GAZPROM IN EASTERN RUSSIA, ENTRY INTO ASIA-PACIFIC MARKETS Moscow, - - PowerPoint PPT Presentation

GAZPROM IN EASTERN RUSSIA, ENTRY INTO ASIA-PACIFIC MARKETS

Moscow, June 14, 2016

In 2015, the construction of the second development well was completed at the Kirinskoye field, with another two wells entering the construction phase (drilled to the producing horizon). The construction of these wells is scheduled for completion in 2016 with drilling another two to the producing horizon. In 2019, the total number of development wells will increase to seven.

Kirinskoye Field Pre-Development

2

Kirinskoye Field Pre-Development

In 2015, Kirinskoye produced 604.6 mln m3 of gas and 104.3 thous. t of gas condensate. Due to a seasonal decrease in the regional gas consumption, production is carried out on a periodic basis. Upon reaching the design capacity, annual gas production will grow to 5.5 bln m3. Condensate is supplied into the oil pipeline owned by Sakhalin Energy.

3

Yuzhno-Kirinskoye Field Pre-Development

Field development project was prepared in 2015; pre-development infrastructure is being currently designed. Gas production is scheduled to start in 2021.

4

Sakhalin Island

Kirinskoye Lunskoye Kirinsky prospect

Yuzhno-Kirinskoye

Mynginskoye

Sakhalin Island

Vostochno- Kirinskaya Yuzhno- Lunskaya Zapadno- Kirinskaya

Chayandinskoye Field Pre-Development

Oil rim:

• Oil production – 310 wells
• Oil treatment – OTU (oil treatment unit)
• Oil delivery – DAP (delivery and acceptance point)

Gas-bearing reservoir:

• Gas production – 335 wells
• Preliminary treatment – PGTU-2, PGTU-4 (preliminary gas treatment units)
• Gas treatment and delivery into GTS – CGTU-3 (comprehensive gas

treatment unit) Project targets:

• Annual gas production – 25 bln m3
• Annual oil production – 1.9 mln t
• Annual condensate production – 385 thous. t

5

OTU

OTU – OPS 11 oil trunkline Power of Siberia gas trunkline

PGTU-2 PGTU-3 PGTU-4

On-site road

Kovyktinskoye Field Development

Gas production from the Kovyktinskoye field is scheduled to start in 2022. Annual design output will be 25 bln m3 of gas, with a total of 514 producing wells (throughout the development period).

GTU-102, Kovyktinskoye field

6

Advancement of Technology for Helium Separation from Natural Gas at Kovyktinskoye Field

Parameters of pilot membrane unit for helium separation (PMU-100) Flowrate 100 thous. m3/day Inlet pressure 3.5 MPa Helium content in feed gas 0.28% Helium content in gas after treatment in PMU-100 max 0.05% Yield of treated gas min 97.0% Number of stages in membrane separation process 2

7

Natural Gas Deliveries to Chinese Market

Pipeline gas supply to the Chinese market is a high priority for Gazprom Group. In 2015, considerable success was achieved in expanding strategic partnership with Chinese companies.

Russia eastern route western route Project for gas deliveries from Russian Far East India Mongolia China

Shanghai Beijing

2015 highlights:

Gas supplies via eastern route

In December 2015, Gazprom and CNPC entered into the Agreement on design and construction of the cross-border section of the Power of Siberia gas pipeline, including the submerged crossing via the Amur River. In the same month, the parties signed the Agreement of communications at Power of Siberia cross-border section.

Negotiations regarding western route

• In May 2015, Gazprom and CNPC signed the Heads of

Agreement for gas deliveries to China via the western route.

Project for gas supplies from Russian Far East

• In

September 2015, Gazprom and CNPC inked the Memorandum of Understanding for the project of pipeline gas supplies to China from the Russian Far East.

In addition to pipeline gas supplies, Gazprom actively cooperates with Chinese companies in other business areas:

LNG SUPPLIES TO CHINA COMPRESSED NATURAL GAS AND SMALL-SCALE LNG PRODUCTION UNDERGROUND GAS STORAGE GAS-FIRED POWER GENERATION SCI-TECH COOPERATION JOINT OFFSHORE EXPLORATION AND PRODUCTION PROJECTS

30

bln m3 bln m3

38

8

Power of Siberia Gas Trunkline

9

Length —

• ver 4,500 km in one

continuous string. Diameter — 1,420 mm. Pressure — 9.8 MPa. Annual export capacity — 38 bln m3 of gas.

10

Region Constructed GDSs Gazprom’s Operational GDSs Gazprom Mezhregiongaz’s GDSs to be commissioned in 2016

Kamchatka Territory 2 1 Primorye Territory 1 Sakhalin Region 1 1 Khabarovsk Territory 3 1 TOTAL 7 3

2/1 GDS 1/0 GDS 1/1 GDS 3/1 GDS

Expansion of Gas Distribution Station (GDS) Network in Far Eastern Federal District

NGV Infrastructure Development in Far Eastern Federal District

CNG infrastructure (CNG filling stations) To be commissioned in 2016:

• Yuzhno-Sakhalinsk – 2 stations;
• Petropavlovsk-Kamchatsky – 1 station.

To be commissioned in 2017:

• Khabarovsk – 1 station.

To be commissioned in 2018:

• Komsomolsk-on-Amur – 1 station;
• Vladivostok – 1 station;
• Korsakov – 1 station;
• Dolinsk – 1 station.

11

Geography of LNG supplies from Gazprom Group portfolio between 2005 and 2015

0.1 0.3 0.3 0.5 1.4 1.9 2.3 1.4 1.5 3.4 3.6 1 2 3 4 2005 2007 2009 2011 2013 2015 mln t of LNG Japan – 46% South Korea – 16% India – 11% Thailand – 6% China – 4% Argentina –10% Egypt – 2% Kuwait – 2% FOB– 4%

Project for third production train of LNG plant, Sakhalin II Key project benefits

Despite the declining LNG demand from traditional importers in Northeastern Asia (Japan and Korea) over the past few years, Asia-Pacific remains a key growth center in global LNG trade due to the emergence of new gas markets in the region.

LNG demand in Asia-Pacific countries New LNG markets in Asia-Pacific

India

Bangladesh Malaysia Singapore

Thailand

Indonesia Vietnam Philippines

Sakhalin II Sakhalin II (TPT1)

Pakistan

• 40

80 120 160

• 20

40 60 80 100 120 2015 2020 2025 2030 bln m3 mln t of LNG per year Вьетнам Филиппины Бангладеш Пакистан Сингапур Малайзия Индонезия Таиланд Индия Vietnam Philippines Bangladesh Pakistan Singapore Malaysia Indonesia Thailand India

In 2015, Gazprom Group supplied nearly 3 mln t of LNG to Asia-Pacific countries. The Company is actively expanding its presence in the Asia-Pacific market. 2015 saw considerable progress in constructing the third production train within the Sakhalin II project.

LNG Business of Gazprom Group

DES to Asia- Pacific DES to other regions FOB

In 2015, Gazprom and Shell signed the Memorandum to construct the third production train of the LNG plant within Sakhalin II. The design phase began in December 2015. The project for the construction of the third production train has a range of competitive advantages:

• SEIC practice of interacting with buyers;
• well-developed resource base;
• proximity to key LNG consumption regions;
• available infrastructure within LNG project.

Note 1: third production train

12

Third Production Train of LNG plant, Sakhalin II project

LNG plant

• Project operator – Sakhalin Energy Investment Company Ltd.
• Projected output – up to 5.4 mln t per year
• Commissioning in 2021
• Target markets – Asia-Pacific countries
• Start of project documentation development in 2015
• DMR liquefaction technology
• Feed gas supplies from fields of Sakhalin gas production center
• Partners – Shell, Mitsui, and Mitsubishi

Project benefits

• Possibility to apply project solutions used in existing production trains
• Cost saving through use of existing gas transmission system and LNG plant infrastructure

Project status

• On June 18, 2015, Alexey Miller, Chairman of the Gazprom Management Committee, and Ben van Beurden, Chief Executive Officer of

Shell, signed the Memorandum to construct the third production train of the LNG plant within the Sakhalin II project. The document defined the project resource base and reflected the importance of moving the project into the investment phase.

• In December 2015, Sakhalin Energy Investment Company Ltd. started to develop the project documentation for the third production train
• f the LNG plant within Sakhalin II.

Третья технологическая линия

• Expansion of existing GTS
• Common infrastructure

Third production train

13

Planned Scheme for Commodity Exports from Amur GPP

Propane and butane

• Shipping products in railcars to Far East with further

transshipment via specialized terminal

• LPG will be delivered to buyers by refrigerated vessels of

VLGC class

• Commodities will be supplied to buyers on FOB or CFR

basis

• Major sales markets – Japan, South Korea, and other

Asia-Pacific countries

• Planned delivery volume – up to 1.5 mln t per year

Liquefied helium

• Shipping helium in special tank containers
• Transportation by road to logistic hub near container ports
• Delivery of containers to buyers in port
• Major sales markets – China, Japan, South Korea, Taiwan,

etc.

• Planned delivery volume – up to 60 mln m3 per year

Svobodny settlement

Japan

LPG tanks Amur GPP Gas carriers and container ships LPG terminal Helium trucks Helium hub

14

Projects in Vietnam (Geological Exploration and Production)

• Oil and gas contract for hydrocarbon prospecting, exploration and

production on terms of product sharing agreement (PSA).

• Duration – 25 years.
• Operator – Vietgazprom Joint Operating Company .
• Two gas and condensate fields discovered: Bao Vang and Bao Den.
• At present, Gazprom is studying possible ways of implementing

comprehensive project in current macroeconomic situation.

• Oil and gas contact for hydrocarbon prospecting, exploration and

production on terms of product sharing agreement (PSA).

• Duration – 30 years.
• Operator – Vietgazprom Joint Operating Company .
• Work done: 2D seismic survey, geochemical survey, electrical

exploration, construction of two prospecting wells in Than Bien and Than Dat formations, and discovery of Than Bien field.

• Integrated interpretation of geological and geophysical information,

including well-construction data, is currently underway; rapid assessment of gas reserves is being performed.

• Agreement on joining the project, dated April 5, 2012.
• Operator – Bien Dong Petroleum Operating Company.
• Designed production capacity (2 bln m3 of gas per year) is expected to

be reached in 2016.

LICENSED BLOCK No. 112 LICENSED BLOCKS No. 05-2 and No. 05-3 LICENSED BLOCKS No. 129–132

15

Projects in Vietnam (NGV Fuel and Power Generation)

 Agreement to set up PVGAZPROM Natural Gas for Vehicles project company, dated November 12, 2013.  In 2015, company was registered in Ho Chi Minh City.  Gazprom Group’s share in project – 71%.  Memorandum of Understanding on power generation signed on May 16, 2016, by Alexey Miller, Chairman of Gazprom Management Committee, and Nguyen Quoc Khanh, Chairman of PetroVietnam Board of Directors in presence of Russian and Vietnamese Prime Ministers. Production and use of NGV fuel

16

Memorandum of Understanding on power generation