Gazprom

Production / Processing

Location of companies for hydrocarbon feedstock processing and petroleum derivatives & gas chemicals production

Principal scheme of the Integrated Gas Production and Transportation System in Eastern Siberia and the Far East

Volumes of natural and associated gas processing by Gazprom Group, bcm

Volumes of oil and unstable condensate refining by Gazprom Group, mln t

Raw material refined and oil gas refined products produced by Gazprom Group’s subsidiaries

Production of main types of gas- and petrochemistry products by the Sibur Holding Group

Gas marketing as a vehicle fuel, mln cu m

Russian LNG projects

Strategy

Evolving as a global energy company Gazprom is active in creating the entire hydrocarbon chain from production to marketing. At the same time, processing of extracted natural and associated petroleum gas is among Gazprom’s main business lines. Developing this direction enables the Company to receive high value-added production, as well as to diversify its business.

Gazprom aims to expand gas chemicals production, increase recovery of valuable components from gas, enhance production of advanced processing products, as well as boost loading of processing capacities. The Company plans to upgrade the existing and launch new gas processing facilities with a view to producing synthetic liquid fuels, dimethyl ether and other products.

Gazprom is currently considering new promising projects to establish gas processing and chemicals facilities in Eastern Siberia and the Far East within the Eastern Program approved by the Russian Federation Government.

26.03.2008
Board of Directors approves Company’s development strategy in gas chemicals and gas processing sector

Gas processing

Within Gazprom Group gas is processed by gas processing and gas production subsidiary companies of Gazprom, as well as Sibur Holding (including the Astrakhan, Orenburg and Sosnogorsk gas processing plants (GPP), the Orenburg Helium Plant, the Surgut Gas Condensate Stabilization Plant and the Urengoy Gas Condensate Treatment Directorate.

The total annual capacities of Gazprom’s gas processing and gas production subsidiaries dealing with hydrocarbon treatment and processing accounted for 52.5bcm of natural gas and 28.6 mln t of unstable gas condensate and oil as of December 31, 2007.

Gazprom is engaged in improving the hydrocarbon feedstock processing level, increasing the quality and expanding the range of products. Over a half of Gazprom’s gas processing investments for 2008 is projected to allocate for the Astrakhan GPP development.

In June 2007 Gazprom and the Kazakh National Company KazMunaiGaz signed the Agreement on the major principles for creating and operating within the joint venture based on the Orenburg Gas Processing Plant. Pursuant to the Agreement, the ownership stakes in the joint venture will be split on a parity basis.

In 2007 Gazprom also inked the long-term agreement for the supply gas to the Orenburg GPP from the Karachaganak field (Kazakhstan) in the amount of some 16 bcmpa, thus securing the GPP full loading and the potential capacity upgrade and expansion.

Oil refining

The Omsk Oil Refinery (19.5 mln t/yr of installed processing capacity) is the key refining company of Gazprom Neft. Moreover, Gazprom Neft controls 38.8 per cent of voting shares in the Moscow Refinery (12.15 mln t/yr of installed capacity) and 50 per cent in NGK Slavneft, the owner of two refineries: Yaroslavnefteorgsintez (installed capacity – 15.2 mln t) and the D.I. Mendeleev Yaroslavl Oil Refinery (0.3 mln t). Thus, Gazprom Neft has access to the refining capacities of the said companies in proportion to a stake held.

The primary factors pushing up the volume of Gazprom Neft oil refining and derivatives production are more efficient oil refining techniques versus its export, as well as increased demand for petroleum derivatives.

In 2007 the Omsk Refinery commissioned an automated on-spot loading station for filling railway tanks with petroleum derivatives, which reduced hydrocarbon gas emissions and loading-related losses. Pursuant to the Omsk Refinery development program until 2010, the projects have been initiated for the purpose of increasing the quality of produced motor gasolines and diesel fuels to meet the Euro-3 and Euro-4 standards.

The Gazprom development strategy stipulates lifting the volumes of hydrocarbon feedstock processing to 70-80 mln t/yr by 2020.

Associated Petroleum Gas Utilization

Expanded utilization of associated petroleum gas (APG) is supported by the governmental strategy for the increase in the share of processing industries and minimizing the environmental impact of industrial enterprises.

In 2007 Gazprom Group’s APG production totaled approximately 6.9 bcm. The share of APG utilization amounted to 49.5 per cent, including 35.7 per cent by Gazprom Neft.

Gazprom Neft and Sibur Holding are performing a joint activity aimed at bringing the APG utilization level up to 95 per cent. The Program developed in this area will be implemented between 2008 and 2010 and will require an investment of RUB17.6 bln: RUB 12 bln – into the construction of gas gathering networks and gas processing capacities, some RUB 5 bln – into the development of in-company generation, and some RUB 17.6 mln – into the audit of the existing associated gas utilization resources. Gazprom Neft will also utilize APG within a joint venture with Sibur Holding at the south licensed area Priobskoye in the Khanty-Mansiysk Autonomous Okrug. APG utilization level is planned to reach 49 per cent in 2008, 61 per cent in 2009, 88 per cent in 2010 and 95 per cent in 2011.

Gas and petrochemistry

Sibur Holding is the main producer of petrochemicals within Gazprom Group.

Based on the 2007 outcomes Sibur Holding’s input in the national production totaled 46per cent of synthetic rubbers, 35 per cent of tires (including Matador JV’s participation), 32 per cent of high-pressure polyethylene and 23 per cent of polypropylene. Additionally, Sibur Holding is producing plastics for various purposes, high-octane gasoline additives and other materials necessary for the automobile, agricultural, building and aerospace industries.

Among the promising projects being currently implemented by Gazprom is the low-density polyethylene production project at the Novy-Urengoy Petrochemical Complex. The gases received as by-products by the Urengoy Gas Condensate Treatment Directorate will serve as the resource base for the said production. On completion of the construction the scheduled polyethylene production will be at 400 thousand t per annum.

Liquefied natural gas (LNG)

LNG production is one of the most promising Gazprom’s lines of activities. Implementation of LNG projects will enable the Company to diversify its business and to expand the spectrum of ultimate production. The major benefit of LNG is its non-conventional transportation (first of all, sea-borne transportation) by contrast to deliveries by pipeline.

Gazprom is gradually developing this line of business. Since 2005 Gazprom has executed LNG spot deals using exchange operations (LNG – pipeline gas). Later on, the Company is planning to ramp up spot trade and develop mid-term gas swap operations (pipeline gas – European LNG).

Early entrance into the LNG market is ensured by taking the opportunities of entering the existing LNG projects. In 2007 Gazprom entered into the Sakhalin II project. The next stage of the strategy implementation envisages that the Company will establish its own LNG production in Russia and other countries and arrange its own LNG marketing. The Shtokman field is intended for the supply of natural gas both for LNG production and to the Nord Stream gas pipeline. Major LNG sales markets will include Asia Pacific countries, the USA and European countries.

June 18, 2009
Management Committee reviews Gazprom’s participation in gas and power generation projects in North America

May 25, 2009
Management Committee addresses issue of stepping up Gazprom LNG projects

May 18, 2009
Board of Directors addresses progress in Gazprom LNG Production and Supply Strategy

26.04.2007
Gazprom Management approves draft Gazprom strategy for LNG production and supply sector

Synthetic liquid fuel (SLF)

Synthetic liquid fuel is engine fuel made from gas rather than oil.

Processing of natural gas into synthetic liquid fuels (SLF) or, in internationally accepted terminology, the “Gas-to-Liquids” (GTL) technology, has long been an area of special interest for major petroleum and petrochemical companies. Tests have shown that utilization of GTL products instead of conventional diesel fuel when operating a bus fleet enables to cut down emissions of hazardous and greenhouse gases.

A range of new approaches to GTL technology application has lately emerged, and this is a particularly urgent matter for the countries with abundant gas reserves located at large distances from consumers in the absence of transportation infrastructure. Application of GTL technology on an industrial scale will make it possible to convert huge gas resources, previously considered economically non-viable to extract and transport, into highly marketable products.

June 18, 2009
Management Committee addresses SLF technology and industry development progress

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