The first export deliveries began in the mid-forties when gas from the USSR in small volumes began to come to Poland. About 20 years export of these goods was small, 5.6 billion cubic meters were sold for the entire period until the end of 1967 in general.

In 1967, after completion of construction of gas pipeline Druzhba 600 km long which connected a domestic gas transmission network to consumers in Czechoslovakia large-scale gas export began. On this pipeline in 1968 deliveries to Austria — the first country of Western Europe which became the importer of the Russian gas began. Total gas export in 1968 made 1.7 billion cubic meters. 1968 was very strained in the relations of the USSR and the West. At the end of August, 1968 troops of the countries of the Warsaw pact suppressed so-called Prague spring that caused a storm of protests from the USA and their allies. But the political conflict did not prevent the beginning of supply of the Soviet gas which across the territory of Czechoslovakia came to Austria.
In the late sixties the USSR significantly increased production of natural gas and came out on top in the world on stocks of this energy carrier. During this period the economy of the European countries was in a rise stage that caused high rates of a gain of demand for energy. The combination of these factors predetermined an entry of the USSR into the European market as the new large supplier, despite existence of contracts for delivery of natural gas in a row of the states of Western Europe from the Netherlands.

The first contracts

On June 1, 1968 the first contract with the Austrian firm OMV was signed. Each of the next three years was marked by signing of the document on gas export to the next West European country: in 1969 — to Italy, in 1970 — in Germany, in 1971 — to Finland and to France. Gas export to the countries of the Central Europe was carried out within long-term intergovernmental agreements on the basis of which annual contracts consisted. All European member countries of the Council of Economic Mutual Aid (CEMA) and also Yugoslavia became buyers of the Russian gas.
Noticeable increase of a role and value of natural gas in national export demanded creation of the specialized foreign trade organization. In April, 1973 in system of the Ministry of Foreign Trade the Soyuzgazeksport All-union association as which implementation of the foreign trade operations with natural gas entered was founded.

The cooperation of member countries of CEMA in development of new natural gas fields and its production provided in the Comprehensive program of further deepening and improvement of cooperation and development of socialist economic integration of member countries of CEMA was of great importance for development of gas export during this period. Development of the Orenburg gas-condensate field and construction of the main gas pipeline Orenburg — the Western border of the USSR («Union») 2750 km long was the largest object of such cooperation. On this gas pipeline which was put into operation at the beginning of 1979, 15.5 billion cubic meters of gas a year came to the countries of the Central Europe. Distinctive feature of this project consisted that the gas pipeline was constructed based on the multilateral intergovernmental agreement with direct participation of the organizations of the Central European states which carried out concrete volumes of work and participated in material and financial inputs. The Orenburg agreement together with the Yamburg intergovernmental agreement concluded in the mid-eighties throughout the long period were the main interstate documents regulating supply of the Russian gas to the countries of the Central Europe.

Advance of domestic gas on a foreign market, the conclusion of new contracts was led to that in 1981 export of this energy carrier reached 59 billion cubic meters, having increased since 1968 by 35 times. It is interesting to note that in the 1970s Soyuzgazeksport was engaged also in import of natural gas from Iran and Afghanistan. The Soviet gas workers mastered two fields in Afghanistan and helped with construction of gas-processing plant and the gas pipeline to border from the USSR. On it in 1967 the Afghan gas of 4 billion cubic meters a year came to Tajikistan and Uzbekistan. Soviet gas workers constructed the gas pipeline 1.1 thousand km long from Iran to Azerbaijan, Georgia and Armenia in 1970. These republics began to receive to 10 billion cubic meters of gas annually on it. Also the project on export of the Iranian gas to countries of Western Europe through the territory of the USSR was developed. However its realization was refused after Islamic revolution in Iran.

«Gas — pipes»

The Agreement on the main terms of delivery of natural gas signed in November, 1980 from the USSR to Germany providing export of 10.5 billion cubic meters of gas a year within 25 years since 1984 became the beginning of a new stage in development of domestic export of natural gas. The agreement was signed within the transaction «gas — pipes», including supply of gas from Western Siberia and construction of the export gas pipeline Urengoy — Pomary — Uzhgorod 4.5 thousand km long. Similar agreements were concluded on supply of natural gas to France, Italy, Austria and Switzerland.

These agreements caused an indignation storm from the USA. Here is how the American researcher Daniel Ergin in the book «Production» described this story: «In power the plans of the western Europeans causing serious disagreements considerably to increase purchases of the Soviet gas were the only serious problem which leaders of G7 had to solve. Europeans assumed to use them in programs of diversification in the energy sector to reduce the dependence on oil. They also hoped to increase employment in mechanical engineering and steel industry. The administration of U.S. President Ronald Reagan was against this project, being afraid that expansion of import of gas will create to the Soviet Union levers for the political pressure on Europe. Besides, it did not want that Russia gained additional income in hard currency that would strengthen its economy and military potential. With increase of disagreements round this transaction Washington imposed a ban on export of the American equipment for this project and then tried to forbid also export of the European equipment created on the basis of the American technologies.

Such infringement of the right of exterritoriality caused a storm. The acute European-American conflict was as a result. Two various approaches to safety issues were staked: aspiration of Europeans to increase number of workplaces and to provide stability of economy and conviction of Americans in existence of the Soviet threat. Embargo of Americans threatened with unemployment to a number of branches of the European industry. It was so strong blow for the largest British engineering company «John Brown» that Margaret Thatcher personally called Reagan. «John Brown» perishes, Ron», — she told. To give the weight to the position, she even flew to Scotland and was present at the ceremony on the occasion of the beginning of deliveries by the John Brown Company of the equipment for the transaction on gas — thereby openly expressing a protest against the American ban».

Thanks to the full tension of forces the USSR could construct the Urengoy gas pipeline — Pomary — Uzhgorod for a year, three times faster than it had been planned.

In 1988 the long-term (for 25 years) contract for delivery of gas was concluded with the Greek company DEPA. As for the East European countries, from the middle of the 1980s the project of development of the Yamburg gas field and construction of the main gas pipeline Yamburg — the western border of the USSR became the large project providing gas export in these states. Member countries of CEMA according to intergovernmental cooperation agreements participated in development of this field and construction of facilities of the gas industry. On account of such participation of the agreement provided supply of the Russian natural gas to the relevant states. These deliveries began in 1989 and proceeded depending on the concrete country till 1997-1998.
In general up to the beginning of the 1990s years under the existing contracts expansion of absolute volumes of domestic export of natural gas proceeded. In 1990 110 billion cubic meters were put on a foreign market.

Gas price

It is necessary to deal with a question of pricing for natural gas. When in 1959 in the Netherlands sector of the shelf of the North Sea the large-scale Groningen gas deposit was revealed, Dutches decided that here it is significantly more than gas, than it is necessary for them for internal consumption therefore they decided to export it. The American researcher Samuel A. Van-Vaktor writes: «At that time there were expectations that atomic energy will become rather cheap and will replace gas for use for the commercial and municipal purposes. It would make useless gas reserves. Respectively, Dutches chose aggressive marketing strategy in relation to neighboring countries. Contracts for cross-border transportation of gas consisted for long term to cover costs of construction of infrastructure. Natural gas had advantage before oil in the field of the prices of long-term contracts — the parties could make an objective price index of the competing types of fuel which would satisfy all. In the theory growth of the price of oven fuel would increase competitiveness of gas (and vice versa)».

It is necessary to emphasize that when forming the market of gas in Europe its price was attached to a basket of oil products (fuel oil, gasoil, oven fuel, etc.) with which gas competed. Basis for the Soviet and then Russian gas steel export became long-term contracts for delivery of gas. These contracts traditionally contain a condition «take or pay» which provides that a certain volume of gas will be surely paid even if real consumption will appear less. This condition provides to the producer and the exporter a guarantee of payback of multi-billion capital investments.

Joint ventures

Here pertinently to give a fragment of the interview of the first Head of Gazprom Victor Chernomyrdin that came out in the corporate magazine of the corporation in 2009. «From the most interesting moments, perhaps, it was remembered as we created joint venture with Germans in 1991. We gas at that time sold Ruhrgas at $170 for 1 thousand CBM, and they marketed our gas at the price about $400 within the country. We suggested selling directly. Naturally, it was not pleasant for Ruhrgas, they began to counteract us. Their Head then declared that «the Russian gas is more terrible than the Russian tanks». The consent of the authorities of Germany was required to come to the German market. I managed to agree about a meeting with Helmut Kohl, at that time the Federal Chancellor of Germany. But the meeting did not take place because of a king who unexpectedly arrived to Kohl. Therefore it redirected me to Hans Dietrich Genscher, the Minister of Foreign Affairs.

I came to it with the card, showed everything — where our fields and pipelines, explained everything. Told that we extract gas and we can be responsible for its uninterrupted delivery. He asked me something like that: «And to whom is it first of all necessary?» I answer it: «I consider that it first of all is necessary to your consumers. Only we are not let». Gensher speaks: «Then I will support you and I will resolve this issue». Frankly speaking, I did not really believe him then. Thought, after all he is Minister of Foreign Affairs, not the first person, and it did not his sphere of activity, but he kept the promise.

As a result two joint ventures were created with the German company Wintershall (for 100% BASF belongs): WIEH (on gas sale) and WINGAS (on its transportation). And as Ruhrgas did not give a chance to transport gas on the networks, we together with our German partners began building in the territory of Germany the gas pipelines later «.
Since the beginning of the 1990s Gazprom s began to pass to operations in domestic markets of the countries-importers of the Russian gas from purely foreign trade transactions in the form of annual and long-term contract to deliver goods not only to points of delivery on border but also directly to consumers. It had to increase cumulative receipts from export. For this purpose in the European countries a number of trading houses, joint ventures and joint-stock companies with individual share of JSC Gazprom or JSC Gazexport was created.

As it was already mentioned, the joint company WINGAS was created within cooperation with the German group BASF (Wintershall Company). It was engaged in marketing of natural gas in the German domestic market, and also construction and operation of gas transmission systems and underground gas storage Rehden. As a result WINGAS share in the Germany market began increasing quickly. Soon the company began to realize gas and in other countries. Joint ventures of Gazprom with Wintershall — WINGAS, WIEE and WIEH — worked at the market of end users and created infrastructure for transportation and storage of gas. In 2003 Gazprom realized through joint ventures with Wintershall 17 billion cubic meters of gas. In 2014 this indicator increased to 25.9 billion cubic meters.

In Hungary Gazprom worked through JV Panrusgas, in Bulgaria — Overgas, in Greece — Prometheus Gas, in Poland — Gas Trading, in Yugoslavia — Progressgas Trading, etc.

For work with end users in Europe (first of all in Great Britain) Gazprom created the special company Gazprom Marketing & Trading Ltd. At the end of 2006 the CEO of this company Vitaly Vasilyev told: «Two years ago, having proclaimed a course on transformation into world-class power corporation, Gazprom started putting into practice new strategy for work with end users in the markets of Western Europe. In its framework it was decided to create in London the Pan-European trading center. It was created on the basis of small foreign «daughter» of Gazprom UK Trading in which four employees worked at that time. So there was Gazprom Marketing & Trading. The main goals set for us the management of Gazprom consisted in the following. We should construct the full-fledged energy trading company which could become one of leaders in the world markets subsequently and have in the portfolio not only gas, but also oil, electricity and other products. At that time the Russian corporation began work in the liberalized markets, the most developed from which is, as we know, British. And as Gazprom is focused on participation in all chain of value creation, our main task became receiving of additional profit through trading over that Gazexport had from sale of production on border under long-term contracts.

We have three main directions of development. The first is «forming» a product for trade in the liberalized markets. Naturally, we began with gas, and then delivered LNG, the electric power, emissions of CO2, financial transactions, including weather derivatives. We began with Great Britain as the local market is most liberalized, were Belgium, Holland, the USA, Ireland, and since recent time and France followed».

At the beginning of 2011 Vitaly Vasilyev told: «The net profit of Gazprom Marketing & Trading Ltd (GMT) following the results of 2010 grew to £174.2 million, in comparison with £114.8 million in 2009. To promote realization of strategy of Gazprom for entry into the market of end users, we continue increasing a portfolio of retails both in Great Britain, and in Western Europe. Our retail business, the first enterprise of such Group Gazprom outside Russia, sells gas directly under the brand more than 30 thousand to consumers and serves more than 10 thousand automatic counters in Great Britain and Ireland. In France we managed to make significant progress in the sphere of sales of gas, and in Germany — in the market of the electric power».

Yamal — Europe

In early nineties over 90% of gas export from Russia were carried out by transit through the territory of Ukraine. For decrease in this dependence the company started studying construction projects of new gas pipelines. In particular, in 1994 construction of the gas pipeline Yamal — Europe began. This gas-main more than 2 thousand km long was stretched from a gas transmission hub to Torzhok (Tver region) through the territory of Belarus and Poland to compressor station Malnov (around Frankfurt An Der Oder) near the German-Polish border. In 1999 on Yamal — Europe the first gas went and in 2006 the gas pipeline reached design capacity of 32.9 billion cubic meters of gas a year.

In the territory of Germany the gas pipeline connects to the YAGAL-Nord gas transmission system which, in turn, connects it with the STEGAL gas transmission system — MIDAL — UGS Rehden.

Turkey

Prompt growth of consumption of gas in Turkey led to increase in its import from Russia. In 1986 the long-term (for 25 years) contract for delivery of gas to the Turkish firm Botas was concluded. For the first time Russian gas came to Turkey in 1987. At first deliveries were carried out on system of gas pipelines which passed through the territory of Ukraine, Moldova, Romania and Bulgaria. In the mid-nineties the idea to construct the gas pipeline on a bottom of the Black Sea which directly would connect Russia and Turkey began to be studied. Many then doubted a possibility of implementation of such technically difficult project. On December 15, 1997 between Russia and Turkey the intergovernmental agreement on construction of the underwater gas pipeline «Blue Stream» was signed. Within this agreement Gazprom signed the commercial contract with the Turkish firm Botas for delivery of 365 billion cubic meters of gas to Turkey on the Blue Stream gas pipeline within 25 years. In February, 1999 Gazprom and the Italian company Eni signed the memorandum of understanding on joint participation in implementation of the Blue Stream project. On November 16, 1999 JSC Gazprom and Eni registered in the Netherlands on a parity basis the Russian-Italian company of a special purpose of Blue Stream Pipeline Company B.V. Total length of the Blue Stream gas pipeline makes 1213 km (Turkey — 508 km, a sea site — 395 km, Russia — 373 km). Construction began in February, 2000, and in December of 2002 the pipeline was put into operation.

At construction of Blue Stream the set of technological novelties was applied. The greatest complexity was the works on a seabed in the conditions of hostile hydrosulphuric environment. The depth of the gas pipeline reaches 2150 m. There was a danger of deformation of pipes under pressure of water. For exception of the avalanche-like deformation of the gas pipeline at big depths through each 500 m the pipe has sites with the raised wall thickness — 52,5 mm (the main — 31,8 mm). Besides, pipes are made of stainless steel with an internal and external polymeric covering.
One more difficulty was that it was impossible to establish any compressor station at a depth, meanwhile length of the sea site makes about 400 km. Compression station Beregovaya established on the bank of the Black Sea provides working pressure in 250 atmospheres. The cost of the Blue Stream project made $3.2 billion. Capacity is 16 billion cubic meters of gas a year.
In 2003 general consumption of gas in Turkey reached 21 billion cubic meters thereof 12.85 billion cubic meters were put by Gazexport. In 2014 Gazprom delivered 27.3 billion cubic meters of gas to Turkey, thereof on Blue Stream passed 14.4 billion cubic meters.

On December 1, 2014 Gazprom and Botas signed the memorandum of understanding on construction of the gas pipeline through the Black Sea in the direction of Turkey which received the name Turkish Stream. On November 19, 2018 construction of 930 km of the sea site of this gas -main (two threads with general power of 31.5 billion cubic meters) was complete. In January, 2020 supply of gas on Turkish Stream began. One thread is focused on consumers in Turkey and the second one on the countries of the Southern and Southeast Europe.

Nord Stream

For increase in gas Gazprom Export went two ways: built new gas pipelines to Europe and tried to normalize the relations with Ukraine. A new export route was the Nord Stream gas pipeline which passed on the bottom of the Baltic Sea and directly connected Russia and Germany. Here I want to remind Sergey Serdyukov’s interview, the Technical Director of the company operator of Nord Stream — Nord Stream AG: «The idea of construction of this gas pipeline has been studying actively since 1996. Its essence consisted in stretching the new export gas-main which would allow expanding capacities for transfer of natural gas from Russia to Western Europe and together with it to create the transport stream not subject to transit risks. At first it was talked of construction of the gas pipeline with a capacity of 19.2 billion cubic meters, then — 30 billion and, at last, 55 billion cubic meters a year. During this time the existing technical capabilities were thoroughly studied by experts and all decisions which are expedient for using at a gas-main construction, included in the project. There was chosen the following configuration: double-stranded execution, pipes with a diameter of 1220 mm, pressure in the gas pipeline at the exit from the Portovaya compressor station (CS) located on the Russian coast — 220 bars (220 kg on 1 sq. cm), at a pipe exit to the land in Germany — 106 bars. For the present nobody in the world had built gas pipelines on which it was possible to pass such streams in the compressorless mode on distance of 1224 km. Moreover some stock on pressure is created on the German coast; after all there are no compressor stations in Greifswald. In other words, energy will be enough to transport gas without additional compressor stations through the Baltic Sea and on 100 km by land».

Construction of Nord Stream began in April, 2010. In November, 2011 commissioning of the first thread and in October 2012 — the second string of this gas pipeline took place. In 2021 passed 59.2 billion cubic meters of gas (more design capacity) through both strings of «Sulfuric Stream».

In 2021 two gas pipelines «Sulfuric Stream — 2″ were completed (power of 55 billion cubic meters a year). However the authorities of Germany did not grant permission for its input in operation.
In September, 2022 as a result of an act of terrorism both strings of Nord Stream and one thread of Nord Stream — 2 were blown up.

In September 2022 installation on liquefaction of gas with a power of 1.5 million LNG a year started working on compressor station Portovaya. Earlier, in 2009 the first LNG large-capacity plant on the 9.6 million tons Sakhalin (in 2022 LNG production made about 11.5 million tons here) was put into operation.

Ukraine

Gazprom repeatedly tried to agree with the authorities of Ukraine about sharing of the Ukrainian gas transmission system. It was obvious that the volume of investment into modernization of the Ukrainian GTS is insufficient and sooner or later it will become useless. In 2004 Naftogaz of Ukraine and Gazprom on a parity basis created International Consortium for Managing and Developing Ukraine’s Gas Transmission System. At the end of August, 2004 Russian Prime Ministers and Ukraine Mikhail Fradkov and Victor Yanukovych signed the agreement “About measures for ensuring strategic cooperation in gas industry”. It was said in the document that the International consortium will construct the new gas pipeline of Bogorodchana — Uzhgorod about 300 km long. It would allow expanding a bottleneck of the Ukrainian gas transmission system and to increase export of the Russian gas to Europe. The Russian-Ukrainian consortium had to become the owner of a new site.

The agreement stipulated that Gazprom for transportation through this pipeline guarantees allocation of additional volumes of natural gas that is over the parameters established by former intergovernmental agreements: in 2005 — 5 billion cubic meters of gas and in 2010 19 billion cubic meters. It was supposed that if Naftogaz of Ukraine is not able to support in a good shape rather worn-out system of gas pipelines of the country, sooner or later it also should be transferred to the order of consortium which some large European gas company had to join.
In the fall of 2004 an election of the president of Ukraine at which Victor Yanukovych won took place. However supporters of his opponent Viktor Yushchenko declared results of elections forged and arranged mass protests. The USA and the EU actively supported Viktor Yushchenko. As a result of the «orange revolution» new elections which Viktor Yushchenko won were held. He started pursuing defiantly anti-Russian policy and broke off the agreement on creation of International Consortium for Managing and Developing Ukraine’s Gas Transmission System. The Ukrainian GTS continued to fall into decay. Gazprom began to increasing the volume of pumping of gas along the routes making a detour of Ukraine.

China

On May 21, 2014 Gazprom and the Chinese CNPC concluded the largest for all history of the domestic gas industry the contract for delivery of gas — more than 1 trillion CBM within 30 years. In September started construction of the Force of Siberia gas pipeline more than 3 thousand km long. This gas pipeline is meant for gas of fields of Yakutia and the Irkutsk region which is characterized by the high content of ethane, propane, butane and helium. On October 14, 2015 construction of the Amur GPZ — the enterprise, largest in Russia, for processing of natural gas, the most important link of a technological chain of supply of natural gas to China began. On December 2, 2019 the ceremony devoted to the beginning of the first in the history pipeline supply of the Russian gas to China on the Force of Siberia gas pipeline took place (the export power of 38 billion cubic meters of gas a year). On June 9, 2021 the Amur GPZ was put into operation, and on September 3 started working the world’s largest helium hub for delivery of liquid helium from the Amur GPZ to the world market.

At the beginning of January of current year Chairman of the Board of PAO Gazprom Alexey Miller declared: «In 2022 at the request of the Chinese party deliveries regularly went over daily contract quantities, and as a result we exceeded annual obligations. Moreover, also at the request of the Chinese colleagues we on December 31, that is some days before term, came for delivery of the daily volumes provided by the contact for the next year. Thus, since January 1, 2023 Gazprom came to essentially new level of supply of gas to China. It, certainly, speaks about Gazprom as about the responsible supplier and the reliable partner. And also about interest of China, the most perspective gas market, in supply of the Russian pipeline gas.

Development of our Chinese vector is connected also with two perspective routes: from the Far East and through Mongolia. On the first the contract is signed, the second route is studied. The total volume of annual deliveries along three routes is about 100 billion cubic meters of gas».