GAS EXPORT AND ENHANCING RELIABILITY OF GAS SUPPLY TO EUROPE - - PowerPoint PPT Presentation

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GAS EXPORT AND ENHANCING RELIABILITY OF GAS SUPPLY TO EUROPE - - PowerPoint PPT Presentation

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GAS EXPORT AND ENHANCING RELIABILITY OF GAS SUPPLY TO EUROPE ALEXANDER MEDVEDEV Deputy Chairman of Management Committee, Gazprom Press Conference, June 6, 2017 GAS SALES BY GAZPROM GROUP Volume and average price* data of Gazprom Group gas

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Press Conference, June 6, 2017

ALEXANDER MEDVEDEV Deputy Chairman of Management Committee, Gazprom

GAS EXPORT AND ENHANCING RELIABILITY OF GAS SUPPLY TO EUROPE

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Volume and average price* data of Gazprom Group gas beyond former Soviet Union (FSU)** Volume and average price* data of Gazprom Group gas in FSU

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Net revenue* from gas sales beyond FSU Net revenue* from gas sales in FSU

* Inclusive of (excise tax and) customs duties ** Gas supplies, including LNG and auctioned gas, to foreign countries, except for FSU, under contracts of Gazprom Export and other Gazprom companies

GAS SALES BY GAZPROM GROUP

56.7 70.2 81.7 66.1 59.4 48.1 40.3 33.2

6,411 7,039 8,509 9,490 8,500 10,116 11,911 10,263 50 100 150 200 250 2009 2010 2011 2012 2013 2014 2015 2016 RUB/1,000 m3 bln m3

1,396 1,358 1,764 1,807 2,116 2,150 2,777 2,686

500 1000 1500 2000 2500 3000 2009 2010 2011 2012 2013 2014 2015 2016 RUB bln

363 494 695 627 505 486 480 340

500 1000 1500 2000 2500 3000 2009 2010 2011 2012 2013 2014 2015 2016 RUB bln

148.3 148.1 156.6 151.0 174.3 159.4 184.4 228.3

9,414 9,167 11,259 11,970 12,138 13,487 15,057 11,763 50 100 150 200 250 2009 2010 2011 2012 2013 2014 2015 2016 RUB/1,000 m3 bln m3

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Poland, 11.1 France, 11.5 UK 17.9 Italy, 24.7 Turkey, 24.8 Germany, 49.8

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GAZPROM GROUP’S GAS SALES BEYOND FSU

(UNDER CONTRACTS OF GAZPROM EXPORT AND GAZPROM SCHWEIZ)

  • Total sales in

2016 amounted to 179.3 bln m3

  • Increase of

19.9 billion m3 (+12.5%) from previous year

  • Major gas

buyers in 2016 were Germany, Turkey, and Italy

bln m3

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Moldova, 3.0 Kazakhstan, 4.7 Belarus, 18.3

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Gazprom’s gas sales in FSU totaled 33.2 bln m3* in 2016

bln m3

* According to consolidated financial statements of Gazprom prepared under IFRS

GAZPROM GROUP’S GAS SALES TO FSU IN 2016

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PIVOTAL ROLE OF GAZPROM GROUP’S GAS IN EUROPEAN MARKET

Gazprom Group’s* share in European gas consumption Gazprom Group’s* share in European gas imports**

* Gas sales to European countries beyond FSU under contracts of Gazprom Export and GAZPROM Schweiz ** Difference between consumption and indigenous production

Gas supplies to Europe by major gas exporters and producers in 2016, bln m3 Short-term forecasts for gas consumption from world’s leading companies (consumption in 2012 = 100%)

100.0 99.7 89.6 93.5 99.9 85 90 95 100 105 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 %

Actual 2012-16 CERA (Oct. 2016) CERA (March 2017) PIRA (Sept. 2016) PIRA (March 2017) IEA (May 2015) IEA (May 2016)

179.3 124.0 51.2 46.4 45.5 24.0 9.8 8.0 50 100 150 200

Gazprom Group* Norway Algeria UK Netherlands Qatar Nigeria Iran

583 598 564 602 551 542 540 485 507 542 26% 27% 25% 23% 27% 26% 30% 30% 31% 33% 100 200 300 400 500 600 700 800 900 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Gas consumption, bln m3 Gas sales by Gazprom Group*, bln m3 Gazprom Group's share*

271 273 257 280 274 248 255 225 240 273 56% 58% 55% 50% 55% 56% 64% 66% 66% 66% 100 200 300 400 500 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Import needs, bln m3 Gas sales by Gazprom Group*, bln m3 Gazprom Group's* share

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LOW COMMERCIAL ATTRACTIVENESS OF U.S. LNG SUPPLIES TO EUROPE

In current environment, forward contract prices at European trading platforms do not cover full cost of future U.S. LNG supplies linked to Henry Hub prices

Estimated price range* for U.S. LNG supplies in Europe versus forward prices** in European gas market

* Based on Henry Hub forward prices, P = HH * 115% + X, where X – costs (liquefaction, shipments, regasification) ** NBP forward prices *** Historical data: Russian gas prices, including delivery, at German border (according to World Bank), projected data: based on current forward prices of Brent and TTF Sources: Bloomberg, Cheniere Energy, WoodMackenzie, World Bank

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FORECASTED GROWTH IN GAS-FIRED POWER GENERATION

Power industry shows highest growth rates in gas consumption across

  • Europe. Even EC’s

most radical ecology-oriented scenario, with highest subsidies for RES, envisages increased gas use for power generation. According to baseline scenario, by 2025 gas-fired power generation in EU will grow by

  • ne-third versus

2015.

Baseline scenario* 2030 Energy Strategy scenario**

* 21% increase in energy efficiency by 2030, 33% reduction of greenhouse gas emissions by 2030 versus 1990, 24.4% share of RES in primary energy consumption by 2030. ** 27% increase in energy efficiency by 2030, 40% reduction of greenhouse gas emissions by 2030 versus 1990, 27% share of RES in primary energy consumption by 2030. Source: European Commission, ENTSO-E

438 473 489 505 521 537 554 570 586 602 618 634 650 666 682 698 714 500 1000 1500 2000 2500 3000 3500 4000 2014 2016 2018 2020 2022 2024 2026 2028 2030 TWh 33.3% 33.6% 438 473 476 478 481 484 487 489 492 495 497 500 503 505 508 511 513 500 1000 1500 2000 2500 3000 3500 4000 2014 2016 2018 2020 2022 2024 2026 2028 2030 Oil Gas Coal Wind Solar and tidal energy, etc. Biomass Hydro Nuclear TWh 26.4% 40.1%

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Prospects for gas demand increase in transportation sector:

  • Heavy-duty truck can consume up to 200–300 kg of

LNG daily

  • Transportation company with 20–40 trucks consumes

several mln m3 of gas per year

  • Europe’s demand for natural gas as vehicle fuel can

reach up to 27 billion m3 by 2025*

Between 2013 and 2016:

  • Number of Gazprom Group’s gas filling stations in Europe increased from 23 to 69
  • In 2016, Gazprom Group entered Serbia’s NGV market, with retail services offered

at two stations

  • Gazprom’s supplies of CNG and LNG to its own and third-party gas filling stations

grew from 4.8 to 14.6 mln m3

  • In collaboration with local companies, Gazprom NGV Europe (part of Gazprom

Group) implements Europe’s first projects for introducing LNG as vehicle fuel in public bus transportation in Poland: 11 buses in Olsztyn and 35 buses in Warsaw

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USE OF NATURAL GAS AS VEHICLE FUEL IN LONG TERM

* ACER (Agency for the Cooperation of Energy Regulators) forecast.

2 4 6 8 10 12 14 16 2013 2014 2015 2016 Serbia Czech Republic Poland Germany

Gazprom’s sales of gas as vehicle fuel through its

  • wn and third-party stations, mln m3/year
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UNDERGROUND GAS STORAGE: ENSURING STABLE, RELIABLE AND FLEXIBLE SUPPLIES

2016: development of Europe’s underground gas storage network

Rehden Banatski Dvor Katharina Bergermeer Haidach Damborice

During 2016/2017 withdrawal season, Gazprom

  • perated 5 bln m3 of storage capacities in Europe.

Maximum daily deliverability of UGS facilities in Western Europe was 83.3 mln m3 during 2016/2017 withdrawal season. Katharina and Damborice UGS projects are in progress:

  • Katharina UGS facility has 6 operational caverns with total working capacity of 315 mln m3 and maximum daily

deliverability of 23.2 mln m3. On April 1, 2017, UGS surface facilities were brought onstream.

  • On July 1, 2016, Damborice UGS facility with design working capacity of 456 million m3 was put into operation in Czech
  • Republic. At present, Gazprom has access to 156 mln m3 of Damborice’s storage capacity, with maximum daily

deliverability standing at 3.7 mln m3.

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NORD STREAM 2

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  • Nord Stream 2 project envisages construction of

gas pipeline across Baltic Sea with entry point in Kingisepp District of Leningrad Region and exit point near Greifswald in Germany

  • Length of gas pipeline: around 1,200 km
  • Annual capacity: 55 bln m3 of gas
  • In addition to higher reliability of supplies, Nord

Stream 2 project is consistent with EU objectives for energy security and harmful emissions reduction

  • Nord Stream 2 AG project company was set up to

deliver project

  • Nord Stream 2 AG signed financing agreements

with ENGIE, OMV, Royal Dutch Shell, Uniper, and Wintershall for Nord Stream 2 gas pipeline project

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TURKSTREAM

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  • TurkStream is project for transit-free export gas pipeline

stretching across Black Sea from Russia to Turkey and further to Turkey's border with neighboring countries

  • First string (15.75 bln m3 in capacity) of gas pipeline is

intended for Turkish consumers, while second string (with same capacity) will deliver gas to EU countries

  • On October 10, 2016, Russian and Turkish Governments

signed Agreement on TurkStream project

  • South Stream Transport B.V., wholly-owned subsidiary
  • f Gazprom, is responsible for construction of gas pipeline’s
  • ffshore section
  • On May 7, 2017, pipe-laying of TurkStream gas pipeline

started near Russian coast (Audacia vessel owned by Allseas)

  • Pioneering Spirit, world’s largest pipe-laying vessel, has

arrived in port of Anapa to build TurkStream pipeline in deep- water area of Black Sea

  • TurkStream is expected to come onstream before late 2019
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THANK YOU FOR YOUR ATTENTION!