Speech by Alexey Miller, Chairman of Gazprom Management Committee,
at conference call on occasion
of New Year's Eve.
Esteemed colleagues, dear friends,
We are only a few days away from the start of the year 2023. But Gazprom is always working on its tasks, and does so in sync. We are still in 2022 now. And there is a lot to be done, although there are just a couple of business days left in the current year.
I would like to note right away that 2022 has of course been a very challenging year. We saw energy markets change totally in a literal sense. Whereas we previously used to call these changes “over-volatility”, by the end of the year we started saying that this is downright “turbulence.” Nevertheless, under all those circumstances, Gazprom continued its work in a reliable, confident and well-coordinated manner. Just as it always should.
As you know, preliminary estimates show that global gas demand has declined by 65 billion cubic meters in 2022. It should also be pointed out that 55 out of 65 billion cubic meters in this reduction figure are attributable to the decrease in gas demand in the 27 EU countries. This fact is very telling.
Gazprom's total gas production for 2022 will amount to 412.6 billion cubic meters. This amount of gas will be quite enough for us to fulfill all of our obligations to our domestic consumers, as well as to perform the required export supplies. Gazprom will supply 243.1 billion cubic meters of gas to Russian consumers from the Company's gas transmission system. Gazprom's gas exports to the countries beyond the FSU will amount to 100.9 billion cubic meters.
The global gas market will be developing at a fast pace; according to the long-term outlook, the consumption will rise by 20 per cent in the next 20 years. Therefore, we naturally think about the future, as well as about our new projects and energy security. I would like to point out that our offshore gas pipelines – TurkStream and Blue Stream – are working reliably. And now, jointly with Türkiye, we have started elaborating the project for creating a gas hub in the territory of their country. This decision was made by the heads of the two countries, and we have already commenced its implementation in practice. The gas hub will make it possible to ensure a transparent and fair pricing in the natural gas market.
There is no doubt that it is a key task for Gazprom to ensure reliable gas supplies during the autumn/winter peak. During the preparations for winter, we are breaking new records every year. And 2022 is no exception. The working gas inventories created [in Russia's underground storage facilities] by the start of the withdrawal period totaled 72,662 million cubic meters of gas. And the daily deliverability as of the start of the withdrawal period stood at 852.4 million cubic meters. These are our new records.
Moreover, we are efficiently expanding our resource base, of course. It should be mentioned that we have enough gas to provide the required supplies to our consumers for many decades to come. And most importantly, we continue to develop new promising gas production centers.
In this connection, I would like to mention the Yamal gas production center, of course. Yamal's backbone field is the Bovanenkovskoye field. This year, we commenced the development of the deeper-lying Neocomian-Jurassic deposits. In Yamal, we are also developing the Kharasaveyskoye field, which is the second most important field within this gas production center.
And it is imperative to note that our fields will produce gas for many years into the future. At some fields, production will stop in 2141 or maybe even later.
We have been setting a record for 18 consecutive years: our reserve replacement ratio consistently exceeds 1. In this connection, I would like to note the efficient work of our geological exploration unit. There is no doubt that there is still a lot to be done. But, dear colleagues, the mere fact that we have been maintaining the reserve replacement ratio above 1 for 18 consecutive years is a guarantee of stability.
We carry out extensive work to develop the Company's resource base in eastern Russia. Last week saw an important milestone. In the presence of Vladimir Putin, President of the Russian Federation, Gazprom launched the new Irkutsk gas production center.
We put onstream the Kovyktinskoye field and the new linear section of the Power of Siberia gas pipeline between the Kovyktinskoye and Chayandinskoye fields. The entire length of Power of Siberia – more than 3,000 kilometers – is in operation now. Just get this: it is the world's largest engineering-and-production infrastructure complex which comprises production, transmission and processing facilities. There are no other engineering-and-production complexes of this size in the world. Our complex is the largest one in terms of scale.
We are well aware that gas obtained from the Kovyktinskoye and Chayandinskoye fields contains valuable components. In this regard, I would like to put an emphasis on helium. Gas from the Kovyktinskoye field goes to the Chayandinskoye field, and then the gas flows of Kovyktinskoye and Chayandinskoye are mixed together and reach the Amur Region, where the Amur Gas Processing Plant is currently under construction. Despite any difficulties and obstacles our “opponents” are trying to create for us, the Amur Gas Processing Plant construction project is 87.86 per cent complete today. And most importantly, we completely fulfill our tasks in terms of providing gas supplies to the People's Republic of China under the thirty-year contract. And we do so without any delays.
A similar complex is being built in Ust-Luga. It will be even larger than the one we have created in the east of Russia.
There is no doubt that large-scale production complexes in Eastern Siberia and the Far East represent new opportunities for supplying gas to these regions. This means new possibilities for expanding gas infrastructure. But it is equally important that we are creating the capacities required to export large amounts of gas to the Chinese market – the world's most dynamic and the fastest-growing one.
For instance, we have mentioned that global gas consumption is expected to increase by 20 per cent over the next 20 years. And the same forecast predicts that the growth in China's gas consumption over the next 20 years will make up 40 per cent of the total global growth. Without any doubt, we are paying our utmost and undivided attention to staying in compliance with all of the contractual obligations we have assumed under the thirty-year contract, and are working to exceed the existing commitments.
Gazprom has decided that in December 2022 it will supply gas to China in excess of the Company's daily contractual obligations. The maximum excess above the contractual amounts was 18.7 per cent. Today, Gazprom will set another new daily record for exports of Russian gas to China.
Therefore, we continue our efforts in terms of the work with China. It should be noted that this year we have signed the contract with regard to the Far Eastern route, which makes it possible for us to deliver 10 billion cubic meters of gas from the Russian Far East. In the very near future, our overall annual gas exports to China will total 48 billion cubic meters. And if we take into account the transit export gas pipeline stretching across Mongolia, this amount will total nearly 100 billion cubic meters, with the current design capacity of the transit gas pipeline across Mongolia amounting to 50 billion cubic meters per year.
Of course, we should also commend other structural units of Gazprom. First of all, I would like to express gratitude to our oil and power subdivisions.
As for Gazprom Neft, this year, the company has launched new oil and gas infrastructure facilities at the Chayandinskoye field.
Gazprom Energoholding, in its turn, has put into operation – dear colleagues, just get this – the most powerful cogeneration equipment, i. e. combined heat and power production equipment, as part of the renovation program at CHPP-22 in the Moscow Region. What is more, all of this equipment was produced in Russia. I would like to first of all stress the fact that the equipment includes a domestically-made engine.
Gazprom makes an enormous, immense contribution to the economic development of our country. Just look into the figures: this year the Company will pay more than RUB 5 trillion to budgets of different levels.
At the same time, Gazprom feels absolutely financially sustainable and fulfills all of its debt obligations. I would also like to thank the financial unit for their very efficient and concerted efforts.
Gas infrastructure expansion is, for sure, a highly important and socially significant project. We can say that it is almost finished. Why? Because in ten years all regions of our country will have a 100 per cent technically possible access to gas grid. At the same time, pursuant to the instruction of Russian President Vladimir Putin, Gazprom also started an additional social gas grid expansion program. It covers the households situated in those localities which already have access to network gas, but their houses are still not connected to gas for some reason.
I would like to say that for the second year in a row we perform the gas expansion program ahead of schedule. The overall length of inter-settlement gas pipelines built within this year will exceed 3,000 kilometers. Of course, gas infrastructure expansion mainly concerns rural areas.
I should also mention another important line of Gazprom's activities. This is LNG, mid-scale LNG production, our own technologies. We have already obtained licenses on both mid- and large-scale LNG.
And the LNG plant that we have launched in the Baltic area is a crucial element providing the energy security in the Kaliningrad Region.
Of course, the Gazprom for Children project is also worth mentioning. Dear colleagues, more than 2,000 facilities have been built across the country over the years under the program. Can you imagine – more than 2,000 facilities. And we continue building them. Gazprom for Children is a large-scale, comprehensive program.
Therefore, Gazprom, being a socially responsible company, will fulfill all its obligations both in business and in social projects.
I would like to thank all of you for your work. The year 2022, indeed, has shown that Gazprom is a united, tight-knit and highly-professional team, which can do anything.
