Gazprom’s board of directors on Jan. 24 addressed proposals to expand Gazprom’s presence in global natural gas markets via exploration, production, pipelines, LNG and power generation.

The board directed the Management Committee to proceed with five key measures to achieve inroads in global markets: 1) expand the existing corridors and create new ones for pipeline gas export to Europe; 2) arrange pipeline gas supplies to Asia-Pacific countries; 3) enhance the export portfolio with additional volumes of liquefied natural gas (LNG) to be delivered, inter alia, from the Shtokman project as well as from potential LNG plants in the Far East; 4) develop opportunities for delivering LNG and compressed natural gas abroad; and 5) select and implement power generation projects in Europe.

In his end-of-year address on Dec. 29, Alexey Miller, chairman, Gazprom Management Committee, pointed to the company’s achievements in 2011 with emphasis on pipeline projects at both ends of the country.

The first string of the Nord Stream pipeline in western Russia was commissioned, opening up a new route to Europe through Germany.  In eastern Russia, the Sakhalin-Khabarovsk-Vladivostok Gas Transmission System was completed, which will be the first interregional system in the Far East for Russia.  The system “triggered the large-scale gasification of Russia’s Far East and created conditions for gas supplies to Asia-Pacific,” Miller said.

In 2012, construction will begin on the Yakutia-Khabarovsk-Vladivostok pipeline.

“The year of 2011 became an important stage in the history of Gazprom as a global energy company,” he continued.  “In 2012, we will carry on our major efforts.  It is planned to commission the Bovanenkovskoye field as part of the Yamal megaproject, start oil production from the Prirazlomnoye field and complete construction of Nord Stream’s second string.”

One of the biggest projects to start in 2012 will be the South Stream Pipeline, which will run through the Black Sea to southern Europe.  On Jan. 20, 2012, Gazprom announced a detailed action plan was approved that would make it possible to start the project in December 2012, instead of in 2013.

“We have everything in place to significantly expedite the previously announced date of the South Stream construction launch,” Miller explained.  “We have a regulatory basis, great interest in the project from its participants in Europe, the required funds and the unique track record of delivering large-scale, gas-transmission projects offshore.”

Partners in the project are Gazprom, 50%, ENI, 20%, Wintershall Holding, 15%, and Electricite de France, 15%.

On Dec. 28, 2011, Turkey officially granted the construction permit for the South Stream Pipeline through its exclusive economic zone in the Black Sea.  The pipeline is expected to begin operation in 2015.

Russia is also working with its neighbors to expand its influence.  One way to do that is by purchasing gas.

On Jan. 23, 2012, Gazprom signed a deal with the State Oil Co. of Azerbaijan Republic (SOCAR) to double its gas purchases from Azerbaijan from 1.5 to 3.0 billion cubic meters [Bcm] (53 to 106 billion cubic feet [Bcf] per year in 2012.

Gazprom noted that the rapid development of the companies' interaction in the gas sector led to stronger ties between Gazprom and SOCAR.

“We doubled the purchase of Azerbaijani gas for the second consecutive year. The Russian-Azerbaijani energy partnership is developing at a good pace and that demonstrates the mutual aspiration for further buildup of hydrocarbons supplies. The absence of upper limit for the gas purchase amount, geographic proximity, well-developed gas transmission infrastructure and no transiting zones make natural gas export to Russia most profitable for Azerbaijan,” Miller stated.

On the exploration and production side of the business, Gazprom is increasing its international efforts.  For example, the government in Bangladesh in January 2012 approved a plan by Gazprom and Petrobangla to drill 10 wells in the country in the Titas and Rashidpur gas fields.

In 2011, Gazprom supplied 513 Bcm (18.1 trillion cubic feet [Tcf]) of gas with 150 Bcm (5.3 Tcf) going to European customers.  One of the company’s key strategies is to increase its role as a major supplier of natural gas to Europe.

The company is also seeking LNG customers worldwide.  Discussions with Indian customers were ongoing in 2011, for example.

On Jan. 20, Gazprom met with Novatek to discuss the possibility of a joint project to increase LNG capacities on the Yamal Peninsula and putting the area’s northern fields into operation.

The companies considered strategies for jointly developing and commissioning new fields to gradually replace declining output from the Nadym-Pur-Taz region.

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