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Gazprom working to develop power generation strategy for 2018–2027

Release

The Gazprom Board of Directors took note of the information concerning the development strategy for the Group’s power generating assets.

It was noted that the main goals outlined in the Group’s current power generation strategy had been largely accomplished, as Gazprom had successfully entered the power business and created Russia’s largest power holding company.

Today, Gazprom is the leader in heat and power generation among domestic heat producing companies. Gazprom’s plants generate about 16 per cent of all electric power in Russia’s Unified Energy System and use primarily gas provided by Gazprom.

The Group holds the top positions in the Moscow Region’s heat supply market – the world’s largest – and ensures the operation of the entire value chain from gas production to power and heat generation to consumer supplies.

Gazprom considers its obligations for facility construction under capacity supply agreements (CSAs), which it assumed when entering the power business, nearly fulfilled. Out of about 9 GW of the planned capacities, highly efficient power units with a total capacity of 8.5 GW are already operational. Some of them are innovative, such as the combined cycle gas turbine unit CCGT-800 at the Kirishi SDPP and the coal-fired power unit STU-330 at the Novocherkassk SDPP. The total investments in CSA-based projects exceeded RUB 450 billion.

The Company is currently building its last CSA-based generating facility – the Grozny thermal power plant with a capacity of 360 MW. The facility is expected to come online in 2018.

In addition to constructing new generating facilities, Gazprom decommissions capacities that are no longer useful, which helps, inter alia, boost fuel efficiency, bolster competitiveness in the electricity markets, and reduce emissions. In 2007–2016, obsolete generating facilities with a total capacity of 3.6 GW were decommissioned.

Gazprom’s power companies show stable growth coupled with declining debt load. In 2016, their aggregate revenue under the Russian Accounting Standards tripled compared to 2007, amounting to around RUB 530 billion. In the same period, their EBITDA increased more than fivefold to RUB 80 billion.

Gazprom is working to develop an updated power generation strategy for 2018–2027. The strategy will take into account the need for further modernization of the existing generating capacities and for continued synergy between the gas and power businesses.

The Gazprom Management Committee was instructed to provide for the development of this strategy and submission thereof to the Board of Directors.

Background

The Gazprom Group’s core generating assets are consolidated in Gazprom Energoholding (a wholly-owned special-purpose subsidiary of Gazprom).

Gazprom Energoholding is the majority shareholder of MosenergoTGC-1, and OGK-2, which produce electricity and heat from natural gas and coal, as well as of MOEK, the largest heat supply company in the Moscow Region. The aggregate installed capacity of the Group’s generating companies under the control of Gazprom Energoholding is 39 GW.

 

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