The pandemic of a new coronavirus infection became the most considerable event of last year. Realization of quarantine and antiepidemiological actions led to decrease in economic activity and reduction of consumption of resources, including power.

According to the Organization for Economic Cooperation and Development (OECD), the volume of the world economy in 2020 was reduced on 3.4%. According to preliminary estimates, consumption of natural gas in the world following the results of last year decreased on 1.3%. However in 2021 the situation was corrected.

Stocks

The Gazprom Group is the absolute leader among the Russian and foreign energy companies in size of gas reserves. Since 2005 completion of reserves of gas of the company steadily exceeds volumes of its production. Gazprom annually due to prospecting works provides the main gain of natural gas reserves in Russia.
According to the DeGolyer and MacNaughton Company, for December 31, 2020 the proved and probable reserves of hydrocarbons of the Gazprom Group on the international PRMS standards made 24.5 trillion CBM of natural gas, 1.1 billion tons of gas condensate and 1.4 billion tons of oil, including a share in stocks of the organizations investments in which are classified as joint operations (20 billion cubic meters of natural gas and 149 million tons of oil).
Getting audited there the objects which stocks in total made 92% of reserves of gas, 94.7% of condensate and 95.8% of oil of Gazprom Group of the categories A+B1+C1. Increase in the proved and probable reserves of gas is received thanks to new geological model and revised projects of development of Antipayutinsky, Srednetyungsky, Orenburg, Pestsovy (Jurassic and Achimov deposits) and Kruzenshternsky fields. Besides, a new gas-condensate field Hambateyskoye was entered into audit and development drilling and additional exploration of oil fields proceeded on Zapadno- Chatylkinsky and Alexander Zhagrin field.
As of December 31, 2020 in the territory of Russia reserves of hydrocarbons of the Gazprom Group of the categories A+B1+C1 made 33.6 trillion CBM of natural gas, 1.5 billion tons of gas condensate and 2 billion tons of oil. Total volume of reserves of hydrocarbons of the Gazprom Group of the categories A+B1+C1 amounts to 244.96 billion barrels of oil equivalent.
Last year by results of participation in the auctions by Gazprom Group which took place in 2019 three licenses for the purpose of search, exploration and production of hydrocarbon raw materials to Sopochny (Yamalo-Nenets Autonomous Area), Hambateysky (Yamalo-Nenets Autonomous Area and Gulf of Ob of the Kara Sea) and North Yamburg (Yamalo-Nenets Autonomous Area) sites were obtained by a total cost of 20.4 billion rubles. The Sopochny license site is near perspective fields of the Gazprom Group in the Ob and Tazov Gulfs and possesses considerable resource potential. Receiving the North Yamburg license site will allow Gazprom Neft expanding the project of development of Achimov oil pools of Yamburg field.
High quality of resource base allows Gazprom to support the low level of investigation cost. Average costs of completion of explored reserves make about 30 rubles for 1 barrel of oil equivalent.
A share of the Group in reserves of hydrocarbons of the categories A+B1+C1 of the associated organizations and joint ventures (including a share in stocks of JSC Rusgazalyans) made 1.1 trillion CBM of natural gas, 110.1 million tons of gas condensate and 595.7 million tons of oil or totally 12.1 billion barrels of oil equivalent.
In the territory of Russia in 2020 seismic exploration works on 3D technique of the volume is 5.9 thousand sq. km were performed. Explorative drilling passed 162 thousand meters of rocks, 34 wells on oil and gas were finished with construction, 27 wells at test gave inflow.
Following the results of last year in the territory of Russia the gain of reserves of hydrocarbons on the categories A+B1+C1 as a result of carried out prospecting works made 486.3 billion cubic meters of natural gas, 17.2 million tons of gas condensate and 9.5 million tons of oil. The most essential gain of reserves of gas is received on the Leningrad field, which is located on a continental shelf of the Kara Sea – 224.2 billion cubic meters. Three fields were discovered: gas field «75 years of the Victory» on a continental shelf of the Russian Federation in the Kara Sea; oil fields Solkhem in Khanty-Mansi Autonomous Okrug — Yugra and Central Uranskoye in Orenburg region and also 22 new deposits on earlier opened fields in Yamalo-Nenets Autonomous Area, Khanty-Mansi Autonomous Okrug — Yugra, on a continental shelf of the Russian Federation in the Kara Sea, in Tomsk region.
Besides, on the organizations investments in which are classified as joint operations, the driving in prospecting drilling made 8.1 thousand meters, three explorative wells are finished with construction, shooting 3D of 0.7 thousand sq.km is executed. Driving volume when carrying out additional exploration by method of drilling of a lateral trunk made 0.6 thousand meters. The New and Salymsky field in Khanty-Mansi Autonomous Okrug — Yugra and three deposits in Khanty-Mansi Autonomous Okrug — Yugra and the Tomsk region are discovered.
Efficiency of GRR in 2020 made 20.7 thousand barrels of equivalent fuel on 1 meter driving.

Extraction

Following the results of 2020 production of natural and associated petroleum gas of the Gazprom Group made 454.5 billion cubic meters. The indicator of useful use of associated petroleum gas in the territory of Russia in general on the Gazprom Group increased to 92% (in 2019 – 90.1%), generally as a result of the carried-out work on objects of Gazprom Neft.
Last year the Gazprom Group extracted 16.3 million tons of gas condensate and 47.1 million tons of oil.
Start of mobile installations of preparation allowed increasing oil production on oil rims of the fields Nadym-Pur-Tazovsk region (Han-Yakhinsky, West Tarkosalinsky, Pestsovy). Production on the specified objects in 2020 made 1.47 million tons of oil (in 2019 – 0.23 million tons). Primary activities of the Gazprom Group in the territory of foreign countries are investigation and development of oil and gas fields, rendering oil and gas services, and also search and acquisition of new oil and gas assets.
Last year the Gazprom Group continued prospecting works in Algeria (the project El Assel), Bolivia (Asero’s project), Vietnam (the Block 112, Blocks 129-132) and also in Serbia and Romania (projects of the NIS Company). Within implementation of prospecting projects where the Gazprom Group has operator functions, the main amount of works was executed in the territory of Serbia. The driving in prospecting drilling made 8.8 thousand meters; four productive explorative wells were finished with construction.
According to the Strategic Cooperation Agreement between PAO Gazprom and JSC Uzbekneftegaz geological studying of four investment blocks in the territory of the Republic of Uzbekistan is carried out, 3.1 billion rubles were directed on financing of prospecting works abroad in 2020.
The Gazprom Group is a participant of a number of oil and gas projects at stage of hydrocarbons production. The largest of them on volumes of production of natural gas are projects on development of fields Mok Tin and Hai That (Vietnam) in the water area of the South China Sea ( a share of the Gazprom Group in the project is 49%) and also fields of Inkauasi on blocks Ipati and Akio in Bolivia (a share of Gazprom Group is 20%); on oil production volumes — the project of development of a field of Badra in Iraq (a share of Gazprom Group in the project is 30%) and Sarkal’s fields on the block Garmian in Iraq (Kurdistan) (a share of Gazprom Group — 45%).
In February, 2020 the field Sillimante located in the British and Netherlands sectors of the North Sea was put into operation (a share of Gazprom Group in the project is 19.9%). An affiliated organization NIS conducts production of hydrocarbons generally in the territory of Serbia and also in Angola, Bosnia and Herzegovina and Romania. Besides, the Group owns shares in the associated Wintershall AG (a share of Gazprom Group is 49%) which is carrying out oil production in Libya and in Wintershall Noordzee Joint Venture (a share of Gazprom Group is 50%) conducting exploration and production of hydrocarbons in British, Danish and Netherlands sectors of the North Sea.
The Gazprom Group is guided by target standard of profitability choosing foreign projects for realization. Regions of interests in oil business are Balkan (Serbia, Romania, Bosnia and Herzegovina) and the Middle Eastern directions.

Transportation

Gas transportation to consumers of Russia and for export is carried out on the unique, not having analogs in the world Uniform System of Gas Supply (USGS). USGS of Russia is a centralized system on production, processing, preparation, transportation and storage of natural gas. The world’s largest system of the main gas pipelines (MGP) of a high pressure in the territory of the European part of Russia and Western Siberia is a part of USGS. Also the Group owns MGP in the east of the country: Power of Siberia, Sakhalin-Khabarovsk-Vladivostok, Sobolevo and Petropavlovsk-Kamchatsky. Extent the operated gas transmission societies of MGP Group and gas pipeline branches as of December 31, 2020 in the territory of Russia made 176.8 thousand km.
In 2020, 625 billion cubic meters of gas came to the gas transmission system (GTS) of Gazprom in the territory of Russia. In December, 2019 pipeline supply of Russian gas to the People’s Republic of China on MGP Power of Siberia began. In total last year it was transported 4.1 billion cubic meters of natural gas on the gas pipeline (in 2019 – 0.33 billion cubic meters).
The companies of the Gazprom Group are owners of GTS of Belarus (JSC Gazprom TransGas Belarus), Armenia (JSC Gazprom Armenia), Kyrgyzstan (OSOO Gazprom Kyrgyzstan) providing supply of natural gas to the consumers of specified countries.
Last year on the Nord Stream gas main more than 59 billion cubic meters of gas were transported. And on MGP Turkish Stream 13.5 billion cubic meters were transported. Besides Turkish consumers receiving gas on the first thread in 2020 from the second gas pipeline consumers of Bulgaria, Greece, Northern Macedonia and Romania also started receiving Russian gas.

Underground gas storages

Operational, trouble-free, safe, reliable and effective work of USGS of Russia is promoted by an extensive network of underground gas storages (UGS). The peak and basic gas storages located in the main areas of consumption of gas ensuring stable functioning of USGS, smooth seasonal, weekly, daily fluctuations of demand for gas. Use of UGS promotes reliability of work of processing equipment of USGS and allows optimizing capital intensity and the GTS technological parameters.
The network of UGS provides more than 20% of supply of gas to domestic and foreign consumers during heating period. In the territory of Russia the Gazprom Group operates 23 UGS in 27 geological structures: 17 in the exhausted gas fields, eight in water-bearing layers and two in deposits of rock salt. For December 31, 2020 total active capacity on arrangement of the Russian UGS reached 75.1 billion cubic meters. For the beginning of a season of selection 2020/21 volumes of an operational reserve of gas in UGS of Russia made 72.3 billion cubic meters.
Reliability of export supply of natural gas is provided by the capacities for storage of gas used by the Gazprom Group in the countries of the near and far abroad. In the territory of the former Soviet Union (FSU) Gazprom operates UGS in Republic of Belarus (Pribugsky, Osipovichsky and Mozyrsky UGS) and Republic of Armenia (Abovyansky station of underground storage of gas). In UGS of the countries of FSU the Gazprom Group in 2020 loaded 0.99 billion cubic meters of natural gas, total selection made 0.82 billion cubic meters.
In foreign countries the Gazprom Group actively uses capacities of gas storages: in Austria (Haidach), Germany (Yemgum, Rehden, Catharina, Ettsel), Serbia (Banatski Dvor), the Czech Republic (Damborzhitsa) and the Netherlands (Bergermeer). By the beginning of a season of selection 2020/21 in UGS of the European foreign countries the total active capacity used by JSC Gazprom Export (taking into account long-term rent), made 8.6 billion cubic meters with the maximum technical daily productivity of 136.2 million cubic meters Besides, by the beginning of a season of selection 2020/21 at JSC Gazprom Export medium-term commercial contracts for use of capacities of UGS in Slovakia, Austria and Hungary with a total active volume of 2.5 billion cubic meters and the maximum total daily productivity affected selection of 18.5 million cubic meters.

Gas distribution

The Gazprom Group provides reliable and safe operation of gas-distributing systems of Russia and also controls observance of requirements of industrial safety at their operation. Activity in the field of gas distribution is conducted by JSC Gazprom Gas Distribution, its affiliated and dependent societies and also JSC Gazprom Transgaz Kazan. As of December 31, 2020, 817.1 thousand km of networks of gas distribution were in property and on service of the affiliated and dependent gas-distributing organizations of the Group in the territory of Russia.
In 2020 transportation volume on gas-distributing system of affiliated and dependent gas-distributing organization of Gazprom Group made 223.2 billion cubic meters of gas. Thus there were provided with natural gas:
- 28.3 million apartments and private households;
- 33 thousand industrial facilities;
- 9.8 thousand agricultural objects;
- 353.6 thousand household objects.
The Gazprom Group conducts activity in the field of gas distribution in Armenia (JSC Gazprom Armenia) and Kyrgyzstan (OSOO Gazprom Kyrgyzstan). Gasification level in Armenia makes 96%, 636 settlements are supplied with natural gas. In Kyrgyzstan 46 settlements are gasified. The level of gasification of the country with natural gas is 35%.
Gasification of regions of Russia is one of the most large-scale and socially significant areas of work of the Gazprom Group. Participants of the carried-out work, besides the organizations of the Group, are the governments and administrations of subjects of the Russian Federation.
66 subjects of the Russian Federation participated in the Program of gasification of regions of the Russian Federation for 2020 for which it was allocated 39.3 billion rubles of investments within the investment program of JSC Gazprom Mezhregiongaz. Besides, within the PAO Gazprom investment program on gasification and gas supply of regions construction of gas pipeline branches and gas-distributing stations was carried out. Last year 16.7 billion rubles were directed on these purposes. Thus, 56 billion rubles were directed on development of gas supply and gasification of regions of the Russian Federation following the results of last year.
In 2020 construction of 141 inter-settlement gas pipelines with a general extent of 2.19 thousand km in 39 regions was completed. There were created conditions for gasification of 200 settlements, 63.1 thousand households and apartments. Essential limiting factors of growth of gasification level in regions are the debt for delivered gas and also non-execution by administrations of the regions their assumed obligations on training of consumers for gas reception.
Following the results of the last year obligations of administrations of subjects of the Russian Federation for construction of gas distribution pipelines were fulfilled almost for 90%, on preparation of households and apartments for gas reception for 74%, on preparation of boiler rooms for 75%.
The level of gasification last year in comparison with 2019 grew on 1.3 items and as of December 31, 2020 made in general across Russia 71.4%, in the cities and settlements of city type – 73.7%, in rural areas – 64.8%.
Last year taking into account offers of administrations of subjects of the Russian Federation programs of development of gas supply and gasification of 67 regions for 2021-2025 were created and approved. Gazprom will direct 526.1 billion rubles on gasification. It is planned to construct more than 24 thousand km of gas pipelines (growth in 2.5 times to volumes of 2016-2020), to create conditions for gasification of 3.6 thousand settlements (growth in 2.7 times) with this money. Within programs of development of gas supply and gasification implementation of two investment projects on autonomous gasification with application of technologies of liquefaction of natural gas in Tomsk and Sakhalin areas is planned.
Under condition of strict implementation of programs of development of gas supply and gasification of regions of the Russian Federation for 2021-2025 the level of gasification of the country will grow to 74.7%. In 35 regions technically feasible network gasification will be fully completed. By estimates of specialists of the company, the volume of consumption of gas in Russia will grow on 18.6 billion cubic meters a year, including gas consumption by the population will increase on 1.9 billion cubic meters a year.

Gas motor fuel

Production and realization of natural gas as motor fuel is among the strategic areas of work of Gazprom Group in Russia. The company actively develops a network of automobile gas-filling compressor stations (CNG filling station), consistently expands own park of automotive equipment on natural gas.
JSC Gazprom Gas Motor Fuel is determined the uniform operator by development of the market of gas motor fuel in the territory of the Russian Federation. There are 348 gas-filling compressor stations with productivity more than 2.6 billion cubic meters a year on balance of the affiliated organizations of Gazprom Group and JSC Gazprom Gas Motor Fuel. 31 objects of gas-filling infrastructure of Gazprom Group were put into operation in 2020.
Last year 1.1 billion cubic meters of compressed natural gas (CNG) was realized in the territory of Russia, thereof 842.4 million cubic meters or 77% accounted for a share of the Gazprom Group.
As a result of collaboration with Ministry of Energy of the Russian Federation a subprogram «Development of the market of gas motor fuel» of a state program of the Russian Federation «Development of power» which is capable to provide unprecedented state support of the GMT market was approved. Total amount of financing from 2020 to 2024 can make to 35 billion rubles, including subsidizing of construction of facilities of gas-filling infrastructure, re-equipment of cars on gas and support of producers of gas engine vehicles.
In 2020 it was acquired more than 1 thousand units of gas engine transport and 8 units of mobile gas-filling infrastructure. As of December 31, 2020 the park of natural gas vehicles made 13.3 thousand and the park of mobile gas-filling infrastructure — 176 units. Due to use of more environmentally friendly motor fuel (methane) emissions of the polluting substances in atmospheric air reduced on 34.54 thousand tons.
The Gazprom Group is presented in the market of Europe by the 100 percent subsidiary Gazprom NGV Europe which owned as of December 31, 2020 objects of gas engine infrastructure in Germany (47 CNG filling stations) and the Czech Republic (14 CNG filling stations). Besides, the NIS company entering into Gazprom Neft Group realizes compressed natural gas via four own CNG filling stations in the market of Serbia. Last year the volume of realization of natural gas as motor fuel in Germany, the Czech Republic and Serbia Gazprom Group made 13.6 million cubic meters. Despite the restrictions connected with spread of coronavirus, annual volume of realization of compressed natural gas in each of the countries of presence of Gazprom Group last year increased that testifies increase in demand for gas motor fuel.
On balance of subsidiaries of Gazprom Group in the territory of the former Soviet Union there are 39 CNG filling stations. These objects are operated by OSOO Gazprom Kyrgyzstan (4 CNG filling stations), JSC Gazprom Armenia (7 CNG filling stations) and JSC Gazprom TransGas Belarus (28 CNG filling stations). In 2020 the volume of realization of compressed natural gas via CNG filling station in the countries of BSS made 71.7 million cubic meters.

Processing

In 2020 the Gazprom Group without raw materials supplied by the customer processed 30.6 billion cubic meters of natural and associated gas. 18.47 million tons of unstable gas condensate are cleared and stabilized at capacities of JSC Gazprom Pererabotka and gas subsidiaries of PAO Gazprom. The volume of primary oil refining and stable gas condensate by Gazprom Group made 53.69 million tons. 49.39 million tons of oil products, 3.57 million tons of the liquefied hydrocarbon gases and 4.47 million cubic meters of helium are made.

Sale

Foreign countries including Europe are traditional export market providing high profitability for the Group. Gazprom reserves a third of the European market and is ahead of competitors on this indicator with a big separation. In 2020 the Gazprom Group realized 219 billion cubic meters of gas to foreign countries.
Last year the main sales volume of gas of the Group accounted for the markets of the Netherlands, Germany, Italy, Turkey and France. The main volume of the natural gas realized in foreign countries is represented by export deliveries from Russia through JSC Gazprom Export under long-term contracts. Saving of long-term contracts as bases of export activity remains a priority for PAO Gazprom.
In response to changes in the European market JSC Gazprom Export gradually increases the presence in the market of short-term transactions with gas, including operations on trading floors, and also carries out investments into the joint ventures working in the European countries including the markets of the end user.
The affiliated organizations of Gazprom Group realized 21.4 billion cubic meters of gas to directly end users in the markets of the European foreign countries in 2020.
Last year volumes of realization of large-capacity LNG from a trade portfolio of the Gazprom Group in the foreign markets increased more than twice and made 7.44 million tons (10.92 billion cubic meters) thereof 49% were a share of Asia-Pacific countries, 37% — of Europe. India became the largest buyer of LNG from portfolio of Gazprom Group in 2020: on this market 1.84 million tons of LNG was delivered. The geography of supply of LNG considerably extended. So, shipments were carried out to 14 countries, in five of which — Belgium, Greece, the Netherlands, Singapore and France for the first time.
Expansion of a trade portfolio of Gazprom Group is connected with an exit to a plateau of volume of supply of LNG under the contract with the Yamal Trade Company and increase in volume of purchases of spot parties. The contract of purchase and sale with the Yamal Trade Company assumes deliveries of 2.9 million tons of LNG a year within 20 years. Besides, to the Gazprom Group supply of LNG from the Sakhalin-II project is still delivered (The Group possesses 50% + 1 action of the project) under the contract with the Sakhalin Energy Company in volume to 1 million tons of LNG a year and also from the Cameroon LNG project — within the contract with the Perenco Cameroon Company under which in a trade portfolio of the Gazprom Group all volume of LNG made at plant is carried out (1.2 million tons a year).
In short and medium-term prospect the trade portfolio of LNG of Gazprom will be filled up with volumes from new projects of Group: a complex on production, storage and shipment of LNG near compressor station Portovaya and a complex on processing and liquefaction of natural gas in the settlement Ust-Luga.
The Russian market of gas is a priority for Gazprom. The Company steadily provides high level of reliability of deliveries. Their volume completely corresponds to the level of demand. Gazprom is the largest supplier of natural gas in the Russian market. In 2020 the Gazprom Group realized to consumers of the Russian Federation 225.1 billion cubic meters of gas.
Last year the Group realized 31.2 billion cubic meters of gas to the countries of the former Soviet Union. The Gazprom Group buys natural gas in Turkmenistan, Kazakhstan and Uzbekistan. An average price of purchase of Central Asian gas last year fell.

Prospects

Following the results of 2020 the volume of consumption of natural gas in the European foreign countries was reduced on 2.8%, having made 544 billion cubic meters as a result of warm winter months and also measures for fight against distribution of COVID-19. In the most considerable way consumption of gas was reduced in electricity generation sector due to growth of solar generation and hydropower and also in the industry, including owing to introduction of restrictive measures which led to decrease in economic activity.
Reduction of offer was observed as cumulative import (-7.9%), and own gas production (-7.7%). The most essential decrease in volumes of own production happened in the Netherlands (-28.3%) that was caused by introduction of the next restriction for production on the largest field Groningen. LNG supply was also reduced (-1.9%).
China is one of the most dynamically developing gas markets of the world. In the conditions of gas consumption growth Chinese companies actively increase both own production and gas import. In 2020 growth of consumption of gas in China despite the pandemic of coronavirus infection and decrease in economic activity proceeded. According to preliminary estimates, gas consumption in the People’s Republic of China last year grew almost on 6.5%. Even during economic recession execution of state programs of an ecological orientation is the main reason of growth of gas consumption. One of them under the name «Fight for the Blue Sky» set an objective to transfer more than 7 million households in the north of China from coal on «pure» power sources, including natural gas by the heating season of 2020. The essential role in a covering of demand for gas in China is played by import. According to preliminary data, last year China imported 141 billion cubic meters, on 5.4% more than in 2019.
In 2020 deliveries through Power of Siberia gas pipeline were increased. In December of the last year the next site of gas transmission infrastructure for distribution of gas coming to the country on main gas-pipeline Power of Siberia which will allow increasing deliveries to the district of Beijing, in particular, was entered in China.
Despite decrease in world consumption of energy in 2020 connected with a pandemic of coronavirus infection, the key factors defining development of the world power in recent years remained invariable: proceeding growth of the population and related growth of consumption of energy and also amplifying attention of many countries to environmental issues and climate change.
World consumption of energy will steadily grow and by 2040 will increase on 22% in comparison with the level of 2020. Thus dynamic growth of consumption of natural gas and energy of renewable energy sources is expected. More than 78% of total amount of a world gain of consumption of energy will account for these energy carriers.
It is expected that world consumption of gas by 2030 will increase in comparison with the level of 2019 approximately on 19% and will make about 4.9 trillion CBM and by 2040 — on 29%, to 5.3 trillion CBM.
In medium-term prospect restoration of demand for gas in the European countries will be promoted by plans of various EU countries for closing of coal power plants and use of gas in transport sector. In the next decade consumption of natural gas in the region will remain in the range of 550-575 billion cubic meters a year. The People’s Republic of China remains the world leader in a gain of volumes of gas consumption. Growth rates of gas production in China will lag behind the rates of its consumption that will cause increase in volumes of import deliveries.
It is not surprising that export of natural gas of Gazprom to foreign countries in 6 months of 2021 grew on 25.7% — to 99.9 billion cubic meters. In May of this year historical records on volumes of deliveries for this month to Germany and Italy were set. At the same time growth of supply of gas to China through Power of Siberia gas pipeline proceeds. Deliveries of the company to domestic market for this period grew on 16% (on 19.1 billion cubic meters).
Gas production by Gazprom in 6 months of 2021 increased on 18%.