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Gazprom’s Domestic Gas Sales Grow 17.6 % in 2011

Source: 6/15/2012, Location: Asia

The Gazprom headquarters hosted today the Press Conference entitled “Gas Supply to Domestic Market. Executing Russian Regions Gasification Program” on the threshold of the annual General Shareholders Meeting. Taking part in the Conference was Kirill Seleznev, Member of the Management Committee, Head of the Gas and Liquid Hydrocarbons Marketing and Processing Department of Gazprom, Director General of Gazprom Mezhregiongaz.

It was highlighted at the Press Conference that operations in the domestic market reinforced Gazprom Group’s financial stability. The Group’s domestic gas sales made up RUB 723 billion (net of VAT and excise duty) last year surpassing the level of 2010 by 17.6 per cent.

Gazprom’s special attention to the domestic market is also explained by the gas consumption growth trend: in 2011 Russian consumers were supplied with 473 billion cubic meters of gas by all producers, and this parameter may grow to 564 billion cubic meters by 2020 according to the Energy Strategy. At the same time, Russian consumers received 265.3 billion cubic meters of gas (net of gas supplies inside the Group) from Gazprom Group’s resources, which is 1.2 per cent more than in 2010.

Meanwhile, there still exists a problem of defaulted payments for the supplied fuel in the domestic gas market, which leads to an increase in consumer indebtedness to gas suppliers. Thus, the overdue debt to Gazprom Mezhregiongaz Group for the fuel supplied in 2011 among all types of consumers grew by RUB 14.1 billion in 2011 versus 2010 and reached RUB 57.7 billion as of December 31, 2011.

Legal actions are intensified to recover debts for gas supplies in an effective way. In 2011 Gazprom Mezhregiongaz Group filed more than 4.7 thousand claims with arbitration courts. The courts decided on collection of debts in the amount of some RUB 13.3 billion in favor of gas suppliers.

The Russian gas market growth is mostly underpinned by the Russian Regions Gasification Programs being implemented by Gazprom. A record amount was allocated for the Russian regions gasification in 2011 – more than RUB 29 billion. 244 inter-settlement gas pipelines with the total length of around 2.5 thousand kilometers were built to supply gas to more than 390 population centers in 49 Russian regions. Thus, in 2011 alone Gazprom obtained hundreds of thousands of consumers.

In 2012 Gazprom’s investments in the Russian Regions Gasification Program will once again hit record high – RUB 37.66 billion (almost 30 per cent up).

Gazprom’s efforts on the regional gasification development is aimed at reaching the maximum economically viable gasification level, meeting the solvent gas demand, improving the living conditions of the population mainly in the rural area and the economic growth of Russian constituents.

At the same time, the amount investments is directly linked with fulfillment by local administrations of their obligations on consumer preparation for gas supplies according to synchronization schedules for Russian regions gasification programs and the existence of indebtedness for the supplied gas. Gazprom Group meets the assumed obligations in full.

Gazprom carries on the activity aimed at improving the reliability of gas transmission via gas distribution networks in Russia.

For instance, unified gas distribution companies are being established at the regional level enabling to carry out a single technical and economic policy as well as implement upgrade and retrofitting programs for depreciated networks.

Much attention is paid to the removal of abandoned facilities of gas distribution networks. According to the existing legislation, such facilities should be registered as municipal property. Regional and municipal authorities, jointly with gas distribution companies, compile the programs on registering the property ownership for abandoned networks with their subsequent transfer to gas distribution companies for maintenance.

The Press Conference also addressed the issues of gasification and gas supply to various Russian constituents.

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