited space of the Press Center, each media outlet registered in the Russian Federation can only receive accreditation for not more than one reporter and one photographer. Accredited camera crews must not exceed three persons.

During the accreditation procedure, members of the media and representatives of investment and finance companies will receive Meeting-related information materials and accreditation badges. Without the badges, access to Gazprom’s premises will be denied on the day of the Meeting.

Phone numbers at accreditation desks: +7 495 718-58-68, +7 495 718-63-77.

Accreditation via couriers will only be possible upon presentation of a power of attorney on the editorial office (corporate) form.

Camera crews will be admitted into the Conference Hall on June 30 from 9:45 am to 9:55 am. The rest of the accredited journalists and representatives of investment and finance companies will be able to enter the Press Center from 9:00 am to 6:00 pm. Since the end time of the Meeting has not been set, journalists and representatives of investment and finance companies will have the opportunity to leave Gazprom’s premises and return by the start of the final Press Conference.

The speech by Alexey Miller, Chairman of the Gazprom Management Committee, at the General Shareholders Meeting along with the final press conference will be broadcast live in Russian and English over the Internet at www.gazpromvideo.ru and at the following phone numbers: +7 495 719-35-77 and +7 495 719-30-00 (multi-line system).

 



Alexey Miller and Serzh Sargsyan express appreciation for robust use of natural gas in Armenia

Yerevan hosted today working meetings of Alexey Miller, Chairman of the Gazprom Management Committee, with Armenian President Serzh Sargsyan and Armenian Prime Minister Karen Karapetyan.

The meetings addressed the development of Armenia’s gas industry. Specifically, the meeting participants noted a high level of gas penetration in the country, amounting to 96 per cent. They also expressed their appreciation for a robust use of natural gas in different economic sectors, including transportation. At present, around 80 per cent of vehicles in the country run on natural gas. Russian gas exports to Armenia stand at some 1.9 billion cubic meters per year. Armenia’s gas consumption is growing this year, with gas supplies from Russia already exceeding 1 billion cubic meters over the first five and a half months of 2017 (+35 per cent compared to 2016).

Alexey Miller and Serzh Sargsyan express appreciation for robust use of natural gas in Armenia

Re-insulation of flowlines of underground reservoirs at Abovyanskoye underground gas storage facility in Armenia

The meeting also touched upon the issues regarding Armenia’s gas supply network development and gas grid expansion, focusing, inter alia, on the General Scheme prepared by Gazprom. The parties discussed the prospects for the construction of a new compressor station at the Abovyanskoye underground gas storage facility and gas trunklines inside the country, as well as for the overhaul of Armenia’s existing gas transmission and distribution infrastructure.

Background

Gazprom Armenia, a wholly-owned subsidiary of Gazprom, is focused on natural gas supplies to the Armenian market. In addition, the company transports, stores, distributes and sells natural gas, as well as upgrades and expands the gas transmission system and underground gas storage facilities in the Republic of Armenia.

In 2013, Gazprom and Gazprom Armenia signed the contract for up to 2.5 billion cubic meters of Russian gas to be supplied annually to Armenia in 2014–2018. On April 7, 2016, an addendum to the contract was signed. Gas is delivered to the Armenian border by Gazprom Export.

The General Scheme of Gas Supply to and Gasification of the Armenian Republic provides for large-scale overhaul, upgrade and modernization of the country's gas transmission infrastructure and underground gas storage capacities.

 



Over 1,100 kilometers of Power of Siberia gas pipeline to be completed by late 2017

The Gazprom in Eastern Russia, Entry into Asia-Pacific Markets Press Conference was held in Moscow today in the lead-up to the annual General Shareholders Meeting. The Press Conference featured Vitaly Markelov and Alexander Medvedev, Deputy Chairmen of the Management Committee, Vyacheslav Mikhalenko and Sergey Prozorov, Members of the Management Committee and Heads of Departments, Pavel Oderov, Head of Department, Alexander Kalinkin and Vasily Petlichenko, Deputy Heads of Departments, and Elena Burmistrova, Director General of Gazprom Export.

Asia-Pacific Markets Press Conference. June 8, 2017.

Asia-Pacific Markets Press Conference. June 8, 2017.

It was noted that Gazprom continued its active efforts within the projects under the Eastern Gas Program.

Particular attention at the Press Conference was paid to Russian gas supplies to China via the eastern route. The construction project for the Power of Siberia gas trunkline is ahead of schedule. By 2017, 445 kilometers of its linear part were built. As of early June 2017, some 774 kilometers were ready. Before the end of the year, it is planned to complete over 1,100 kilometers of the pipeline, which translates into about a half of Power of Siberia’s priority section stretching from the Chayandinskoye field in Yakutia to the Russian-Chinese border.

Asia-Pacific Markets Press Conference. June 8, 2017.

Vitaly Markelov

In accordance with the contract signed between Gazprom and CNPC, gas supplies to China via the eastern route will start in the period from May 2019 through May 2021. In May 2017, the parties began to negotiate the exact starting dates for the said gas deliveries.

Discussions continue over gas to be supplied to China via the western route and from Russia’s Far East.

Asia-Pacific Markets Press Conference. June 8, 2017.

Alexander Medvedev

It was also noted that the Asia-Pacific region was a traditional LNG market for Gazprom. Between 2005 and 2016, over 75 per cent of the Group’s LNG was shipped to the region. In 2016, the Company supplied 2.8 million tons of LNG to Asia-Pacific.

One of Gazprom’s top priorities is to ramp up gas sales in Asia-Pacific with the help of a third train of the LNG plant within the Sakhalin II project. It is planned to build a new production train similar to the two existing trains, with an annual capacity of up to 5.4 million tons of LNG. Design documentation for the construction project is being finalized as part of FEED.

The Press Conference also touched upon other issues related to Gazprom's eastern projects.

Gazprom website Editorial Board

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Materials:

Background



Upward trend for gas exports to Europe continues after record year in 2016

The Gas Export and Enhancing Reliability of Gas Supply to Europe Press Conference was held in Moscow today in the lead-up to the annual General Shareholders Meeting. The Press Conference featured Alexander Medvedev, Deputy Chairman of the Management Committee, Pavel Oderov, Head of Department, and Elena Burmistrova, Director General of Gazprom Export.

Alexander Medvedev

Alexander Medvedev

It was noted that in 2016 Gazprom’s exports to Europe had hit a record of 179.3 billion cubic meters, which was 19.9 billion cubic meters more (+12.5 per cent) than in 2015. The largest buyers were Germany, Turkey, and Italy. For instance, Germany, Gazprom’s number one market in Europe, imported 49.8 billion cubic meters of Russian gas, a historical high for the country.

In 2017, gas supplies grew further: over the first five months of the year, the Company exported 9.5 billion cubic meters (+13.3 per cent) of gas more than in the same period of 2016.

Gazprom takes consistent efforts aimed at establishing more reliable and cost-effective routes for supplying gas from Russia to Europe. Specifically, the Company continues the construction project for the Nord Stream 2 gas pipeline with the annual capacity of 55 billion cubic meters of gas. On April 24, 2017, Nord Stream 2 AG signed the financing agreements for the project with the leading energy companies ENGIE, OMV, Royal Dutch Shell, Uniper, and Wintershall. Pursuant to the documents, those companies will provide long-term financing for 50 per cent of the total cost of the project.

On May 7, 2017, the construction of the TurkStream gas pipeline began. Its first string will make it possible to annually deliver 15.75 billion cubic meters of gas to Turkey, and the second string will convey the same amount of gas to southern and southeastern Europe.

Gazprom continues to expand its underground gas storage capacities abroad. In the Czech Republic, the Damborice UGS facility with the design working capacity of 456 million cubic meters came onstream on July 1, 2016. At the moment, Gazprom can use 156 million cubic meters of the facility’s capacities, with the maximum daily deliverability standing at 3.7 million cubic meters. The underground storage capacities located close to sales markets allow the Company to smooth out seasonal consumption peaks, which makes supplies much more reliable.

Gazprom website Editorial Board

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Press Conference

 

Materials:

Background



Russian industry development bolstered by Gazprom and Linde’s partnership

A working meeting between Alexey Miller, Chairman of the Management Committee of Gazprom, and Aldo Belloni, Chief Executive Officer of Linde, took place today at the St. Petersburg International Economic Forum 2017.

Russian industry development bolstered by Gazprom and Linde’s partnership

At meeting

The parties emphasized the strategic nature of cooperation between the companies and reviewed the current status of Gazprom’s projects involving Linde.

Aldo Belloni (right), Chief Executive Officer of Linde, at meeting with Alexey Miller

Aldo Belloni (right)

Among other things, the meeting touched upon the construction of the Amur gas processing plant (GPP), which would use Linde’s technological solutions. The preparations at the site for the process facilities of the GPP’s first start-up complex are 95 per cent finished. Priority equipment for the said facilities will be supplied to the GPP in the 3rd quarter of 2017.

Russian industry development bolstered by Gazprom and Linde’s partnership

Construction of Amur GPP, May 2017

Alexey Miller and Aldo Belloni stressed the importance of having launched a facility based in St. Petersburg for manufacturing the key components, i.e. spiral heat exchangers, of the equipment for cryogenic recovery of substances from gas. The first products of the joint venture established by Linde and Power Machines are intended for the Amur GPP.

Localization of heat exchanger manufacturing in Russia had been made possible thanks to the close cooperation between Gazprom, Linde, and domestic engineering companies.

Background

Linde AG is one of the world's largest companies focused on industrial technologies for natural gas treatment and separation with the recovery of ethane, propane and heavier hydrocarbon fractions. In addition, the company designs and builds cryogenic facilities for natural gas and helium liquefaction.

The Amur GPP with a design capacity of 42 billion cubic meters of gas per year will be constructed near Svobodny in the Amur Region. The GPP will include the world's largest helium production facility.

Linde will supply the Amur GPP with the core process equipment for cryogenic recovery of helium and valuable petrochemical substances from gas.