Alexey Miller, Chairman of the Gazprom Management Committee moderated today an inter-disciplinary meeting at the Gazprom headquarters on boosting the use of natural gas vehicle (NGV) fuel. Taking part in the meeting were senior officials from specialized Russian ministries, leading oil companies such as Rosneft and LUKOIL, large producers of motor vehicles: KAMAZ, GAZ Group, Machinery & Industrial Group, Yo-AUTO and Russian Railways, executive authorities of Russian constituents, structural units and subsidiaries of Gazprom.

The meeting participants addressed the key aspects of the NGV fuel market advancement in Russia. Special attention was paid to production of gas motors and commercial output of vehicles running on natural gas, the role of oil companies in expanding the gas filling stations network as well as to the significance of vehicles conversion to gas for Russian regions.

The meeting emphasized that natural gas use as a motor fuel was extremely significant for the entire society.

In this context, the greatest advantage of natural gas if compared to any kind of motor fuel is its environmental friendliness. Conversion of vehicles from gasoline to natural gas reduces polluting emissions by approximately five times. This is especially important for big cities, where motor vehicles cause most of the air pollution.

Economic benefits of gas fuel use are also very important. Its cost for Russian consumers is regulated by law. For instance, the average Russian price of one cubic meter of NGV fuel (roughly commensurate with one liter of conventional fuel) is nowadays around RUB 9. Large-scale conversion of motor vehicles to natural gas will lead to reduction of road transport costs due to the difference in the value of gas and gasoline, which will bring about cost reduction in all sectors of economy and community life, trigger industrial growth and improve living conditions.

Therefore, Gazprom set the task of significantly expanding the NGV business in Russia and creating a huge gas sales market on its basis to be fed with Gazprom's gas. At present, the Company is addressing new approaches that may be applied in this kind of business. Preparations are being made for developing a business scheme that will enable the Company to essentially boost the sales of NGV fuel.

Speaking at the meeting Alexey Miller said: “Russia is number one country on the global scale by gas reserves, but it, unfortunately, takes only the 20th place by the use of NGV fuel. Gazprom has a track record of dealing with NGV fuel in Russia through its subsidiaries, but the priority nowadays should be given to building a system for developing the NGV fuel market that would cover the entire country by uniting the efforts of all stakeholders. We believe there are all preconditions for that.

Wider use of NGV fuel in Russia will be a part of the Russian Regions Gasification Program, and Gazprom has established business ties with nearly all of the Russian constituents within this Program. We propose signing with them Programs for Gasification and Gas Supply starting from 2013, and these programs will include a mandatory provision on NGV fuel. Thus, we could achieve a new quality of NGV fuel market development in Russia starting from 2013. First of all, the development efforts should be taken in the regions having cities with millions of people.”

While discussing the organizational and financial measures of NGV fuel promotion the meeting participants emphasized that it was high time to shape the relevant legal framework for state regulation of motor vehicles conversion to natural gas and secure synchronized construction of a gas filling network to be accompanied by an expanded marketing of refined products.

Based on the meeting results, Gazprom's specialized structural units were tasked to shortly draft the Russian Regions Gasification Program's typical section concerning the NGV fuel market development.

An order was also given to hold a similar inter-disciplinary meeting this autumn to discuss the issues of the NGV market development in Russian regions.

Prior to the meeting the participants visited an exhibition of natural gas vehicles at Gazprom's premises. The exhibition displayed 17 units of motor vehicles: LIAZ and MAN buses, a KAMAZ dump truck, Volkswagen Caddy EcoFuel, Mercedes E 200, Yo-Concept, Yo-Crossover passenger cars as well as equipment for a natural gas filling station.

Background

Natural gas use as a motor fuel is rapidly expanding around the world and nowadays involves more than 80 countries. The average annual increase in gas-powered vehicle fleet makes up 26 per cent. The world's leading vehicle producers turn out more than 80 models of gas-powered cars. The Russian fleet of gas-powered vehicles numbers some 86 thousand units (global vehicle fleet is comprised of some 15 million units).

Nowadays, 242 compressed natural gas (CNG)  filling stations are operating in 58 Russian regions, with 207 owned by Gazprom. Besides, another CNG filling station is being built in the Kaliningrad Region.

In 2011, 361.6 million cubic meters of compressed natural gas was sold through Russian CNG filling stations, which is 16.6 million cubic meters more than in 2010 and accounts for only 18 per cent of the design capacity of Russian CNG filling stations.

According to the 2011 results, the most developed regional markets are in the Stavropol and Krasnodar Territories, the Sverdlovsk, Chelyabinsk, Rostov and Tula Regions and the Republic of Bashkortostan: they accounted for 52.1 per cent of the total CNG sales in Russia.

Gazprom entered into cooperation agreements on natural gas use as a motor fuel with the Kaluga, Orel and Penza Regions. Regional regulatory acts aimed at developing local CNG markets were adopted in Moscow, the Stavropol Territory, the Sverdlov, Tambov, Kaluga and Saratov Regions and the Republic of Tatarstan.

At present, gas filling capacities are being promoted in Eastern Siberia and the Far East. CNG filling stations have been built in Bratsk. A methane filling station is being designed in Petropavlovsk-Kamchatsky. In the future, CNG filling stations will be built in Khabarovsk, Blagoveshchensk, Vladivostok and Yuzhno-Sakhalinsk.

Yo-Mobile is specific for its hybrid propulsion system (internal combustion engine and generator). Therefore, the engine may run on gasoline or on natural gas. Gazprom is interested in this vehicle in view of the NGV fuel market development as well as the gas use for production of composite materials for this vehicle.