The transnational Yamal – Europe gas pipeline runs across four countries: Russia, Belarus, Poland and Germany. The current overall length of the pipeline exceeds 2,000 km. There are 14 compressor stations operational, of which three are in Russia, five – in Belarus, five – in Poland and one – in Germany.
The gas pipeline construction began in 1994 close to the German and Polish borders, and first sections of the pipeline were brought online as early as in 1996.
The German end of the project was overseen by WINGAS, a joint venture between Gazprom and Wintershall. Russian gas arrives at the Malnow compressor station in the vicinity of the German-Polish border.
The Polish section of the pipe was built by EuRoPol GAZ, a joint venture where Gazprom and the Polish PGNiG are in property.
Gazprom has become the sole investor of construction work on Yamal – Europe’s Belarusian part commenced in 1997. Today, there are five compressor stations up and running – Nesvizhskaya, Krupskaya, Slonimskaya, Minskaya and Orshanskaya. Upon commissioning of the last one in 2006, Yamal – Europe reached full capacity – 33 billion m3 per annum.
The purpose of the Blue Stream gas main is to directly supply Russian gas to Turkey and bypass transit countries. The 1,213-km-long gas pipeline consists of an overland and a submerged section. It starts in the vicinity of Izobilnoye, Stavropol Krai and ends in Ankara, Turkey.
The submerged section of Blue Steam is unique in design and construction. The submerged pipeline rests on the bottom of the Black Sea at a depth of down to 2,150 m, i.e. 30% deeper than every known underwater pipeline in the world. Construction was impeded by the unfavorable landscape of the bottom and by the aggressive ground environment saturated with hydrogen sulfide.
The submerged section of the pipeline is 393 km long. The pipeline was completed in December 2002. In February 2003 commercial gas started flowing through the pipeline.
In 2008 Blue Stream transmitted some 10 billion m3 of gas. In 2010 Blue Stream is planned to reach full capacity – 16 billion m3 per annum.
South Stream is a new promising project of Gazprom and ENI (Italy). In January 2008 Gazprom and ENI set up a special purpose entity, South Stream AG, to carry out marketing research and compile a feasibility study of the South Stream project.
A submerged section of the South Stream pipeline will run across the Black Sea from the Russian coast (Beregovaya compressor station) to the Bulgarian coast. The total length of the section will be around 900 km, and the total depth – over 2,000 m. Further pipeline route will run through the Bulgarian territory. Maximum throughput capacity of South Stream will make up 63 billion m3 per annum.
In 2008-2009 intergovernmental cooperation agreements were signed with Bulgaria, Hungary, Greece and Serbia in order to construct pipeline sections in the respective European countries within the South Stream project. During the project implementation Gazprom and ENI will apply their experience gained in laying the submerged section of the Blue Stream gas pipeline across the Black Sea and utilize up-to-date technologies complying with the most stringent environmental requirements.
In 2005 Gazprom set about building the Nord Stream gas pipeline (initially – North European Gas Pipeline). The pipeline across the Baltic Sea towards Western Europe constitutes a fundamentally new export route for Russian gas to European customers. With no transit countries on its way, the new transnational gas main is distinguished by low country risk and transit costs, while assuring more reliable export supply.
The project is crucial to diversify export routes and directly link the gas transmission pipelines of Russia with the European gas network.
Nord Stream will stretch some 1,200 km across the Baltic Sea from the Portovaya Bay (Vyborg) to the German coast (Greifswald).
Being constructed by Gazprom on its own, the overland section will connect Nord Stream to UGSS.
The first joint of the Gryazovets – Vyborg overland section was welded in December 2005. The submerged section will be built by Gazprom together with its foreign partners and contractors. OAO Gazprom teamed up with BASF SE (Wintershall), E.ON AG (E.ON Ruhrgas) and N.V. Nederlandse Gasunie to implement the Nord Stream project. The partner stakes in Nord Stream AG – operator of the project – are split as follows:
Representing critical significance for Europe, the Nord Stream project has been given by the European Union the Trans-European Gas Network status. The Russian blue fuel to be carried by the pipeline could be transported from Germany to Denmark, the Netherlands, Belgium, the UK and France.
The major gas customers of the first pipeline string will be as follows: WINGAS (9 billion m3), Gazprom Marketing & Trading (4 billion m3), E.ON Ruhrgas (4 billion m3), Gaz de France (2.5 billion m3) and DONG Energy (1 billion m3).
The final technical concept for the project was adopted in October 2006.
Stage 1 of project implementation is currently underway – the construction of one string with a throughput capacity of some 27.5 billion m3 per annum. With the construction of the second string Nord Stream’s throughput capacity will double to 55 billion m3 per annum.
The first string is planned for commissioning in 2011, the second one – in 2012. The budget of the Nord Stream project amounts to EUR 7.4 billion.
In 2007-2009 Nord Stream AG held a bidding process for the supply of large diameter pipes to construct the first string of the gas pipeline, manufacturing of reinforced concrete coatings and rendering of pipe laying services. Field studies were performed, detailed environmental impact assessment of the gas main being built was prepared. Public consultations on the impact assessment reports are ongoing. They are to be held until mid-2009. The active phase of the pipeline construction is to start before April 2010.
Representing significance for entire Europe and constantly attracting public interest, the Nord Stream project implementation is covered by mass media in detail. Complete information on the project may be found at www.nord-stream.com.
As the groundwork for sustainable gas supply at the required level, Gazprom is looking to tap into new fields in various regions, for example, the Yamal Peninsula and the Arctic seas offshore. All these areas have exceptionally challenging climatic and geological conditions. Gas will cost much more to extract there compared to other regions.
Therefore, Gazprom is seeking to add natural gas of Central Asian origin to its export portfolio in order to enhance the effectiveness of trading operations.
In 2008 Gazprom transited over 61 billion m3 of gas originating in Central Asia.
Cooperation between Gazprom and Central Asian gas producers began in 2001 and now covers: gas purchases and transit across the territory of Central Asia countries, exploration and production, gas processing at Russian facilities as well as fuel and energy infrastructure creation and acquisition in Central Asia.
So far, Gazprom has formed the strongest partnership in the region with Kazakhstan’s National Holding Company АО NK KazMunayGas. Under the Intergovernmental Gas Deal signed by Russia and Kazakhstan on November 28, 2001, Gazprom and KazMunayGas established in June 2002 a 50/50 joint venture, KazRosGaz, to market Kazakh gas internationally. In November 2005 OAO Gazprom and AO Intergas Central Asia (a gas transporting subsidiary of KazMunayGas) signed a set of mediumterm contracts for the transportation of Russian and Central Asian natural gas through the Kazakh territory from 2006 to 2010. The contracts provide for utilization of the Central Asia – Center (CAC) and Bukhara – Urals gas transportation systems.
In July 2006 Kazakh and Russian Presidents signed the Joint Declaration to promote the long-term cooperation when processing and marketing gas from the Karachaganak gas and condensate field. Within the scope of the Declaration, OAO Gazprom and AO National Company KazMunayGas entered on June 1, 2007 into the Agreement on the Major Creation and Operation Principles for a Joint Venture on the Platform of the Orenburg Gas Processing Plant (Orenburg GPP). The joint venture will be focused on providing processing services for hydrocarbon feedstock of the Orenburg Oblast and Karachaganak field on a processing fee basis. Creating the joint venture on the platform of the Orenburg GPP and boosting Karachaganak gas processing volumes to 15 billion m3 will help secure the full loading of GPP’s all existing and newly upgraded capacities in the long run. The bulk of the processed gas will be destined for Kazakhstan’s internal market and the remaining part – for export purposes.
In 2002 Gazprom signed the Strategic Agreement with Uzbekistan’s National Holding Group Uzbekneftegaz to become partners in the gas industry. The Agreement provides for long-term purchases of Uzbek gas from 2003 to 2012. In summer 2003 the Uzbek Government appointed Gazprom as export operator for all Uzbek gas exports.
In September 2005 OAO Gazprom and AK Uztransgaz (a sub-holding company of Uzbekneftegaz) signed the medium-term Agreement to transport natural gas through Uzbekistan from 2006 to 2010. The Agreement was signed with a view to transporting Turkmen gas via the CAC gas transmission systems and Bukhara – Urals pipeline, both of them crossing the territory of Uzbekistan.
A pilot project for Gazprom in Uzbekistan’s upstream sector was rehabilitation of gas production from the Shakhpakhty field. The cooperation in this area is progressing under the Production Sharing Agreement terms. A further stage of cooperation may see the development of a bigger gas exploration and extraction project for Uzbekistan’s Ustyurt region.
In April 2003 Russian President Vladimir Putin and his Turkmen counterpart Saparmurat Niyazov signed the 25-year Agreement for Russia and Turkmenistan to partner up in the gas industry, effective from January 1, 2004 to December 31, 2028. The companies in charge of putting the Agreement into action are OAO Gazprom and Turkmenistan’s national gas trader Turkmenneftegaz. Gazprom export and Turkmenneftegaz followed up with a longterm contract, spanning the same time period, for Turkmenistan to supply natural gas to Russia.
In May 2003 OAO Gazprom and the Government of the Kyrgyz Republic signed the long-term Agreement of Cooperation in the Gas Industry for the period of 25 years.
In January 2006 OAO Gazprom and the Government of the Kyrgyz Republic signed the Memorandum of Intent for the establishment of a Russian-Kyrgyz joint venture in the oil and gas industry.
In May 2007 OAO Gazprom and the Government of the Kyrgyz Republic signed the Agreement on the Common Principles for the Geologic Survey of Subsoil Resources in order to lay the cornerstone for the joint venture operation. In 2008 under the Agreement the Company was granted licenses for geological survey of Kugart and Eastern Mailu-Suu IV areas. In July 2008 the Stepwise Program for Geological Survey of Subsurface Resources in the said areas was approved and in December 2008 Gazprom accomplished geological survey work.
Cooperation between the Government of the Republic of Tajikistan and OAO Gazprom is regulated by the long-term (till 2028) Agreement on Strategic Cooperation in the Gas Industry of May 15, 2003.
In June 2008 the Agreement on the General Principles of Geological Survey of Oil and Gas Prospects in the Republic of Tajikistan (Rengan, Sargazon, Sarykamysh, Zapadny Shaambary) was signed. ZAO Gazprom zarubezhneftegaz is the Gazprom subsidiary operating the Company’s projects in Tajikistan. In early 2009 seismic exploration ceased at the Sargazon prospect and commenced at the Sarykamysh prospect in June 2009.
Thus, today there is a strong contractual and legal framework for the strategic cooperation with all of the countries in the region.
Central Asian gas is delivered to consumers via a system of transit pipelines named Central Asia – Center (CAC), built in 1967-1985 through Turkmenistan, Uzbekistan and Kazakhstan up to the Alexandrov Gai compressor station in the Saratov Oblast.
Additional opportunities to transport natural gas from fields in the Caspian Sea and other locations in Turkmenistan and Kazakhstan to Russia are provided by the Pre-Caspian gas pipeline. The Agreement on the general cooperation principles for construction of the pipeline was signed by OAO Gazprom, AO NK KazMunayGas and State Concern Turkmengaz in September 2008.
The Pre-Caspian pipeline will run from the Belek compressor station in Turkmenistan along the Caspian Sea shore through Kazakhstan to Russia’s Alexandrov Gai compressor station. The total length of the gas main will be around 1,700 km, of which over 500 km will run through the territory of Turkmenistan and some 1,200 km – through Kazakhstan.
The assumed volume of gas transportation through Kazakhstan’s section of the Pre-Caspian pipeline will make up to 40 billion m3 per annum.
As of December 31, 2008 Gazprom Group held 19 subsoil licenses for prospecting, exploration and production of hydrocarbon feedstock abroad, including five licenses for geological survey, exploration and production, and 14 ones – for geological survey of subsoil resources.
In late 2000 Gazprom, the Indian Government and Gas Authority of India Ltd (GAIL) entered into the Production Sharing Agreement (PSA) on block 26 in the Bay of Bengal. The block is located within India’s continental shelf and belongs to the Bengal Petroleum Basin.
The block area is 10,425 km2, water depth – 40 to 150 m, prospective oil and gas horizons depth – up to 6,500 m. The area is geologically challenging.
ZAO Gazprom zarubezhneftegaz acts as Gazprom’s agent in implementing the Agreement.
Within stages one and two of the Minimum Exploration Work Program for block 26 two prospecting wells were drilled. Seismic prospecting is underway so far, and in autumn 2009 an exploration and appraisal well is planned to be drilled with a target depth of 5,000 m.
Currently, Vietgazprom, a joint operating company set up by Gazprom and Vietnam Oil & Gas Corporation Petrovietnam pursuant to the Contract dated September 11, 2000, is performing prospecting activities on block 112 offshore the Socialist Republic of Vietnam. The Contract contemplates searching for, exploring, producing and marketing hydrocarbons.
In August 2007 a commercial gas inflow was reported during the first exploration well testing in Bao Wang as part of the prospecting activities on block 112 offshore Vietnam in the Gulf of Bac Bo. The discovered field contains gas condensate.
In May 2008 Gazprom and Petrovietnam signed the Agreement for Further Cooperation providing for geological exploration and further development of blocks 129, 130, 131, 132 offshore Vietnam. Vietgazprom will be the project operator to develop the blocks.
In September 2005 Gazprom won the tender to explore and develop two areas of offshore gas fields (Urumaco I and Urumaco II) as part of stage A of the Rafael Urdaneta project. The project deals with gas reserves of 736 billion m3 divided among 29 blocks.
The Government of Venezuela issued 30-year licenses for Gazprom to explore and develop natural gas fields.
The year 2006 saw the launch of geological prospecting activities to be conducted during four years. Abiding by the Urumaco I and Urumaco II tender requirements, Gazprom established two joint stock companies: UrdanetaGazprom-I SA and UrdanetaGazprom-II SA.
In May 2007, as part of the license conditions, phase one of geological exploration was completed and the decision was taken on exploration wells drilling. Developing the cooperation with Petroleos de Venezuela SA (PdVSA), Gazprom signed the agreements providing for the Company’s participation in the certification and evaluation of Ayacucho III block reserves (Orinoco Oil Belt), as well as the Memorandum of Understanding on the Blanquilla Este y Tortuga project embracing natural gas exploration and production offshore Venezuela, its supply to the domestic market, as well as liquefaction and export.
During 2006-2007 based on bidding outcomes Gazprom obtained the right to explore and develop hydrocarbons on the promising licensed blocks 19 (Mediterranean offshore) and 64 (300 km south of Tripoli).
In December 2007, following the asset swap deal with BASF, OAO Gazprom acquired a 49% stake in Libya’s oil concessions C 96 and C 97 owned by Wintershall. These concessions are governed by the agreements effective till 2026. The concessions include nine fields with As Sarah as the largest. Current oil production is about 6 million t per annum. Geological exploration is still in progress and work is underway to maintain the current production level at concession C 96 and to boost production at C 97.
As part of its Strategic Cooperation Agreement with Italy’s ENI, Gazprom is negotiating the possibility of swapping assets, including assets in Libya.
In December 2008 Gazprom Netherlands B.V., a member of Gazprom Group, was announced the winner of the hydrocarbon exploration and development bidding for the onshore El Assel area located in Algeria. Pursuant to provisional estimates, the recoverable oil reserves of the area average 30 million t.
Gazprom is now looking into its potential involvement in oil and gas projects in Bolivia, Egypt and Iran.
