The Gazprom Board of Directors took note of the information about the Company’s efforts aimed at expanding gas infrastructure in Russian regions.

It was stressed that Gazprom fulfilled its obligations for providing gas to Russian consumers. This large-scale and systematic work is one of the Company’s most important activities in the domestic market.

The work is carried out on the basis of annually developed programs in accordance with general gas supply and gas infrastructure expansion schemes devised for each region. The schemes take into account current and future gas demand, a resource base, alternative gas supply options and energy saving measures.

At present, the Company is updating the general schemes for the Republics of Karelia, Komi and Mari El, the Chechen Republic, the Perm Territory, the Arkhangelsk, Astrakhan, Kaluga and Leningrad Regions. Taking into account the proposals of the administrations of the constituent entities of the Russian Federation, it is planned to start adjusting the general schemes for the Republics of Dagestan and Bashkortostan, the Ivanovo, Kurgan, Omsk, Smolensk, Tomsk and Yaroslavl Regions in the fourth quarter of this year.

Between 2005 and 2017, Gazprom invested over RUB 324 billion to expand the gas grid coverage across Russia, building 2,164 gas pipelines with a total length of more than 30 thousand kilometers and providing conditions for bringing gas to 4,087 settlements, 5,247 boiler houses and about 864 thousand households and apartments.

As a result, the average gas penetration rate in Russia increased by 14.8 per cent from 53.3 per cent (as of January 1, 2006) to 68.1 per cent (as of January 1, 2018), including in rural areas – by almost 1.7 times – from 34.8 per cent to 58.7 per cent.

Gazprom continues its efforts in this area. In 2018, the gas infrastructure expansion program covers 66 constituent entities of the Russian Federation. The Company plans to complete the construction of 1.3 thousand kilometers of gas pipelines, thus creating conditions for providing gas to consumers in around 200 settlements. Overall, RUB 36.7 billion is earmarked by the Company for the implementation of gas infrastructure expansion projects in 2018.

At the same time, the regional administrations’ failure to fulfill their obligations to prepare consumers for receiving gas from gas pipelines already built by Gazprom and non-payment for gas supplied continue to hamper the gas infrastructure expansion process in Russia.

As of today, only 10 regions are fully complying with the schedules of preparing consumers to receive gas. These are the Belgorod, Omsk, Penza, Sakhalin, Yaroslavl Regions, the Republics of Kalmykia and Mordovia, the Chuvash Republic, the Yamalo-Nenets and Khanty-Mansiysk Autonomous Areas. In 34 regions this work is being carried out with a slight lag. The administrations of 16 regions are falling substantially behind the signed schedules, and in three regions such lag is systematic.

As of January 1, 2018, the overdue debt of consumers amounted to RUB 111.6 billion (taking into account the transfer of debt claims of Gazprom Mezhregiongaz Pyatigorsk in 2017). In eight months, the debt grew by RUB 21 billion to RUB 132.6 billion (as of September 1). Heat supply companies, which account for about RUB 53 billion of the overdue debt, remain the most problematic category of consumers.

The dynamics of debt repayment and the progress of schedule fulfilment by the regional administrations for preparing consumers to receive gas are always taken into account by the Company when planning and adjusting gas infrastructure expansion programs and the Gazprom for Children program.

The Management Committee was tasked to continue implementing the gas infrastructure expansion program for Russian regions and to report the results of those efforts to the Board of Directors in the fourth quarter of 2019.