Gazprom increases production and sale of gas

Gazprom is the world leader in stocks and production of natural gas and also in the extent of the gas transmission system. Thus the company steadily increases these indicators, strengthening leadership


Gazprom annually develops more reserves of gas than gets from subsoil. In particular, last year the gain of reserves of hydrocarbons of Gazprom Group on the categories A+B1+C1 in the territory of the Russian Federation as a result of carrying out prospecting works made 852.9 billion cubic meters of natural gas, 95.6 million tons of gas condensate and 3.3 million tons of oil. The main gain of reserves of gas is received on Tambeysky (395.5 billion cubic meters) and Malyginsk (201.1 billion cubic meters) fields located on the Yamal Peninsula and also on achimovsky deposits of Urengoy field (Yamalo-Nenets Autonomous Area) – 194.9 billion cubic meters.

In 2017 four fields were open: Southern Lunskoye (shelf of the Sea of Okhotsk), Salairskoye (Krasnoyarsk Krai), named after A. Zhagrin (Khanty-Mansi Autonomous Okrug — Yugra), Novozarinskoye (Orenburg region) and also 47 new deposits on earlier opened fields in the Yamalo-Nenets Autonomous Area, Khanty-Mansi Autonomous Okrug — Yugra, Tomsk, Irkutsk and Orenburg areas.
According to DeGolyer and MacNaughton, for December 31, 2017 the proved and probable reserves of hydrocarbons of Gazprom Group on the international PRMS standards made 24.15 trillion CBM of natural gas, 1.1 billion tons of gas condensate and 1.4 billion tons of oil. Audit there passed objects which stocks in total made 94.1% of reserves of gas, 92.7% of condensate and 93.5% of oil of Gazprom Group of the categories A+B1+C1.


Last year production of natural and associated gas of Gazprom Group reached 471 billion cubic meters, having exceeded the level of previous year on 12.4% in connection with sharp increase in demand. The essential contribution to growth of gas production was made by Bovanenkovo oil and gas field. With commissioning on a field in 2016-2017 of new mining capacities its peak productivity reached 264 million cubic meters per day. Production of gas condensate on Gazprom Group made 15.9 million tons.

Oil production by Gazprom Oil Company reached 39.5 million tons. Taking into account a share of Gazprom Group in volumes of production of the organizations investments in which are classified as joint operations (1.1 billion cubic meters of natural and associated gas and 7.6 million tons of oil), production of hydrocarbons by Gazprom Group in 2017 made 472.1 billion cubic meters of gas, 15.9 million tons of gas condensate and 48.6 million tons of oil.

Transportation and storage

Extent of the main gas pipelines and gas pipeline branches made Gazprom Groups as of the end of 2017 in the territory of Russia made 172.1 thousand km. Last year Gazprom placed into operation 640.2 km of the new main gas pipelines and branches in the territory of our country.

In 2017 672.1 billion cubic meters of gas came to the gas transmission system of Gazprom in the territory of Russia that for 8% exceeds the level of 2016. Besides, the companies of Gazprom Group are owners of gas transmission systems of Belarus, Armenia and Kyrgyzstan.

The Underground Gas Storages are an integral part of the Uniform System of Gas Supply of our country. They smooth uneven demand on gas — seasonal, week, daily, guaranteeing in a heating season from 20 to 40% of all supply of gas of Gazprom.

In Russia Gazprom operates 22 underground gas storages. As of December 31, 2017 the total active capacity of the Russian underground gas storages reached 74.9 billion cubic meters. Last year 45.5 billion cubic meters of gas was taken from underground gas storages of Russian Federation.

In the territory of the countries of the former Soviet Union Gazprom operates underground gas storages in Belarus (Pribugsky, Osipovichsky and Mozyrsky) and Armenia (Abovyansky station of underground storage of gas) and also uses capacities of Inchukalnsky underground gas storage in Latvia. At the end of 2017 the operational reserve of gas in the countries of the former Soviet Union made 3 billion cubic meters.

Gazprom actively uses capacities of underground gas storages in Europe. In particular, in Austria («Haidach»), Germany («Yemgum», «Rehden», «Catharina», «Ettsel»), Serbia («Banatski Dvor»), the Netherlands («Bergermeer»), the Czech Republic («Damborzhitsa»). Own capacities of Gazprom for storage of gas in the European foreign countries made 5 billion cubic meters in 2017. Last year 8.6 billion cubic meters of gas were downloaded in underground gas storages of the European foreign countries and total selection made 4.3 billion cubic meters.

The Gazprom group provides reliable and safe operation of gas-distributing systems of Russia. Activity in the field of gas distribution conducts JSC Gazprom Gas Distribution. There were 773.4 thousand km of networks of gas distribution in property and service of the affiliated and dependent gas-distributing organizations of Group in the territory of Russia as of December 31, 2017. Last year transportation volume on gas-distributing system of affiliated and dependent gas-distributing organizations of Gazprom Group made 239 billion cubic meters of gas. Besides, the affiliated organizations of Group conduct activity in the sphere of gas distribution in Armenia (JSC Gazprom Armenia), Kyrgyzstan (OSOO Gazprom Kyrgyzstan) and also in Romania (WIROM GAS S.A.).

Gazprom realizes large-scale Program of gasification of regions of the Russian Federation which promotes their social and economic development and growth of a standard of living of the population. Within the Program in 2017 construction of 121 inter-settlement gas pipelines with a general extent of 1.9 thousand km in 32 territorial subjects of the Russian Federation was completed.
Level of gasification across Russia by the end of 2017 reached 68.1%. The Program of gasification for 2018 included 66 regions.

Gas sale

In 2017 general consumption of gas in Russia made 468 billion cubic meters that is on 2.5% more than the level of 2016. Growth of consumption was caused by generally colder weather conditions in the first half of the year of the last year. The main consumers of natural gas in Russia are producers of the electric power and heat (37%), the population (11%), oil industry (9%), household sector (8%) and metallurgy (6%).

Gazprom is the largest supplier of natural gas in the Russian market. In 2017 the Gazprom Group realized to consumers of the Russian Federation 229.9 billion cubic meters of gas that is on 15 billion cubic meters or on 7% higher than the level of 2016.

To the countries of the former Soviet Union the Group realized 35 billion cubic meters of gas (5.4% more than in 2016). Export growth of natural gas to the countries of the former Soviet Union in 2017 became result of increase of consumption in Belarus and the Baltic States and also renewal of supply of gas to Azerbaijan.
Last year became record on volumes of supply of gas under contracts of JSC Gazprom Export and under the direct contracts of GAZPROM Schweiz AG to the European foreign countries. Following the results of 2017 this indicator reached a point of 194.4 billion cubic meters, having increased on 15.1 billion cubic meters or on 8.4%. A share of deliveries of Gazprom in gas consumption by the European foreign countries (including Turkey) reached 34.2%.

Increase of economic activity and growth of internal consumption of gas in Europe at the invariable level of own production and, thereof, increase in demand for import gas became the most important factors of growth of deliveries. Consumption of gas in the European foreign countries in 2017 made 568.2 billion cubic meters that is on 26.5 billion cubic meters or on 4.9% more than in 2016. It is the highest rate of demand for gas for the last five years. Own gas production in the European countries in 2017 grew slightly — on 3.7 billion cubic meters or on 1.4%. General import of gas on the European market in 2017 increased on 22.8 billion cubic meters or on 8.1%.

In 2017 volumes of realization of the liquefied natural gas made 3.34 million tons of a trade portfolio of Gazprom Group. The list of the directions of deliveries was replenished with one more country — Spain. As well as in previous years, the companies in Asia-Pacific countries, in particular in Japan (36%) and China (19%) were key buyers of liquefied natural gas from a trade portfolio of Gazprom Group.
Last year the turn of dynamics of prices of oil towards increase was observed. In 2017 oil quotations grew on 24%, having reached on average for a year of value of 54 dollars/barrel. Coal price grew more significantly, almost on 50% and averaged 77 dollars/tons in a year. Against the growing prices of the competing energy resources growth of quotations of gas trading floors in Europe was observed.
Important tendency of the last years is decrease of own gas production in Europe. In the long term this process will proceed and by 2035 production volumes in the region can be cut by half in comparison with the current level. The most essential falling of gas production can happen in the Netherlands and Great Britain.


Moderate increase in demand for gas against falling of internal production will lead to growth of dependence of Europe on import deliveries. Additional needs for import of gas will partially become covered by liquefied natural gas supply; however the main contribution to providing the European consumers with natural gas will remain behind the main gas pipelines, including thanks to the PAO Gazprom new pipeline projects: Nord Stream — 2 and The Turkish Stream. Some experts point to possible risk of the competition between PAO Gazprom export gas and supply of liquefied natural gas from the USA in the European market. However current ratio of the prices in the world markets of liquefied natural gas and the high cost of a full cycle of its production in North America in combination with costs of sea transportation and regasification reduce appeal of supply of the American liquefied natural gas to Europe in comparison with other regional markets.

According to expert estimates, the most attractive to the American liquefied natural gas will be markets of the countries of the Central and South America and also Pacific Rim where higher price level in comparison with the European is predicted. Thus, influence of liquefied natural gas from the USA on the European market will have further limited character. Besides, decrease in the world prices for natural gas in comparison with acting at the time of adoption of investment decisions on the American projects called into question economic feasibility of supply of liquefied natural gas from North America on some regional markets, especially European. Actual data about supply of the liquefied gas from the USA indicate limited opportunities of its realization in the European gas market under current conditions. For 2017 about 18 billion cubic meters of liquefied natural gas from the Sabine Paz project from which only 2.6 billion cubic meters are delivered to Europe were exported. Thus, a share of the American liquefied natural gas in consumption of gas in the European market made 0.5% only.

The defining role in dynamics of development of the world energy market is played by China. Not incidentally this country is one of the priority directions of diversification of business of PAO Gazprom. In December, 2019 supply of gas to this country on the Force of Siberia gas pipeline will begin. According to forecasts of the leading world organizations, in average and long term about a quarter of a universal gain of consumption of gas will account for a share of China. Total amount of consumption of energy in the People’s Republic of China in 2035 will make from 3.2 billion to 4.2 billion tons in oil equivalent and consumption of natural gas can reach 680 billion cubic meters (in 2017 — 237 billion cubic meters). In the near future the People’s Republic of China can become the world’s largest importer of natural gas.

World consumption of energy will continue to grow in the long term; however the structure of the world energy balance will change. Growth rates of consumption of oil and coal will be slowed down. Consumption of natural gas, on the contrary, will surely grow. Thus, among traditional power sources only natural gas will strengthen the positions in world fuel and energy balance. Being environmentally friendly and economically attractive fuel, gas becomes more and more widespread in the world, actively competing with other fossil power sources — oil and coal.
Despite the happening changes of an environment of the world energy markets, natural gas remains the most fast-growing energy resource among fossil types of fuel in the long term. World consumption of gas will grow on 1.5-2% a year and will reach the level of 4.8-5.3 trillion cubic meters that will provide to natural gas a share about 25% in world fuel and energy balance by 2035. The power industry remains key sector of consumption of gas. In this sector natural gas will face the competition from the renewables, nuclear generation and coal. Economic appeal in comparison with renewable energy sources and also the best ecological characteristics and possibility of more flexible use in a power supply system in comparison with other fossil types of fuel remains the most important advantages of gas. Combination of the listed factors will make natural gas the leader in absolute measures of a gain of consumption among all energy resources till 2035.

Increase in gas production in all regions of the world except Europe will happen in a long term. General gain of gas production in the world by 2035 will exceed 1 trillion cubic meters. The greatest contribution to increase in gas production in the world will be made by the Russian Federation. And the greatest dynamics of growth of consumption of natural gas will be shown by the Asian region which share in world consumption of gas will grow from the current indicator of 19% to 25% in 2035.