Gazprom Today

Largest Gas Company

Gazprom is a global energy company basically focused on geological exploration, production, transportation,storage, processing and marketing of gas and other hydrocarbons as well as electric power and heat energy production and distribution. The state owns a 50.002 per cent controlling stake in Gazprom.

Mission and Strategic Goal

Our mission is to provide maximally efficient and well-balanced gas supply to Russian consumers as well as to secure a high degree of reliability when implementing long-term gas export contracts.

Gazprom’s strategic goal is to take the leading position among global energy companies by entering new markets, diversifying business activities and ensuring reliable supplies.

Reserves and Gas Production

Gazprom Group possesses the world’s largest natural gas reserves. As of December 31, 2008 the Group’s A+B+C1 resources were estimated at 33.1 trillion cubic meters. According to the international PRMS standards the Group’s proven and probable hydrocarbon reserves are estimated at 27.3 billion tons of fuel equivalent and valued at USD 230.1 billion.

With 17 per cent of the global gas production, Gazprom Group is the leader among the world’s oil and gas companies. In 2008 Gazprom Group produced 549.7 billion cubic meters of gas.

Reliable Gas Supplier to Russian and Foreign Consumers

Gazprom owns the world’s largest gas transmission system capable of uninterrupted and long-distance gas delivery to Russian consumers and abroad. Gazprom gas trunklines stretch 159.5 thousand km. The Company’s 165 gas distribution companies maintain 445.3 thousand km of gas distribution pipelines and secure transportation of 164.3 billion cubic meters of natural gas.

Gazprom exports gas to the countries within and beyond the FSU, and continues reinforcing its positions on conventional international markets. In 2008 the Company sold 184.4 billion cubic meters of gas to European countries along with 96.5 billion cubic meters to the CIS and Baltic states.

Diversifying Transmission Routes and Reinforcing European Energy Security

Increasing the security of gas supplies to European consumers is one of Gazprom’s strategic targets. For this purpose Gazprom has initiated the new gas transmission projects – Nord Stream and South Stream – that will make it possible both to diversify export routes of Russian gas and to secure additional opportunities for raising gas export.

Preparations are underway for the Shtokman field development project offshore the Barents Sea. The project will become the resource base for Russian gas export to Europe via the Nord Stream.

Market and Product Diversification

Gazprom is implementing a staged strategy of expanding its presence on the liquefied natural gas (LNG) market. This helps to extend the Company’s business geography. In 2005 Gazprom supplied its first LNG cargo to the USA, in 2006 – to the Great Britain, Japan and South Korea. Gazprom’s entry in the Sakhalin II project gives a strong impetus for the completion of a large-scale project targeted at supplying energy carriers to Asia-Pacific and North America. In 2009 the first Russian LNG plant was launched in Sakhalin.

Business Priorities

A business priority of Gazprom is the development of the Yamal Peninsula, Arctic continental shelf, Eastern Siberia and the Far East.

According to the assignment of the Russian Federation Government, Gazprom coordinates the implementation of the Development Program for an integrated gas production, transportation and supply system in Eastern Siberia and the Far East, taking into account potential gas exports to China and other Asia-Pacific countries (Eastern Program). Russia’s East is planned to see the development of a gas processing and gas chemicals industry that will enable to rationally use substantial reserves of helium and other valuable components of Eastern Siberia’s gas.

Business Diversification

Oil business development and competitive presence in the power generation industry are the strategic goals of Gazprom on its way to become the leading global energy company.

The strategy of oil business development stipulates the growth of annual oil production to 90–100 million tons by 2020. It is projected to achieve this level through phased development of all the proven oil fields of Gazprom neft and other Gazprom’s companies as well as through acquisition of new licenses.

Gazprom has outlined the following strategic targets in the power generation sector: diversification of tariff regulation risks, fuel balance optimization and obtaining the synergy effect through combination of gas and power generation businesses.

Environment and Social Responsibility

Gazprom carries out business activities in strict compliance with the international and Russian environmental legislation. The Company has adopted the Environmental Policy and the List of paramount environmental activities until 2010.

Environmental Policy implementation of the will result in the cost reduction and increase in efficient resource utilization, minimized specific indicators of environmental impacts, optimized corporate management system for environmental protection, Gazprom’s well-balanced innovative development combining production expansion and modern and efficient approaches to the environmental protection.

The major socially oriented project of Gazprom is the Gasification Program for the Russian Federation regions, which was implemented in 64 Russian constituents in 2008. 153 inter-settlement gas pipelines with the total length of 2,700 km have been constructed in 47 Russian constituents. In 2009 the Gasification Program will be implemented in 69 constituents.

Gazprom on Global Market

In 2008 the average capitalization of the Company dropped by 7 per cent down to USD 241.1 billion (USD 259 billion in 2007). Despite the capitalization decrease in 2008 Gazprom during that period retained the leading position among European companies by market capitalization and was among the top ten largest energy companies of the world.

Production

Gazprom Group holds the world's largest natural gas reserves.

As of December 31, 2009 the Group's A+B+C1 gas reserves (Russian standards) were estimated at 33.6 trillion cubic meters while oil and condensate reserves – at 3.1 billion tons.

As for the gas production volume amounting to around 14.5 per cent of the global total, Gazprom Group is one of the leading petroleum companies worldwide. In 2009 the Group produced 461.5 billion cubic meters of natural and associated gas, 10.1 million tons of condensate and 31.6 million tons of oil.

Natural gas from Central Asia is an essential element in Gazprom's resource base. Gazprom Group purchased 37.3 billion cubic meters of Central Asian gas in 2009.

Gazprom owns the world's largest gas transmission system capable of continuously conveying gas over long distances to Russian consumers and abroad. Gazprom's gas trunklines length exceeds 160.4 thousand kilometers.

Gazprom is intent on expanding chemicals production, enhancing valuable components extraction from natural gas and boosting advanced processing products output. In 2009 the Group processed 30.4 billion cubic meters of gas and 44.3 million tons of oil and condensate.

The power generation business development in Gazprom Group contemplates, inter alia, acquiring stakes in generating companies, building new generating facilities, as well as improving power distribution and network operation businesses. The Group's key assets in the Russian power industry are as follows: Mosenergo (53.47 per cent), TGC-1 (28.7 per cent), WGC-2 (56.6 per cent) and WGC-6 (60 per cent).

Gazprom is Russia's leading gas distributor. Gasification of Russian regions is therefore a major goal of the Group. In 2009 the gasification program covered 69 Russian constituents and investment in gasification projects is earmarked for 65 regions of the country in 2010.

In this section you will also find information about the most significant projects being implemented by Gazprom.

Marketing

Gas deliveries by Gazprom Group in 2008

Russia
287 bcm of gas

Europe
184,4 bcm of gas

CIS and Baltic states
96,5 bcm of gas

America and Asia-Pacific
454 thousand tons of LNG

Marketing

Gazprom’s mission is to ensure maximally efficient and balanced gas supply to Russian customers and reliably fulfill long-term gas export contracts.

In 2008 Gazprom Group sold 567.9 billion cubic meters of gas, of which 287.0 billion cubic meters was supplied to the Russian market, 96.5 billion cubic meters – to the CIS and Baltic region and 184.4 billion cubic meters – beyond the former Soviet Union.

Gas deliveries to the Russian market account for over 50 per cent of Gazprom’s overall gas sales. Together with the Russian Government the Company takes a number of actions aimed at developing the Russian gas market in conformity with the market principles.

Gazprom is active in gasifying Russian regions

Gazprom is the only supplier of gas to the regulated sector of the Russian market

Since 2006 when the respective Federal Law took effect Gazprom has enjoyed the exclusive right to supply gas beyond Russia. The Company’s export strategy hinges on an integrated export channel and a system of long-term contracts. Nowadays Gazprom supplies around one third of the total gas imports to Western Europe. The main buyers of Russian gas are Germany, Turkey, Italy and France.

In its relationships with the CIS and Baltic states Gazprom adheres to the policy of a stagewise transition to the contract terms & conditions and pricing mechanisms similar to those applicable in European countries. Moreover, the gas price formula currently used for the Baltic countries makes Gazprom’s deliveries to the region profitable in line with European levels.

Gazprom’s marketing strategy in the American and Asia-Pacific markets stipulates consecutively boosting liquefied natural gas (LNG) supplies. Between 2005 and 2008 the total LNG sales through spot deals reached 1.2 million tons (1.7 billion cubic meters).

Gazprom is the majority shareholder in the Sakhalin II project. In 2009 the first Russian LNG plant was brought online as part of the project. The entire output will be supplied to Japan, South Korea and North America.