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Gazprom ramping up gas sales to Russian consumers through exchange trading

#Gasification #IR releases #Shareholders Meeting

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Press Conference



The Gas Supply to Domestic Market. Executing Russian Regions Gasification Program Press Conference was held at Gazprom’s office in Moscow today in the lead-up to the annual General Shareholders Meeting. The Press Conference featured Kirill Seleznev, Member of the Management Committee, Head of Department of Gazprom, and Director General of Gazprom Mezhregiongaz.

It was noted at the Press Conference that Gazprom had sold 214.9 billion cubic meters of natural gas to Russian consumers (according to the International Financial Reporting Standards) in 2016, which is 2.8 per cent less than in 2015. The Company’s revenue from gas sales in the domestic market amounted to RUB 819.9 billion under IFRS (a 1.8 per cent increase versus 2015).

Gazprom is ramping up its gas sales at the St. Petersburg International Mercantile Exchange (SPIMEX). In 2016, Gazprom traded 10.7 billion cubic meters of gas (compared to 4.3 billion cubic meters in 2015) there, gaining a 64 per cent share in total sales at SPIMEX. Regional consumers express considerable interest in organized trading on SPIMEX: Gazprom supplied its gas to 45 Russian regions in 2016 (against 39 regions in 2015).

Efforts continue to implement the ambitious Russian Regions Gasification Program. Between 2005 and 2016, Gazprom invested therein some RUB 295.2 billion in total. Over that period, the Program resulted in the construction of 2,046 gas pipelines stretching over 28,000 kilometers (including 163 gas pipelines with an overall length of some 1,425 kilometers built in 2016) and the creation of conditions for converting 5,060 boiler houses to gas and connecting around 815,000 households and apartments to gas lines.

Thanks to the Gasification Program, Russia’s average gas penetration level surged from 53.3 per cent in 2005 to 67.2 per cent in 2016, going up from 60 to 70.9 per cent in urban areas and from 34.8 to 57.1 per cent in rural areas.

One of the main obstacles to the execution of the Program is that Russia’s regional administrations fail in their obligations to prepare consumers to receive gas. Since 2005, only 11 Russian constituent entities (Belgorod, Kemerovo, Kursk, Omsk, Penza, Tyumen and Yaroslavl Regions, Republics of Kalmykia and Mordovia, Chuvash Republic, and the city of St. Petersburg) have fully met their obligations.

Another urgent issue hampering the execution of gas supply and gasification programs is the non-payment by consumers for gas deliveries. In 2016, the outstanding debt payable to Gazprom by all consumer groups added 7.1 per cent against 2016, reaching RUB 160.8 billion.

Gazprom makes comprehensive efforts to strengthen financial discipline and actively cooperates with Russian authorities to further improve the national legislation in the gas supply sector.

The Press Conference also touched upon other aspects of the Company's operational and marketing activities in different Russian regions.

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