Business & Industry

Dec 1, 2014

Comfort to the world

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 electricity and heat production and distribution.

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Gazprom views its mission in reliable, efficient and balanced supply of natural gas, other energy resources and their derivatives to consumers.

Gazprom pursues the strategic objective of establishing itself as a leader among global energy companies by entering new markets, diversifying its activities and ensuring reliable supplies.
Gazprom Group possesses the world's largest natural gas reserves. As of December 31, 2013 the Group's A+B+C1 gas reserves (Russian classification) were estimated at 35.7 trillion cubic meters.
With 13 per cent of the global gas production, Gazprom Group is the leader among the world's oil and gas companies. The Group produced 487.4 billion cubic meters of gas in 2013.

Gazprom owns the world's largest gas transmission system capable of uninterrupted and long-distance gas delivery to domestic and foreign consumers. Gazprom gas trunklines stretch 168.9 thousand kilometers.
Gazprom keeps strengthening its positions it traditional foreign markets. In 2013 Gazprom sold 161.5 billion cubic meters of gas beyond the former Soviet Union.

Diversifying transmission routes and reinforcing European energy security

Enhancing 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 Russian gas export routes and to ensure utmost reliability in gas supplies to European consumers.
Nord Stream's first string with the annual gas throughput of 27.5 billion cubic meters was commissioned on November 8, 2011. Commercial supplies of Russian gas to the European Union via Nord Stream started on that very day.

Gazprom is implementing a phased strategy of expanding its presence in the liquefied natural gas (LNG) market. This helps extend the Company's business geography. Gazprom supplied its first LNG cargo to the USA in 2005, and to the UK, Japan and South Korea in 2006. Once Gazprom joined the Sakhalin II project, the Company gave a strong impetus for the completion of this large-scale project targeted at supplying energy carriers to Asia-Pacific and North America. The first Russian LNG plant was inaugurated in Sakhalin in February 2009. LNG spot sales totaled 7.74 million tons (11.12 billion cubic meters) between 2005 and 2012.
Gas resources development in the Yamal Peninsula, the Arctic seas, Eastern Siberia and the Far East is a business priority of Gazprom.

According to the assignment by the Russian Federation Government, Gazprom coordinates the execution 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 export to China and other Asia-Pacific countries (Eastern Gas Program). Russia's East is to see the creation of a gas processing industry that will enable the efficient use of Eastern Siberia's substantial reserves of gas containing helium and other valuable components.

Gasification of Kamchatka started in autumn 2010 upon commissioning of the Sobolevo ± Petropavlovsk-Kamchatsky gas pipeline as part of the Eastern Gas Program. Moreover, in September 2011 the Company finished construction of the Sakhalin ± Khabarovsk ± Vladivostok gas trunkline, the first inter-regional gas transmission system in Russia's East.

Business diversification

The oil business development and competitive presence in the power generation industry are the strategic goals of Gazprom.

The oil business development strategy stipulates the annual production growth to 100 million tons of oil equivalent by 2020. It is projected to achieve this level through phased development of all the explored oil fields of Gazprom Neft and other companies of Gazprom Group as well as through acquisition of new licenses.

Gazprom Group is the largest owner of power generating assets in Russia. As of December 31, 2013 the installed capacity of the Group's key power generating companies in Russia totaled 38 GW or about 15 per cent of the overall installed capacity of the Russian power system. The Group's development strategy to 2020 stipulates expansion of the generating capacities to 44.8 GW. Gazprom constructed above 2.2 GW of generating capacities in 2012. This is more than RAO UES of Russia had built over the entire period of its existence.

Gazprom carries out business activities in full compliance with the international and Russian environmental legislation. The Company has adopted the Environmental Policy based on resource conservation, climate protection and maximum mitigation of adverse environmental impacts. In December 2011 Gazprom endorsed its Comprehensive Environmental Program to 2015. The Program contains a list of systemic measures and investment projects aimed at enhancing the energy security of the Company's facilities being designed, constructed and operated as well as the Program deadlines, results, financing amounts and sources.

The Russian Regions Gasification Program is Gazprom's major socially oriented project. Between 2005 and 2013 the total amount of investments allocated by Gazprom for gasification of Russian regions surpassed RUB 214 billion (excluding the funds earmarked by Gazprom for construction of gas laterals and gas distribution stations required to supply gas to the regions). These funds were used for putting onstream 1,527 inter-settlement gas pipelines with a total length of above 22 thousand kilometers, supplying gas to some 600 thousand apartments and households and 3,623 boiler houses. For the first time 2,753 population centers were connected to gas grids.

As a result of these efforts, Russia's forecasted gasification level averaged 65.3 per cent, including 70.9 per cent in cities and towns and 54 per cent in the rural area in early 2013.

In 2013 Gazprom will allocate a record amount of investments for Russian regions gasification ± RUB 33.9 billion. The amount of finance will be nearly 10 per cent higher than in 2012. The Gasification Program will cover 69 constituents of the Russian Federation, including the regions of Eastern Siberia and the Far East that execute the Eastern Gas Program.

Gazprom in global market

Gazprom is Russia's largest joint stock company in terms of capitalization. The Russian Federation controls a 50.23 per cent stake in the share capital of Gazprom.

Gazprom shares are traded at Moscow Interbank Currency Exchange (Russia) as well as at London, Berlin and Frankfurt stock exchanges in the form of American Depositary Receipts. In addition, the best part of shares is circulated in the U.S. over-the-counter market among qualified institutional buyers.

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