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March 21, 2013

Gazprom boosting efficiency of associated petroleum gas utilization

The Gazprom Management Committee took into consideration the information relevant to boosting the efficiency of associated petroleum gas (APG) utilization in Russia.

It was noted that APG combustion was an acute problem of today's oil and gas industry due to economic, ecological and social disadvantages and risks especially in terms of global trends towards low-carbon and energy efficient economics. Russia is still the world leader in APG combustion volumes: according to available data, this figure surpassed 17 billion cubic meters in 2012. Yet, associated petroleum gas is a valuable resource that may be utilized as an energy carrier, a raw material in gas treatment and gas chemical sectors, as well as for gas injection and oil recovery enhancement.

Since 2009 Gazprom has been taking great efforts to increase the utilization efficiency of produced APG. The company displays a steady increase in APG utilization from 59 per cent to 70 per cent in 2012.

Moreover, Gazprom promotes cooperation with independent producers in this business segment. Thus, a permanent working group is established to coordinate Gazprom's interaction with oil companies while developing and implementing joint projects on extraction, treatment and transmission of associated petroleum and natural gas from the Yamal-Nenets Autonomous Area to Gazprom's production facilities. Jointly with LUKOIL the Company is going to launch a project on processing APG from the Komi Republic at the Sosnogorsk GPP. APG supplies from independent subsurface users in the Irkutsk Region and Yakutia are provided for as part of the project for building the Power of Siberia gas transmission system.

In addition to investment projects on APG utilization, Gazprom allows priority access to its gas transmission system (GTS) for suppliers of dry stripped gas (DSG) recovered as a result of APG processing. DSG transmission volumes grow annually: Gazprom's GTS is expected to take 22.3 billion cubic meters of DSG from independent producers in 2013, that will exceed 2012 figures by 6.7 per cent (20.9 billion cubic meters).

The measures being taken by the Government encourage subsurface users to raise investments into APG utilization facilities. Starting from this year, in addition to elevated payments for APG combustion, an investment deduction system is coming into effect, according to which capital investments in APG utilization projects will be deduced from the combustion payments. In this way, the total APG utilization volume will increase in Russia.

In this context, Gazprom's specialized structural units were tasked to compile in the fourth quarter of 2013 a program of actions aimed at synchronizing the activities of Gazprom and independent APG suppliers in order to boost its utilization efficiency.




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