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Board of Directors commends progress made on major investment projects

The Gazprom Board of Directors commended the Company for the progress made on its major investment projects.

It was noted that Gazprom was taking extensive countrywide efforts to set up new gas production, transmission and processing facilities and develop the existing capacities. The Company’s efforts are aimed at maintaining a high level of energy security in Russia, improving the reliability of gas supplies to consumers, creating conditions for entering new markets, and boosting gas exports. The projects are going according to schedule.

Gazprom is actively advancing in the promising regions. One of the Company’s focus areas in terms of investments is the execution of the Eastern Gas Program. In eastern Russia, Gazprom has already established new gas production centers in Sakhalin and Kamchatka and built the Sakhalin – Khabarovsk – Vladivostok gas transmission system. As part of the Sakhalin III project, new development wells are being built at the active Kirinskoye field, with geological exploration and pre-development underway at the Yuzhno-Kirinskoye field. In September 2016, a new field was discovered at the Yuzhno-Lunskaya structure within the Kirinsky prospect, which is also part of the Sakhalin III project.

The current endeavors include the pre-development of the Chayandinskoye field and geological exploration of the Kovyktinskoye field. The fields form the basis for the Yakutia and Irkutsk gas production centers, respectively. The construction of the Power of Siberia gas trunkline is also in full swing. The pipeline will supply gas from the above production centers to consumers in Russia’s Far East and China.

With a view to process multi-component gas from Chayandinskoye and Kovyktinskoye, Gazprom is building the Amur gas processing plant, the biggest such plant in Russia and one of the world’s largest. The Company is preparing the plant site and constructing the relevant transport infrastructure at the moment.

In the Arctic, Gazprom is focused on exploring the Yamal Peninsula, a region that holds strategic importance for the Russian gas industry in the long term. The pre-development of Yamal’s largest field – Bovanenkovskoye – continues, with two production facilities already onstream, totaling 90 billion cubic meters of gas in annual output. The Company is building a third production facility, aiming to bring the field to its design capacity of 115 billion cubic meters of gas per year.

Gazprom is making comprehensive steps to expand the gas transmission system in the corridor from the Yamal Peninsula to the Gulf of Finland. The Company intends to ensure additional gas deliveries to northwestern Russia for the purposes of gas supply to and gasification of Russian regions, as well as gas exports via the Nord Stream 2 pipeline. The Bovanenkovo – Ukhta and Ukhta – Torzhok gas pipelines are already in operation. The linear part of the Bovanenkovo – Ukhta 2 gas pipeline is under construction. As of today, 330 kilometers of Ukhta – Torzhok 2, the 970-kilometer gas pipeline scheduled for completion in 2019, have been built. Gazprom is preparing the project and design documentation to construct new gas transmission capacities between Gryazovets and Ust-Luga. In addition, Gazprom has started to reconstruct the existing gas pipelines in the Leningrad Region.

Substantial efforts have been made to develop the gas transmission system in southwestern Russia. As of today, gas transmission capacities with a total annual throughput of 31.5 billion cubic meters have been built within the Southern Corridor project, which means that the conditions are now in place for feeding gas into TurkStream, a promising offshore gas pipeline.

Gazprom is paying great attention to improving the reliability of gas supplies to the Kaliningrad Region. The Company has increased the throughput capacity of the Minsk – Vilnius – Kaunas – Kaliningrad gas pipeline and built the Kaliningradskoye underground gas storage (UGS) facility, which is now being expanded. Next year, Gazprom will complete the construction of an offshore LNG regasification terminal, thus further strengthening the region’s energy security.

Gazprom’s wide network of UGS facilities in Russia plays an important role in ensuring stable gas supplies to domestic and foreign consumers. The Company is consistent in increasing the peak potential daily deliverability of the UGS facilities by the start of withdrawal seasons. Over the past five years, the deliverability increased by 22 per cent, from 647.7 to 789.9 million cubic meters by the 2015–2016 season. This figure is expected to reach 801.3 million cubic meters by the 2016–2017 autumn/winter period.

Gazprom plans to substantially boost liquefied hydrocarbon production in Nadym-Pur-Taz, the region traditionally known for gas production. To that end, Gazprom is developing relevant processing capacities, with a focus placed on the expansion of the Urengoy condensate treatment plant and the re-equipment of the Surgut condensate stabilization plant.

Another important investment area for Gazprom is the creation of Company-owned liquefied natural gas (LNG) production capacities. At present, Gazprom is designing the third production train of the LNG plant in Sakhalin and implementing the Baltic LNG project, which provides for the construction of a plant near Ust-Luga.

The Board of Directors instructed the Management Committee to continue delivering the Company’s major investment projects.

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