Production

Gas production by Gazprom Group:

  • 443.9 billion m3 in 2014
  • 487.4 billion m3 in 2013
  • 487.0 billion m3 in 2012
  • 513.2 billion m3 in 2011
  • 508.6 billion m3 in 2010
  • 461.5 billion m3 in 2009
  • 549.7 billion m3 in 2008
  • 548.6 billion m3 in 2007
  • 556.0 billion m3 in 2006
  • 555.0 billion m3 in 2005
  • 552.5 billion m3 in 2004
  • 547.6 billion m3 in 2003

How much gas did Gazprom produce in 2014? What is the share of Gazprom in Russian gas production?

Gas production by Gazprom GroupIn order to ensure data comparability, the figures for 2003 through 2005 are calculated via a methodology in line with the preparation principles for Gazprom Group’s consolidated statements
Gas production by Gazprom Group
In order to ensure data comparability, the figures for 2003 through 2005 are calculated via a methodology in line with the preparation principles for Gazprom Group’s consolidated statements

In 2014 Gazprom Group produced 443.9 billion m3 of natural and associated gas. Gazprom accounted for 69% of Russian gas production.

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Most of Gazprom’s basic fields are at a declining production phase. What does Gazprom undertake to maintain and boost gas production?

Gazprom’s share in global gas production
Gazprom’s share in global gas production

A decline in production from basic fields is offset through systematic commissioning of new gas production capacities as well as through higher efficiency of the existing resource base utilization.

Over the period from 2001 to 2013 Gazprom put into operation the Zapolyarnoye (Cenomanian and Valanginian deposits), Bovanenkovskoye, Vyngaiakhinskoye, Yety-Purovskoye, Yen-Yakhinskoye and Yuzhno-Russkoye fields as well as the Tab-Yakhinskaya, Pestsovaya and Zapadno-Pestsovaya areas and the second block of the Achimov deposits in the Urengoyskoye field; the Aneryakhinskaya and Kharvutinskaya areas of the Yamburgskoye field, the Nydinskaya area of the Medvezhye field and the Yareyskaya area of the Yamsoveyskoye field. The aggregate annual capacity of these fields exceeds 350 billion m3 of gas.

In October 2012 Gazprom started gas production from the Bovanenkovskoye field in the Yamal Peninsula. The field’s design capacity totals 115 billion m3 of gas per year. In January 2013 the Zapolyarnoye field was brought to its full design capacity, thus becoming the most productive field in Russia with the total annual output of 130 billion m3 of gas.

In addition, Gazprom develops difficult-to-access Achimov deposits in the Urengoyskoye field at the depth of around 4,000 m enabling to extract extra gas amounts. In 2008 OOO Achimgaz, a joint venture of Gazprom and German Wintershall Holding, started production operations within the first pilot block of the Achimov deposits. In 2009 Gazprom commenced independent production within the second pilot block (design capacity – 3.5 billion m3 of gas per year).

With a view to enhance the efficiency of the existing resource base utilization, the Company reconstructs and upgrades gas production facilities. Investments are channeled in upgrading the main process equipment, automation systems as well as power, heat and water supply systems and purification facilities.

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What is the status of Gazprom’s project aimed at the Yamal Peninsula fields development?

Development of the Bovanenkovskoye gas field, the largest one in terms of gas reserves, was the first step towards the Yamal megaproject implementation. The explored and estimated gas reserves of the field account for 4.9 trillion m3. The projected gas production from the field is to be increased from the current 115 billion m3 to 140 billion m3 per annum in the long term.

In December 2008 Gazprom launched the Yamal megaproject: the first joint of the Bovanenkovo – Ukhta gas trunkline system was welded and drilling of production wells was initiated in the Bovanenkovskoye field.

In 2009, a unique bridge crossing over the Yuribey River, the Obskaya – Bovanenkovo railroad section, was brought into service to become the world’s longest bridge located beyond the Polar Circle. In February 2011 regular operation was launched all over the railroad to the Karskaya terminal station. This important infrastructure facility is aimed at ensuring year-round, rapid, cost effective and all-weather delivery of cargoes and personnel to the Yamal fields in the severe polar climate.

Gazprom Group’s gas production in Russian Federal Districts in 2013
Gazprom Group’s gas production in Russian Federal Districts in 2013
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In October 2012 the Bovanenkovskoye field was commissioned. Nowadays two production facilities with the aggregate design capacity of 90 billion m3 a year operate in the field; once the third production facility is commissioned, the field will reach its full design capacity of 115 billion m3 of gas a year. Along with the Bovanenkovskoye field, the first string of the Bovanenkovo – Ukhta gas trunkline system (GTS) with the length exceeding 1,240 km was commissioned. The second string of the GTS is currently under construction.

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What foreign companies partner Gazprom in the Russian upstream projects? What for and on what basis is it done?

Gazprom’s strategy to invite partners for hydrocarbon reserves development is aimed at efficient extraction of resources in a complex geological environment and implies asset swapping on a parity basis in order to expand the scope and geographic reach of Gazprom’s businesses.

For instance, such an approach has been applied to the Yuzhno-Russkoye oil and gas field development. In Russian-German joint venture OAO Severneftegazprom – the field licensee – Gazprom owns 50% plus six ordinary registered shares, German BASF SE and E.ON AG – 25% less three ordinary registered shares and three preference non-voting shares each. In exchange for the German companies participation in Severneftegazprom, Gazprom increased its stakes in Wingas joint venture (to 50% less one share), in ZAO Gerosgaz (to 100%) holding 2.93% of OAO Gazprom shares and obtained a 49% stake in Wintershall subsidiary entitled to develop and produce hydrocarbons in Libya under concession agreements.

The Yuzhno-Russkoye field reserves exceed 1 trillion m3, which is, given the present-day volumes of annual gas supply from Russia to Germany, commensurate with exports for 17 years ahead. The field was put into commercial operation in December 2007 and reached its design capacity of 25 billion m3 of gas per annum in 2010.

OOO Achimgaz (a joint venture owned by Gazprom and Wintershall Holding on a par) implements the project for developing the Achimov deposits in the Urengoyskoye field.

Gazprom actively promotes cooperation with foreign companies within the Sakhalin II project. In pursuance of the Protocol signed in December 2006 by OAO Gazprom, Shell, Mitsui and Mitsubishi Corporation, Gazprom joined Sakhalin Energy (Sakhalin II operator) as the principal shareholder.

The shareholding structure of Sakhalin Energy is currently as follows: Gazprom – 50% plus one share, Shell – 27.5% less one share, Mitsui – 12.5% and Mitsubishi – 10%.

In December 2008 the Sakhalin II project started exporting crude oil on a year-round basis and on February 18, 2009 the first Russian LNG plant was put into operation.

In 2009 Gazprom and Petrovietnam entered into the Agreement on Strategic Partnership, stipulating active interaction in oil and gas projects in Russia, Vietnam and in third countries within Gazpromviet. The Nagumanovskoye oil, gas and condensate field in the Orenburg Region as well as the Severo-Purovskoye gas and condensate field in the YamalNenets Autonomous Area were defined as the objects of the companies’ cooperation in Russia.

Sakhalin-II project
Sakhalin-II project
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How is Gazprom Group’s liquid hydrocarbons production progressing?

In 2014 Gazprom recovered 35.3 million t of oil and 14.5 million t of gas condensate.

The oil business development is a strategic objective of Gazprom on its way towards becoming a global energy company. Gazprom Group’s oil production hinges on OAO Gazprom Neft. At present it is vested with subsurface use rights for the Novoportovskoye field in northern Yamal-Nenets Autonomous Area, Prirazlomnoye and Dolginskoye fields in the Pechora Sea, the eastern part of the Orenburgskoye field as well as geological explorations licenses for three blocks in the Arctic shelf (Severo-Zapadny, Kheysoveysky and Severo-Vrangelevsky).

Gazprom Neft actively pursues the policy of expanding its international market share. Thus, in February 2009 it acquired a controlling stake in the diversified petroleum company NIS (Serbia). In March 2011 the stake in NIS was increased from 51 to 56.15%. In April the company purchased an oils and lubricants plant in Bari (Italy) with the annual production capacity of up to 30 thousand t of oils and 6 thousand t of lubricants from Chevron Global Energy. In summer 2009 Gazprom Neft acquired a 20% stake in OOO National Petroleum Consortium established by Russian petroleum companies on a parity basis for oil production projects execution in Latin America. One of the projects is Junin-6 located in the Orinoco River heavy oil belt, Venezuela. It is worth mentioning that OAO Gazprom Neft became the leading operator of the project phase 1 among participating companies. Oil has been produced from Junin-6 since autumn 2012.

In January 2010 OAO Gazprom Neft on behalf of the consortium signed a contract to develop the Badra field (Iraq) with some 3 billion bbl of oil. Gazprom Neft is the project operator holding a 30% stake. First oil was produced from the field in late 2013. The large-scale project development started in 2014.

In 2012 the number of Gazprom Neft projects in Iraq increased to three. In August the company signed the agreement on hydrocarbon reserves exploration and development in the Garmian and Shakal blocks in Southern Kurdistan. Gazprom Neft acquired a 40% stake in the Garmian project and 80% – in Shakal.

In early 2013 Gazprom Neft entered another project in Iraqi Kurdistan acquiring an 80% stake in the Halabja block. All three projects are implemented under the Production Sharing Agreement (PSA) terms.

In late 2013 Gazprom launched oil production from the Prirazlomnoye field. This is the first national project aimed at developing the Arctic resources. The Prirazlomnoye oil field is located 60 km off the Pechora Sea shore. The recoverable oil reserves amount to over 70 million t. The project operations are implemented from the Prirazlomnaya platform designed and built in Russia on Gazprom’s order. The platform intended for operation under extreme environmental and climatic conditions, meets the most stringent safety requirements and can resist heavy ice loads. In April 2014 the first oil cargo was loaded from the platform. In this way, it is the first time that ARCO (Arctic Oil), the new type of Arctic oil produced from the Russian shelf was supplied to the global market.

Following the 2014 results, Gazprom Neft produced 66.3 million t of oil equivalent – 6.4% growth versus 2013.

By 2020 Gazprom Neft is planning to boost its annual production volume to 100 million t of oil equivalent taking into account its subsidiaries’ operating results and shares in affiliated companies. The company also intends to maintain the reserves to production ratio at the current level for at least 20 years with the fields at an early development phase to yield no less than 50% of the produced volume by 2020.

As of December 31, 2014 the A+B+C1 (Russian standards) oil and condensate reserves of Gazprom Group were estimated at 3.3 billion t allowing to ultimately achieve the production levels commensurate with those of the leading oil companies.

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Coalbed methane production

In essence, coalbed methane (CBM) extraction is viewed as a key element of OAO Gazprom’s resource base expansion strategy and will ultimately result in emergence of a CBM production industry in Russia. Besides, large-scale deployment of Russian CBM production technologies will minimize accidents at coal mines and considerably improve the environmental situation.

The Russian Federation possesses immense forecast CBM resources – around 84 trillion m3, which is commensurate with one-third of Russia’s forecast natural gas resources.

The Kuzbass region with its forecast methane resources coming to 13 trillion m3 is nowadays considered to be the most appropriate site for commercial production.

Methane resources concentration in certain areas of Kuzbass is comparable to the amount of natural gas in northern Tyumen Region. Geological and commercial advantages of Kuzbass as well as the availability of gas infrastructure and consumers at a distance of just 15 to 150 km predetermine the economic viability of commercial methane production in Kuzbass.

In February 2010 Gazprom commissioned the first Russian CBM production facility in the Taldinskoye field (Kemerovo Region). The produced methane is used for power generation at two gas-fired power stations and as a motor fuel. More than a hundred vehicles are methane-powered at the Taldinsky coal strip mine.

Every year Gazprom produces about 11 million m3 of coalbed methane in the Taldinskoye field. Presently project documents are being prepared for bringing the field into pilot commercial operation.

Natural gas extraction and CBM extraction are completely different processes. The latter anticipates using brand new technologies, it is substantially more labor and capital intensive. The Russian CBM production technology was designed by the Group as well. Over 30 patents were received across the entire process cycle – from exploration to utilization of CBM.

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