Moscow hosted today the Opening Ceremony of the 4th All-Russian Oil and Gas Week. The Forum was organized by the RF Oil and Gas Industrialists’ Union backed by the RF Government, RF Federal Assembly, RF Industry and Energy Ministry and RF Commerce & Industry Chamber.

In the course of the main session Alexander Ananenkov, Deputy Chairman of Gazprom’s Management Committee delivered the Report on Russia’s Energy Strategy and Gas Industry Development Prospects.

The Report said that, under Russia’s Energy Strategy to 2020, natural gas would remain to be the backbone of domestic fuel and power demand for the forseeable future. During the period of reforms the gas industry proved to be the most sustainable sector of the Russian economy, ensuring not only half of domestic power consumption but also over 20% of foreign currency earnings and some 25% of tax revenues to the federal coffers. Over 80 million of Russia’s inhabitants are using natural gas being the linchpin of power consumption by tens of thousands of industrial and agricultural companies. Some 45% of electricity and 66% of heat power are currently being generated from natural gas.

The Report underscored that successful development of the gas industry was reliable on a solid feedstock base. Russia is the global leader as for its gas resources, counting on over 34% of the world’s overall explored reserves. Russia’s initial total natural gas reserves are valued at 236 tcm, including 13.5 and 48 tcm accounting for cumulative production and A+B+C1 explored reserves. Explored gas reserves are mainly concentrated in Western Siberia (77.4%) and the larger part of forecasted resources is calculated to be in Western and Eastern Siberia, the Far East and on the Kara, Barents and Okhotsk Seas offshore.

“Gazprom will remain to be the Russian gas industry leader for the foreseeable future covered in Russia’s Energy Strategy,” – underlined A. Ananenkov. Within the past years the Company underwent sustainable development and realized its growth potential.The Gazprom Group’s gas production accounted for 512, 521.9 and 540.2 bcm in 2001, 2002 and 2003, respectively. Last year, Gazprom’s Management Committee decided to build up gas extraction to 580-590 bcm by 2020. Said amount was fixed in the Energy Strategy.

Western Siberia will still be Gazprom’s key resource base in the foreseeable future. At the same time, said region’s largest fields are undergoing the final stage of development, with local gas production being on an annual decrease of 20-25 bcm. Over the nearest 5-6 years, said gas extraction cut down and further build-up will be offset through the development of the Zapolyarnoye and other fields of the Nadym-Pur-Taz region, with the development of the Yamal fields to follow. The Yamal Peninsula is a strategic feedstock base expected to meet Russia’s future natural gas needs. Local explored gas reserves average 11 tcm and potential production amount is calculated to account for 250 bcm/y.

Nevertheless, the Yamal fields development requires a substabtial investment inflow due to considerable distances from the existing gas main system and the need to meet a handful of crucial challenges related to the construction of wells and gas production facilities in regions with permafrost soil, on gas pipeline laying sites and in areas where innovative technological solutions are introduced to ensure eco- protection in the objectively harsh polar environment.

The Arctic offshore is projected to become another promising gas production province of Russia. This region is able to maintain a high level of domestic gas extraction in the long term. Local gas reserves and production amount are estimated at 15 tcm and over 250 bcm/y, respectively. The Shtokmanovskoye field represents a paramount facility on the Arctic shelf with the largest liquefied natural gas production complex planned to be launched here.

A. Ananenkov pointed out that Gazprom would pay special attention to the exploitation of the Far Eastern oil and gas resources. This objective seems feasible primarily thanks to this region’s extensive resource base. Eastern Russia contains 25% of the country’s initial total gas reserves, which is more than 59 tcm. Analysis of geographical and economic peculiaritirs of Russia’s east shows that a comprehensive state-led approach is needed to exploit oil and gas resources of this region.

At present, Gazprom together with Russia’s Industry and Energy Ministry is updating the Program on setting up in Eastern Siberia and the Far East an integrated gas production, transmission and supply network, taking into account potential gas exports to Asia Pacific.

The mainstay of eastern Russia’s future gas supply network is said to be the so called Central Gas Main that will unite basic fields of Eastern Siberia and the Far East, to be linked with Russia’s United Gas Transmission System. Based on the Central Gas Main, eastern Russia will see before 2020 already the construction of a United gas production and transmission system to be possibly built in several stages, allowing to optimize capital investments and have all regional basic fields “supplying” targeted markets on an uncompetitive basis.

Gazprom is being particularly focused on the gas transmission network development. At present, the Company is implementing the Comprehensive Program on upgrading and technical modernization of gas transportation facilities between 2002 and 2006. Along with the development of the transmission pipeline network, Gazprom is looking into other ways of gas processing and transmission, i.e. gas liquefaction and its transportation by special tankers; chemical processing of gas into synthetic liquid fuels with their further transportation by conventional tankers or oil pipelines; and compressed gas transmission.

Drawing up a conclusion, A. Ananenkov underscored that meeting challenges being set before Russia’s gas industry and, primarily, Gazprom by the Energy Strategy would imply joining of forces and financial resources on the part of investors, the State and global energy companies.

DIVISION OF RELATIONS WITH MASS MEDIA