Gazprom Commits Reviews Prospects for Gas Supply in Russia through 2030

Source: www.gulfoilandgas.com 5/13/2021, Location: Asia

The Gazprom Management Committee took note of the information about the prospects for the expansion of the gas supply and gas infrastructure network in Russian regions through 2030.

It was noted that Gazprom, being a socially-oriented company, pursues the creation of the conditions for connecting the residential and industrial consumers to gas as one of its key activities. Gazprom is actively developing the gas supply network across the country.

In line with the gas grid expansion procedure adopted in Russia, the Company's activities are based solely on substantiated proposals from heads of regional administrations. The proposals serve as the basis for the development of five-year gas supply and gas infrastructure expansion programs for Russian regions. Under these programs, Gazprom is responsible for the construction of gas pipeline branches, gas distribution stations (GDSs), as well as inter-settlement gas pipelines up to the boundaries of localities, whereas the constituent entities of the Russian Federation and consumers are responsible for the construction of intra-settlement and last-mile gas pipelines (from the intra-settlement infrastructure facilities to the boundaries of land plots).

At the same time, the existing procedure needs to be enhanced, and the gas grid expansion efforts need to be significantly accelerated. As per the list of instructions of Vladimir Putin, President of the Russian Federation, dated May 31, 2020, gas infrastructure expansion in Russia is to be completed in a stage-wise manner by 2024 and 2030, and residential consumers must not bear any expenses for the connection to gas distribution networks.

Gazprom carries out comprehensive work to reach the goals set by the Russian Government. In 2020, the Company and 67 Russian regions signed gas supply and gas infrastructure expansion programs for a new five-year period, i.e. for 2021–2025. The amount of financing channeled by Gazprom is 2.9 times higher than that in 2016–2020. Over two-thirds of the investments will be provided to rural areas. By 2026, gas grid expansion will be completed to the fullest extent technically possible in 35 regions of Russia.

On April 30, 2021, the Russian Government approved the Action plan (roadmap) for the implementation of a socially-oriented and cost-effective system of gas infrastructure expansion and gas supplies to serve the needs of the constituent entities of the Russian Federation.

The document provides for a conceptually new model of gas infrastructure expansion. One of the main novelties is that gas supply and gas infrastructure expansion programs for Russian regions will be drawn up and updated on the basis of regional targeted fuel-and-energy balance plans (FEBPs). The FEBPs shall take into account the forecasted energy consumption levels with due regard to the prospects for the regions' development, as well as the possibility of using alternative gas sources (liquefied natural or petroleum gas) or other types of fuel instead of pipeline gas. These FEBPs will make it possible, in particular, to deliver comprehensive forecasts of the demand for gas and other energy carriers, and ensure a proper balance between all branches of the energy sector.

Another novelty is the introduction of the role of a 'single operator of gas infrastructure expansion' responsible for the construction of gas pipeline branches, GDSs, inter-settlement gas pipelines, and gas distribution networks to the boundaries of land plots. This will serve to fulfill the instruction of Vladimir Putin, President of the Russian Federation, voiced by him in the speech to the Federal Assembly of the Russian Federation on April 21. According to the instruction, the Russian Government jointly with the executive bodies of the constituent entities of the Russian Federation, Gazprom, and other gas distribution companies shall ensure that by 2023 in localities which are provided with gas connection gas pipelines are laid up to the boundaries of households which are located near inter-settlement gas pipelines and not connected to gas. Said gas grid expansion activities shall not require any payments from the population, and shall be performed on the basis of a relevant request, after the criteria and conditions of such connection (technological connection) are determined.

The establishment of the single operator of gas infrastructure expansion will also make it possible to synchronize the construction of gas infrastructure expansion facilities, achieve a considerable optimization of the construction costs, and reduce the time required for connecting consumers to gas supply networks.

On top of that, amendments will be introduced into the regulatory framework. Gazprom has already submitted to the executive bodies a number of proposals aimed at improving the current legislation. The proposals primarily seek to lift the excessive administrative barriers in the design development and construction of gas supply facilities, which is also supposed to accelerate Russia's gas infrastructure expansion in general.

The issue of the prospects for the expansion of the gas supply and gas infrastructure network in the constituent entities of the Russian Federation through 2030 will be submitted for consideration by the Gazprom Board of Directors.


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