Russia’s energy giant Gazprom
by Olivia Kroth
Russia’s energy giant Gazprom is supplying more gas to Asian states, mainly China. In the next decade, India and Kyrgyzstan will also receive natural gas from Russia. Gazprom has two major Asian projects: “Eastern Gas Programme” and “Power of Siberia”. In February 2015, Gazprom CEO Alexei Miller flew to Bejing to sign a new contract for the supply to China of 38 billion cubic metres of gas annually. Starting in 2015, Kyrgyzstan will also be supplied with Russian gas annually worth 35 billion rubles. Gazprom is going to deliver 60 percent of Kyrgyz gas (TASS, 13.02.2015).
In February 2015, a press release on the website of Gazprom informed: “Alexei Miller, Chairman of Gazprom, and Zhang Gaoli, First Vice Premier of the State Council of the People’s Republic of China, met in Bejing. Alexei Miller also met Wang Dongjin, Vice President of CNPC, China’s largest petroleum company, wholly owned by the state. On May 21, 2014, Gazprom and CNPC signed a Purchase and Sale Agreement for Russian gas supply via the eastern route. The 30-year contract provides for Russian gas supplies to China of 38 billion cubic metres per year.”
“On November 10, 2014, the Framework Agreement for Russian gas supplies to China via the western route followed. The eastern route leads from Yakutia and Irkutsk to China via the Power of Siberia trunkline. The western route envisages gas supply to China from Western Siberian fields”, according to the Gazprom internet site.
Alexei Borisovich Miller (Алексе́й Бори́сович Ми́ллер) was born in Leningrad, on the 31st of January 1962. He obtained a PhD in Economics in 1989 from the N.A. Voznesenskii Leningrad Finance and Economics Institute and first worked as an engineer-economist in the general planning division of the Leningrad research institute. From 1991 to 1996, Alexei Miller served in the Saint Petersburg (formerly Leningrad) Mayor’s Office under Vladimir Putin. From 1996 to 1999, he worked in the management of the Port of Saint Petersburg. From 1999 to 2000, he served as Director General of the Baltic Pipeline System. In 2000, he was appointed Deputy Minister of Energy, and since 2001, he has served as Chairman of the Management Committee of Gazprom.
Vladimir Putin and Alexei Miller:
Looking far-sightedly into the future, President Vladimir Putin said, in 2012, “The forecasts all predict that global demand for gas will grow over the coming years, above all in Asia. The liquefied natural gas market is set to become more and more important. Building modern LNG facilities takes five to seven years, sometimes even up to ten years. We have to put all the right conditions in place for developing this sector.”
Even before EU anti-Russian sanctions set in, Russia was more interested in Asian customers than Europeans. Russia’s main gas projects for the coming years are the “Eastern Gas Programme” and “Power of Siberia”. Thus, the Russian gas market is witnessing a transformation. The ties with Asia are strengthened, according to greater attractiveness and profitability.
Russia’s natural gas wealth is being developed mainly by Gazprom, a relatively young firm. On the 17th of February 2013, it celebrated its 20th birthday, but Russia’s gas wealth is very old. In 1993, the state-owned gas company was transformed into a Russian stock company with the name of Gazprom. It has started to develop huge deposits in Eastern Siberia and the Russian Far East, which cover almost 60 percent of the Russian Federation.
According to information on the Gazprom website, “the initial aggregate gas resources of Eastern Russia account for 52.4 trillion cubic metres onshore and 14.9 trillion cubic metres offshore.” The firm owns an abundant resource base. Its subsidiary and affiliated companies hold over 40 licences for the right to use subsurface resources in Eastern Siberia and the Russian Far East.
Irkutsk Region with Lake Baikal:
“Power of Siberia”: Gas production in Yakutia is based on the Chayandinskoye field with gas reserves of 1.2 trillion cubic metres. Gas production in the Irkutsk Region is based on the Kovyktinskoye Field with gas reserves of 1.5 trillion cubic metres. The length of the pipeline system will be 4.000 kilometres. Yakutia-Khabarovsk-Vladivostok: 3.200 kilometres; Irkutsk Region-Yakutia: 800 kilometres. The first section will come onstream in late 2017. Some 3.000 experts are engaged in Gazprom production facilities of Yakutia.
The “Eastern Gas Programme” is centered in the Sakhalin Region and Kamchatka Territory. Gazprom holds several dozen licenses for using subsurface resources in Eastern Siberia and the Far East: Chayandinskoye Field in Yakutia; Kovyktinskoye and Chikanskoye in the Irkutsk Region; Kirinskoye and Yuzhno-Kirinskoye offshore Sakhalin Island.
Lenin Statue in Yuzhno-Sakhalinsk:
Sakhalin is Russia’s largest island in the North Pacific, part of Sakhalin Oblast. Sakhalin’s economy relied mainly on fishing, forestry and coal mining, before Gazprom arrived as biggest employer on the island. In 2014, Gazprom increased sales of liquefied natural gas (LNG) by 120 percent to 4.5 billion cubic metres. The Sakhalin-2 gas project is yet the only source of LNG for Gazprom.
The firm is also aware of its social impact on people’s lives. Thus, the Gazprom for Children Programme includes new sports grounds in the Irkutsk region and furthermore an Aquatic Centre in the city of Irkutsk. The Gazprom for Children Programme is the company’s largest social project, to “create the environment for harmonious spiritual and physical development of children and teenagers” and to “engage the maximum possible number of children in sports activities, artistic and amateur clubs”, according to information on the Gazprom website.
These social projects in Siberia are only a small part of Gazprom’s overall sponsoring programme in Russia. The firm also sponsors the famous football club Zenit in Saint Petersburg. Gazprom is Zenit’s main shareholder. In this sense, the Russian gas giant is also a sponsor giant helping the country in many ways.
Soviet mural in Yuzhno-Sakhalinsk:
Olivia Kroth: The journalist and author of four books lives in Southern France. Her blog: