October

Transcription

October

BLUE FUEL
October 2013 | Vol. 6 | Issue 5
BLUE FUEL
Gazprom Export Global Newsletter
Alexander Medvedev: Sakhalin—
Capturing Opportunities in a
Changing Energy Market
Page 5
Blue Corridor NGV Rally 2013:
New Fuel and Technologies
Around Baltics
Page 13
Russia and Germany’s 40 Year
Natural Gas Relationship—An Energy
Industry Success Story
Page 19
www.gazpromexport.com | [email protected]
+7 (499) 503-61-61 | [email protected]
© Gazprom Export
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www.gazpromexport.com | [email protected] | +7 (499) 503-61-61 | [email protected]
Ý Ê Ñ Ï Î Ð Ò
BLUE FUEL
Gazprom Export Global Newsletter
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In this issue
To Our Readers: Gazprom’s Environmental Policies are
Safe and Sound on Land and at Sea........................................Pg. 4
Alexander Medvedev: Sakhalin—Capturing Opportunities
in a Changing Energy Market....................................................Pg. 5
Q&A: The Risks Associated with the Belated
Refilling of Europe’s UGS Facilities..........................................Pg. 9
LTC and Hub Prices’ Tango Tangling .....................................Pg. 11
Visitors from Japan.................................................................Pg. 12
Blue Corridor NGV Rally 2013: New Fuel and
Technologies Around Baltics..................................................Pg. 13
Blue Corridor NGV Rally 2013................................................Pg. 14
GAZPROM Germania Enters the
Decentralized Energy Supply Business..................................Pg. 15
Natural Gas for Transport: GAZPROM Expands
Operations in Germany...........................................................Pg. 16
GM&T Unveils Its New LNG Carrier ‘Lena River’...................Pg. 17
Gazprom Energy Signs Long Term Hydropower
Offtake Deal With Infinis.........................................................Pg. 18
Vemex Opens a CNG Gas Fueling Station on the
D5 Highway in the Czech Town of Králův Dvůr......................Pg. 19
Russia and Germany’s 40 Year Natural Gas Relationship—
An Energy Industry Success Story.........................................Pg. 19
Energy Security as an Important Element
of National Security.................................................................Pg. 22
GAZPROM Day at Europa-Park..............................................Pg. 23
Gazprom Export and Natalia Vodianova Foundation..............Pg. 26
Publishers Contact Info:
+7 (499) 503-61-61 | [email protected]
To Our Readers:
Gazprom’s Environmental Policies are
Safe and Sound on Land and at Sea
Gazprom is the world’s largest gas producer with most of its products coming
from Russian soil. Our operations are focused on the environment and bring great
responsibility to carry out the work in a sustainable way; for the company, the people,
and for nature. The underlying principle of our business is sustainability, which is a
combination of economic growth and maximal conservation of nature. Preserving the
environment in which we operate for future generations is one of our highest priorities.
We adhere to the highest international standards and have had an extensive
environmental policy in place since 1995. This policy, which we continuously update and
adapt, establishes an integrated approach to environmentally responsible action across
the company and its subsidiaries.
As a result, Gazprom invested a little over $1 billion in various environmental programs
in 2012—a 43% increase compared to 2011! Activities include forest protection and
reforestation, re-cultivation of land, energy efficiency improvements, and fishery
restoration.
Moreover, 2013 is the Year of the Environment at Gazprom. In this context we have
organized multiple events aiming at reducing our environmental footprint, such as
planting 100,000 trees and clearing 1,000 hectares of land from debris. We also hope to
turn 900 cars and buses into gas-fueled vehicles and replace gas/diesel-fueled ones.
To achieve CO2-emission reduction in our own operations we are investing about $700 million
between now and 2015 to repurpose associated gas. As a result, emissions from flaring were
reduced by 40% y-o-y in H1 2013 and we aim to reach 60% by the end of the year.
At sea, Gazprom has put in place specific measures for environmental control and
monitoring of the area’s air quality, geological environment, subsurface waters, and biodiversity. In any case, we always use the newest technologies and adhere to the highest
industrial, environmental, and safety standards.
International cooperation is also one of our top priorities. Together you can achieve more,
which is shown by our regular exchanges and joint R&D activities on climate change and
GHG emission reduction with peers such as E.ON, GDF Suez, and Gasunie.
Last but not least, we welcome our Blue Fuel readers to look at Gazprom’s environmental
reports, published each year and publicly available on our website—
http://www.gazprom.com/nature/environmental-protection/#water
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BLUE FUEL
Alexander Medvedev: Sakhalin—Capturing Opportunities
in a Changing Energy Market
(Excerpts from a speech by Deputy Head of Gazprom Management Committee and Director General of Gazprom Export at the
Sakhalin Oil and Gas Forum 2013)
Sakhalin has secured a privileged place in Gazprom Group’s
strategic plans for many years to come. This is the case
thanks to the wealth of natural resources, the availability of
skilled labor and investments attracted to this region that are
already yielding results.
In contrast to pessimistic scenarios on future global oil
production that predict an early end, our country’s natural
gas reserves are in abundance. Russia’s conventional
gas reserves are estimated to be no less than 250 trillion
cubic meters of the total global volume of 600-650 trillion
cubic meters.
Estimates for global unconventional gas—including gas from
shale, sandstone and coal seams—vary greatly. The U.S.
Energy Information Administration estimates the amount to be
8 trillion cubic meters, whereas Russian experts give a much
higher figure. However, no major integrated assessment
of this segment has been carried out yet. It is worth noting
that at least 90% of Russia’s non-conventional reserves are
located in eastern Russia—mainly in the Urals and Siberia.
Accessing previously hard-to-recover unconventional
gas reserves—made possible thanks to improvements in
hydraulic fracturing technologies in the U.S.—is perhaps the
most significant change in the global energy sector in recent
years. This change forced even the strongly ideological
leaders in the European Union to abandon the reference to
gas as a transit fuel and raise its status to a fuel of choice.
Meanwhile, gas in Asia was never subjected to a similar
‘discrimination.’ Unlike in the European Union, renewable
energy sources are not subsidized in Asia without proper
consideration of acceptable rates of return and an impartial
assessment of the overall effectiveness of such a policy.
Shale gas has indeed started a small revolution in the U.S. In
2010, it had only a 2% share in total gas production. In 2012,
its share rose to 37%. Now, there are plans to spread this
revolution and turn the U.S. into a major gas exporter, with
access to the markets in Europe and Asia-Pacific region.
When analyzing this scenario, it is necessary to take a
number of important factors into account. Let’s start with the
fact not all who want to participate in this export business
have received the regulatory green light. Furthermore,
there is also no consensus within the business community
in the U.S. over plans to export shale gas. For example,
multinational chemical corporation Dow Chemical is strongly
opposed to shale gas exports, arguing that manufactured
goods should be exported rather than raw materials. Dow
Chemical believes that unlimited gas exports will be a fasttrack to the enrichment of only a narrow circle of energy
companies. In response, energy major ExxonMobil, which
intends to build an LNG plant in Texas, stated that attempts
by Dow and other companies to limit gas exports are
“opportunistic” and “protectionist.”
Considering its low cost in the domestic U.S. market, natural
gas may begin to be seen as the primary energy source for
Continues on page 6
5
Alexander Medvedev: Sakhalin—Capturing
Opportunities in a Changing Energy Market
Continued from page 5
shale gas exports to Europe and more likely
increase the capacity of the North American
gas market as a whole. We at Gazprom do
agree that the Americans would be able to
export gas, but there are two key questions:
what would be the actual volumes and at
what price would they be sold?
power generation and also motor fuel, either
directly or in the form of synthetic diesel fuel
produced through the GTL technology. This
technology could become the heart of the
future gas industry and at the same time
increase competition between oil and gas
in the fuel market. Such competition would
also narrow the gap between contract gas
prices tied to an oil-products basket and spot
market prices.
Widespread use of gas as a motor fuel in the
U.S. would undoubtedly limit the volume of
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Currently, shale gas production in the U.S.
is profitable only because of the high price
of liquid fractions that are produced together
with shale gas. It is unclear how long this
situation will last. Due to the low price of gas,
drilling for dry gas has almost stopped in
the U.S. At some point, shale gas which is
produced as a by-product of the production
of shale oil and condensate, will not meet
demand, and the price will go up. But once
the domestic price exceeds $5 per million
British thermal units (MBtu), supplies from
the U.S. to Europe will become unprofitable.
Supplies to Asian premium markets are
likely to be profitable. However, considering
the cost of liquefaction, transportation,
regasification and delivery to the end
consumer, the price of U.S. liquefied shale
gas will not be as low as some may think
given the low price of gas in the United States
BLUE FUEL
The delivery of our pipeline gas to China is a key pillar of
Gazprom’s strategy for the Asia-Pacific region. Sometimes,
it seemed that this story was endless like the chronicles of the
five thousand years of Chinese civilization. But as they say, a
journey of a thousand miles begins with a single step. At our
recent negotiations with China National Petroleum Corporation
(CNPC), we were able to agree on a number of non-price
parameters—supply commencement dates, volume, gas
volume increase dynamics, preliminary conditions for entry into
force of the contract, take-or-pay level, minimum payment for
gas volumes not taken and other conditions. We are looking
forward to agreeing on the price before the end of the year and
signing a contract for annual supply of 38 billion cubic meters
via the Eastern route from 2018.
to date. So, Gazprom’s LNG will retain its competitiveness,
considering the initial cost advantage.
The Asia-Pacific markets, whose appeal needs no
confirmation, are showing an increasing preference for
natural gas. The average annual growth rate of natural gas
consumption in the Asia-Pacific region currently stands at
3.3%, which in the timeframe until 2035 will lead to an additional
demand for 660 billion cubic meters. The main consumers are
China, India and several other Asian “dragons.”
We all know that there is no single market for natural gas. Natural
gas prices in European markets are higher by an average of $8
per MBtu than at the Henry Hub, the main distribution hub in the
U.S. The prices are higher by $13 per MBtu in Japan and this
gap is in fact observed almost across all of Asia.
Given the economic growth dynamics in the Asia-Pacific
region, demand for imported energy, according to consensus
estimates, will slowly but surely increase despite its relative
current slowdown. The gap in prices compared to other
regions will remain and thus secure the Asia-Pacific region’s
position as a premium market.
The somewhat difficult position of our partners is the reason
why these negotiations have been going on for so long.
China needs imported gas but the country still has regulated
prices for domestic consumers that are significantly below the
market prices in Asia. State-owned companies, for example,
are buying LNG at market prices indexed to oil, and then
the state partially compensates importers for the difference
between the purchase price and the selling price. As a result,
CNPC made a loss of $2.4 billion in the first quarter of this
year alone from the difference between imported gas prices
and domestic gas tariffs. We can all agree that a loss is a bad
incentive for import growth.
Beijing agrees to raise domestic gas prices to economically
reasonable levels, but is forced to do it gradually in order not to
trigger inflation and social unrest. Since July 2013, gas prices
for industrial consumers have risen by an average of 15%.
While this is not enough to make the Chinese market fully
attractive to exporters, it is a step in the right direction. In our
opinion, all depends on how fast China decides on domestic
gas price levels for when Russian supplies are to begin.
Discussing pricing in the Asia-Pacific region also requires
a closer look at gas hubs and spot trading. Asian countries
Continues on page 8
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Alexander Medvedev: Sakhalin—Capturing
Opportunities in a Changing Energy Market
are looking at European hubs and studying
spot trading. There is an opinion that using
spot prices linked to, for example, prices at
the American Henry Hub, may result in lower
prices. However, this perception could not
be further from the truth. The continental
European gas market in its current form allows
for potential price and volume manipulations,
however, pegging gas prices to that of oil
prices helps prevent such manipulations. A
gas price determined by a formula linked to a
third commodity (or a basket of commodities),
does not leave the supplier any chance of
influencing the price for profit. Let’s not forget
that oil prices are not determined by Gazprom
but by the global market. Moreover, OPEC,
of which Russia is not a member, has great
influence on oil prices.
In the U.S., Henry Hub prices fluctuate around
$3 to $4 dollars per MBtu. These prices do
not cover the costs incurred by shale gas
producers, which are almost twice as high as
spot prices. It is not a mere coincidence that
American companies are focusing on shale oil
drilling and consider gas only as a by-product.
This situation is not sustainable and does not
reflect market realities, thereby making an
adjustment of Henry Hub prices inevitable.
In Gazprom’s long-term contracts, we will
continue to adhere to the tried and tested
Groningen (Dutch) model of oil indexation.
This model allows us to secure the investment
cycle and reflects the balance of interests
between the producer and the buyer.
Finally, let’s take a look at the balance of
power in view of the competition between
LNG producers in the Asia-Pacific region.
In 2012, the supply volumes in the LNG
market did not change compared to the
previous year (247 million tons). Last year’s
increase in production volumes was due to
the commissioning of a new LNG plant in
Australia in 2012 at a time when there was
a decline in production at existing plants in
Indonesia, Yemen and Egypt (mainly due to
well-known force majeure events). Besides,
2013 saw a considerable delay and change in
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the configuration of the Browse LNG Project.
We do not rule out that such a decision may
be taken for other Australian projects.
In the next two years, the Asia-Pacific market
is likely to retain its premium status since the
gas consumption dynamics remain positive
and no new LNG volumes are expected to
emerge. The total increase in LNG supplies
by 2015 is estimated at no more than 5-10
million tons. Now and in the short-term,
insufficient LNG supplies and infrastructure
constraints will create opportunities for
high-price contracts and a comfortable
environment for sellers. By 2015-2016, a new
wave of LNG volumes from projects that are
currently under construction is expected.
However, considering the growing demand
for energy in the Asia-Pacific region, this
additional gas is likely to be sold out instantly
without creating any surplus. But this will not
negate stiff competition.
With all these developments in mind,
Gazprom continues to strive to diversify our
customer base. For the time being, twothirds of our revenue comes from the sale of
pipeline gas in Europe. But we truly believe in
“Eurasianism.” To this end, much of Gazprom
Group’s investment expenses for 20132030 will be channeled towards creating an
energy bridge between the two markets of
Europe and Asia. Asian markets will become
an equally important market for us like the
European market and the fast-growing
Russian market, serving as a third pillar of
Gazprom’s success as the leading global
supplier of natural gas.
BLUE FUEL
Q&A: The Risks Associated with the Belated Refilling of
Europe’s UGS Facilities
Vladimir Khandokhin, Head of the Logistics and Gas Purchases Department, Gazprom Export
exceed 10.5 billion cubic meters, while the August 2012
figures remained below 9.5 billion cubic meters.
BLUE FUEL: Does it mean that the high demand for Gazprom
gas to pump it into UGS facilities is dictated solely by the fear of
severe cold weather?
BLUE FUEL: The coming winter in Europe, especially the first
quarter of 2014, could be marred by possible disruptions in gas
extraction from underground gas storage (UGS) facilities and
even a supply crisis? Do you share such pessimistic views?
VLADIMIR KHANDOKHIN: I am familiar with warnings of this
kind. Advocates of such forecasts anticipate a repetition of
the cold snap that occurred in February 2013 in Europe.
They are apprehensive of a situation when one or more
suppliers might limit deliveries or even completely halt them.
The missing volumes might not be compensated at the
regulated energy markets if there will be physically no gas in
the European underground storage facilities.
These concerns are justified to a certain extent as the
cold winter and spring of this year led to protracted gas
withdrawal from underground storage facilities and,
therefore, the replenishment of the consumed volumes
started later than usual, while in some countries and some
regions, underground storage tanks, to the best of our
knowledge, were literally exhausted.
BLUE FUEL: So what do we do? Or rather, what has already
been done?
VLADIMIR KHANDOKHIN: The storage facilities should always
be filled by the beginning of a new winter season when
pipelines start to work at full capacity to meet the increased
demand. That is the reason why in recent months we have
witnessed gas injection into UGS at an accelerated pace.
According to statistics, purchase of Gazprom gas by our
major partners in the first eight months surged significantly—
by 13.3 billion cubic meters, which is a 14% increase when
compared to last year. The summer months were the most
fruitful for us—we pumped and sold 12.7 billion cubic meters
of gas in June, 13.5 billion in July, and 12.9 in August. For
comparison, deliveries in June and July of 2012 did not
VLADIMIR KHANDOKHIN: Not at all. In addition to the shortterm weather factor, there is a longer-term trend. Europe
is experiencing declining domestic production and supply
of gas from other importers because of depletion of
conventional reserves. Norway can still restore production,
although its supplies to Europe, including LNG supplies,
decreased by 8.8% for the first half of the year. The United
Kingdom (down by 6.8% over the same period) and Algeria
will hardly manage to reach the same production levels.
The Algerians recently agreed with their Italian customers
to reduce supply volumes. According to statistics, the first
half of the year recorded a 9.5% fall in gas (including LNG)
supplies from Algeria, and a 7.2% fall from Libya.
Qatar is reducing its supply of liquefied natural gas (LNG) to
Europe and redirecting its cargo to the premium markets in
Asia. In total, LNG supplies to Europe in 2012 fell by 30%.
This year is expected to record further decline. In the first
six months, Qatari LNG deliveries fell by 21.6%. The only
exceptions within this downward trend are Gazprom Group
and gas producers from the Netherlands, who were able to
increase supplies to the European markets.
Redirecting cargoes to premium destinations could be a
reversible phenomenon but only if Europe becomes a more
attractive market for suppliers. The political and social
instability witnessed in the Middle East and North Africa
probably will not end soon. Perhaps, it is even gaining
steam. Note also that in Europe, the gap between demand
and domestic production will only widen. Europe’s demand
for additional imported gas will reach 145 billion cubic
meters by 2025 and 185 billion cubic meters by 2035. Taking
into account all these circumstances, it is easy to see that
only Russian gas may be considered by the European
consumers as a guarantee of energy security.
BLUE FUEL: What are the chances that pumping gas into the
European underground gas storage facilities will be successful
despite the failure to meet schedules?
VLADIMIR KHANDOKHIN: I can confirm that Gazprom Export
has made every effort to ensure that this traditional seasonal
Continues on page 10
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Q&A: The Risks Associated with the Belated Refilling
of Europe’s UGS Facilities
operation is carried out efficiently and within
a very short time. The situation with all the
underground storage facilities, where we
are renting capacities to ensure reliability
and flexibility in performing our long-term
contracts on gas supply to our customers,
has remarkably improved in the second half
of September. For example, in Germany,
which is our main market, underground
storage facilities Rehden and Katharina
are already 98% and 90%, respectively,
full. Austrian underground storage facility
Haidach has also been filled by 90%. In
Serbia, underground storage facility Banatski
Dvor is 80% full. Pumping is going according
to plan and we expect these UGSs to be
filled up by the end of October.
BLUE FUEL: Does it mean that European
consumers have nothing to worry about
this winter?
VLADIMIR KHANDOKHIN: There are
certainly good reasons for Europeans to
remain optimistic. As of the second half of
September, UGS facilities in Europe were
filled by an average of 86% or 65.3 billion
cubic meters. In Germany, this figure reaches
91.6% or 18.4 billion cubic meters. In the
British Isles, it is even up to 95%, although
some gas was already withdrawn from the
UGS facilities in September due to uneven
supplies from Norway. The situation is worse
in France. As of September 24, underground
gas storage facilities were less than 69% full.
The French energy minister sent a letter to
colleagues in neighboring countries, noting
the unsatisfactory level of strategic gas
reserves. He stressed that the upcoming
winter “will require close cooperation.” The
French government has even created a crisis
task force to monitor the situation with gas
supply.
In general, the situation in Europe is gradually
getting better. But there are two points that
need to be taken into account when making
predictions. When compared with the fullness
level of gas storage facilities in Europe in
2012, it is evident that the process is behind
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schedule. And if you take into account the
recent forecasts by meteorologists that we in
Europe will witness the most severe winter
for many years, then the “sufficiency” of
the gas volumes pumped into underground
storage facilities can be deceiving.
BLUE FUEL: Let’s assume there was a force
majeure and a cold winter would lead to a
sudden disruption of gas supplies to Europe
from other producers. Would Gazprom be able to
compensate for dwindling imported gas volumes
in such a scenario?
VLADIMIR KHANDOKHIN: Gazprom has
always fulfilled its contractual obligations
under long-term agreements. In this respect,
we have a solid business reputation as
a partner who always keeps his word.
It’s different if Europe requests additional
volumes on top of those stipulated by
the contracts. In this case, the barriers of
different nature would emerge, for example,
those imposed on Gazprom’s business
through the Third Energy Package. How
can we increase supplies to Europe via the
Nord Stream gas pipeline if the requirement
for “third party access” forbids us to use all
the 100% capacity of the OPAL pipeline?
Let’s recall that this gas pipeline was built
by Gazprom and its partners as the best
vehicle for delivering Russian export gas to
end users and as a continuation of the Nord
Stream export pipeline.
A strict application of the regulations
established by the European Commission
would have done a disservice to OPAL,
as there are no real gas volumes from
other market players. As a result the pipe
was standing half empty, while European
consumers were receiving less fuel for heat
and light. After an unfortunate drawn out
learning curve the Russian and European
sides worked together and came to an
acceptable solution which allows for a
transparent allocation of capacities. The
question remains however whether there
is any common sense in applying the third
party access restriction in the first place?
BLUE FUEL
LTC and Hub Prices’ Tango Tangling
Sergei Komlev, Head of Contract Structuring and Price Formation, Gazprom Export
There is strong divergence of views on the nature of
Continental hub prices between European academics,
politicians, and regulators on one side and the gas business
community on another side. The first group typically claims
that supply and demand fundamentals are an exclusive
driver of the hub prices in Europe. This group considers
hub prices to be self-contained, competitive, and free from
influence by the fundamentals of other markets - and in
fact ready to take over from oil-indexed prices. The second
group usually shares a different view.
European gas markets are dominated by long term oil
indexed pipeline and LNG supply contracts. The pricing of
these contracts governs, by and large, hub price behavior.
That means that a long-term oil indexed contract price proxy
can be used to forecast evolution of European spot and
forward curve hub price dynamics.
In my opinion, although the views of the business community
are much closer to realities than the popular belief of
academics, politicians and regulators, they do not fully assess
all the complicacies of the contract/hub price interactions.
Comparison of the forward winter prices with the real winter
season prices on the European hubs reveals that real prices
tend to be lower than previously anticipated. Forward prices in
our study were prices of the front season contract on TTF that
is traded on a daily basis for 12 previous months before the
gas winter onset. For example, winter 2012/13 contract was
launched on 1 October of 2011 and expired on 30 September
30 of 2012. Real winter prices were a day-ahead of prices on
TTF for the six winter months starting from 1 October to 31
March. These day-ahead prices over the last five years in 461
observations out of the total 640 were lower than the average
forward contract price for the same winter season. That
means that in 72% of observations market expectations for
winter prices were overstated. In other words, as seasonally
strong demand approaches, anticipated high prices disappear
like fading away mirage.
The fact that traders are overly bullish about the front
season natural gas contract could not be explained by
the unpredictability of weather driven demand. Weather
conditions support rather than deny our conclusion that
there is a systemic mistake made by the market participants
in assessing gas pricing mechanisms. Deviation from the
main trend in less than one third of observations when
the real winter prices run above their market expectations
(winters 2010/11 and 2012/13) resulted simply from the
abnormally cold weather conditions.
It is my strong belief that systemic mistake in winter price
predictions lies in misunderstanding of the specific nature of
interaction between long-term contracts and hub prices. TTF
prices have a strong positive correlation with Gazprom’s
oil-indexed prices, with coefficients of 0.79. In real-life
terms, this means that the baseline curve for spot prices is
determined not only by supply and demand dynamics at the
hubs, but by the oil-indexed contracts themselves. Supply
and demand only mutate this price. The higher the contract
prices due to oil-price escalation, the higher the hub prices.
Normally business community representatives acknowledge
that the prices of oil-indexed long-term contracts determine
the baseline trend for hub prices and use long-term oil-indexed
contracts (and predictability that they offer) as proxy for winter
gas prices. Mistake rests in another popular assumption that
hub prices due to a stronger winter demand could easily
surpass the estimated oil-indexed prices for the same season
because the latter prices are by definition indifferent to market
imbalances. That popular assumption is essentially wrong and
is not supported by the anecdotal evidence.
Monthly TTF price was higher than the same winter
month Gazprom average contract price in only 3 out
of 30 observations. In contrast to its front season TTF
contract traded above the same month oil-indexed contract
price in 23 (41%) out of 57 observations. In other words,
expectations that winter hub prices will be higher than the
oil-indexed contract prices turns out to be a mirage that
fades away when winter arrives.
What makes hub prices so challenging to cross the red
line set by the long-term oil-indexed contracts when
demand gets stronger? Gas that comes under long-term
arrangements represents a more valuable product
than hub gas because it offers a combination of supply
security and delivery flexibility. In fact, what Gazprom
brings to its clients is more than a commodity—it is
gas plus the related services necessary to deliver a
secure and flexible source of supply.
As two prices start to interact directly in winter the market
singles out a combined value of security and the flexibility
provided by long-term pipeline suppliers and adjusts
hub prices by a negative price premium. In a short-term
under-supply situation, it is more convenient and cheaper
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LTC and Hub Prices’ Tango Tangling
(when prices do not differ much) for midstreamers to rely on existing flexible longterm contractual arrangements to secure
additional deliveries, lowering demand for
hub gas. That is why hub prices do not cross
the contract price line for significant periods
of time unless there are serious supply
disruptions and/or abnormally cold winters.
When hub prices approach contract levels,
consumers cease buying gas at the hub
and instead switch to contract deliveries
thus fully utilizing their built-in flexibility.
When prices exceed the contract level
buyers immediately react by arbitraging.
Arbitraging brings spot prices back below
the contract level.
Visitors from Japan
Alexander Medvedev, Gazprom Export
CEO, hosted a delegation of prominent
Japanese political scientists, economists
and journalists specializing in Russian
studies at the Gazprom offices in Moscow.
Gazprom’s cooperation with Japanese
companies, the Vladivostok LNG project,
the liberalization of LNG exports, the
prospects for Russian gas supplies to
China as well as shale gas were among
the topics discussed. Alexander Medvedev
12
underlined Gazprom Group’s keen interest
in fostering its partnership with Japan.
“Our experience of working together
with the Japanese companies Mitsui,
Mitsubishi and Itochu proves that we can
find a common language. Now English
dominates in our communication, but
I hope that more people will soon use
Russian and Japanese,” said Gazprom
Export CEO.
BLUE FUEL
Technologies Around Baltics
As in the past the seventh Blue Corridor
NGV Rally was developed to encourage the
establishment of the natural gas fueling
infrastructure needed to create a natural gas
highway across Europe. Ever more drivers
and fleet owners will open up to the idea of
purchasing natural gas vehicles (NGVs) as the
infrastructure will feature a sufficient number
of gas filling stations and the transport of the
fuel to them, assuring drivers go anywhere
without interruptions.
The Blue Corridor NGV Rally 2013, supported by Gazprom,
E.ON and a number of companies across Europe, was
held from 3 to 19 October this year, driving NGVs from St.
Petersburg, Russia around the Baltic Sea and back, with
stops in St. Petersburg, Vyborg, Helsinki, Turku, Stockholm,
Jonkoping, Gothenburg, Copenhagen, Hamburg, Swinoujscie,
Gdansk, Kaliningrad, Klaipeda, Jelgava, Riga, Tallinn and
Narva. Along the route nine round tables were held, bringing
together energy experts, vehicle manufacturers, municipalities
and transport companies. As in previous years, the Rally
along the ancient Hansa trade route around the Baltic Sea
demonstrated the cost benefits and environmental advantages
of natural gas in transport.
Since the start of the Blue Corridor NGV Rally in 2008, the use
of natural gas in transport has nearly doubled from 9.5 million
to 18 million natural gas vehicles globally. Beyond light-duty
personal automobiles, heavy-duty vehicles like dump trucks
and public transportation such as buses as well as cargo ships
and ferries have become viable alternatives for drivers.
For the first time in its history, part of the Blue Corridor
Rally was mapped to include sea routes with gas serving
as the propellant fuel. Starting to cruise on the Baltics
earlier this year the brand new 218-meter ferry M/S Viking
Grace carried the Rally participants from Turku in Finland to
Stockholm in Sweden.
The M/S Viking Grace is the most environmentally friendly
large cruise vessel built to date—and it uses liquefied
natural gas for fuel. While emissions into the water have
been eliminated completely, emissions into the air are
significantly less than those of any other large passenger
ship. Nitrogen emissions and particulates were reduced by
85% and greenhouse gases by 15%, while sulfur emissions
are practically nonexistent. The appearance of M/S Viking
Grace underlines the major challenge and opportunity for the
coming years: gas for ship bunkering. From January 2014,
new environmental regulations that are coming into force in
the Baltics and North Sea, will change the rules of the game
in marine fueling, forcing companies either to use scrubbers
or to switch to cleaner fuels. Gas is the most effective solution
available here and now. LNG-fueled ships are already meeting
planned CO2 reduction targets for maritime transport today,
which goes hand in hand with significant cost reductions.
Northern European countries use motor fuels in a number
of different ways. With only 81 natural gas vehicles and
3 CNG fueling stations in the country (one of these just
opened and fueled the Rally), Denmark is especially
optimistic about future development of NGVs. Environmental
impact Plays a major role. As part of an effort to become the
first carbon neutral capital by 2025, Copenhagen has recently
begun to focus on ways to increase its use of natural gas in
transport. A round table discussion with over 100 guests,
which featured a speech by the Minister of Transport, focused
13
Blue Corridor
NGV Rally 2013
The Blue Corridor NGV Rally
2013 was held from 3-19
October, to showcase the
virtues of natural gas as a
transportation fuel of the future.
Blue Corridor sponsors
Gazprom and E.ON drove
NGVs from St. Petersburg,
Russia to Narva, Estonia
with stops in St. Petersburg,
Russia; Vyborg, Russia;
Helsinki, Finland; Turku,
Finland; Stockholm, Sweden;
Jonkoping, Sweden;
Gothenburg, Sweden;
Copenhagen, Denmark;
Hamburg, Germany;
Swinoujscie, Poland; Gdansk,
Poland; Kaliningrad, Russia;
Klaipeda, Lithuania; Jelgava,
Latvia; Riga, Latvia and Tallinn,
Estonia in between. The rally
demonstrated the cost benefits
and environmental benefits of
natural gas in transport as it
drove around the Baltic Sea.
The Blue Corridor NGV Rally
2013 gave a glimpse into the
future of NGV transportation
by featuring roundtable
discussions joined by industry
representatives, policymakers,
environmentalists and auto
enthusiasts. Along the 4,000
kilometer trek around the
Baltic Sea, it was explained
how using natural gas in
transportation is an affordable,
environmentally friendly and
safe alternative to petrol.
The events also provided
opportunities for participants
to check out innovative NGVs
on display and take a tour of an
NGV facility.
Check out the Blue Corridor
NGV Rally 2013: New Fuel and
article on page 13 of this issue
or visit www.bluecorridor.org for
more information.
on ways Denmark can capitalize on the
benefits of natural gas in transportation.
The private sector and local municipalities
are the ones leading the way, working to
build new fueling stations in Copenhagen
and provide the city with natural gas buses.
They expect an influx of NGV garbage
trucks along with modifying the existing
fueling infrastructure to be able to supply
natural gas without starting from scratch. In
addition, local officials in the city of Skive are
encouraging gas in transport because they
see it as an opportunity to create jobs in the
economically unstable area and turn the city
carbon neutral by 2029. It plans to do this by
making Skive a center for the NGV industry.
Sweden joined the Rally for the first time
where the number of NGVs is projected to
triple between 2010 and 2018, from 31,179 to
92,657 with more than 44,000 natural gasrun vehicles, and 195 refueling in existence
currently. In Scandinavia, Sweden is a clear
leader in natural gas transportation and
intelligent government policies are partly to
credit for it. As part of its long-term strategy
Stockholm in particular has long encouraged
CNG use in transportation.
In neighboring Finland, which is also involved
in the Rally for the first time, there is a
special focus on the bi-fuel motor options. All
natural gas-fueled cars imported to Finland
are bi-fuel vehicles. Biogas is increasingly
becoming available at Finnish compressed
natural gas stations as well. Finnish
transmission system operator Gasum started
to inject it into the natural gas grid in October
2011 and began offering it as a transport
fuel. To complement the variety of options,
small-scale LNG is also supplied in the gas
market in Finland.
“The Blue Corridor Rally addresses the
only threat facing NGVs: consumers and
policy-makers lack information regarding the
benefits of gas as a fuel… NGV is a costeffective, environment friendly alternative,
and people should know they can choose
14
that option,” said Jussi Vainikka, Gasum’s
Head of Business Unit for CNG.
After leaving the Scandinavian part of its
route, Blue Corridor held its flagship event
in Hamburg. The Hansa city is at a junction
of both marine and road transport routes.
Germany, on its part, is the leader in the
NGV market, with more than 920 fueling
stations and more than 100,000 NGVs in
use. Recognizing the advantages of this
fuel, vehicle manufacturers responded
adequately to meet the demand.
Volkswagen, for instance, will present up to
40 auto models in the next year that utilize
natural gas power systems and the company
has plans to design more. Representatives
of Daimler Trucks, Iveco and Westport also
informed the Blue Corridor audiences of their
companies’ plans to increase and improve
their NGV offerings.
Companies and consumers alike are
coming to understand that “natural gas in
transport is ready for every-day use,” said
Timo Vehrs, head of Business Development
at Gazprom Germania. He predicted that
as personal mobility expands,—“one of
the mega trends of the 21st century,”—so,
too, will NGV use because natural gas is
readily available and cars running on it are
technically mature and offer a variety of
speeds, models and engine classes.
Antonio Tricas Aizpun, the European
Commission Directorate General for Mobility
and Transport, pointed out that natural gas
is part of the EU mix of alternative fuels
required to substitute oil, with its supplies
able to last longer given the newly explored
reserves. He praised the potential and
already available mature technology, pointing
out that it’s the lack of infrastructure that
holds it back. There is a need to create
economies of scale in international markets
and joint standards would be of help.
“The European Commission recognizes that
natural gas is the fuel of the future,” Aizpun
said. For this reason, the EU is working to
BLUE FUEL
implement several programs to aid the construction of fueling
station and an increased use of NGVs—including the new
CPT Directive, the EU Marine Fuel Sulphur Directive, the LNG
Blue Corridor project, Horizon 2020 and TEN-T—to make
sure there is a more even distribution of NGV infrastructure
across EU Member States.
Natural gas in the transportation sector is a relevant topic for
the entire world. Almost every global vehicle producer today
has various types of transport which run on natural gas. In
Europe, 1.5 million natural gas vehicles are already on the
road, and this number is growing quickly. The International
Association of Natural Gas Vehicles estimates that there will
be more than 50 million natural gas-fueled vehicles worldwide
(9% of the world’s transportation fleets) within the next 10
years. Transporters will gain pricing advantages if synergies
across the entire cross-country transport routes will be
applied as transport emissions travel beyond national borders
anyway. This calls for a joined fueling network along with
unified measuring and standards.
Beyond growing interest in general, this year’s Blue Corridor
Rally was a hallmark for by more recognition, acceptance
and readiness to use the NGVs across Europe—a truly
remarkable event. Gas is in growing demand as motor fuel
supported by the expanding fueling network and variety of
available NGVs.
Visit the Blue Corridor NGV Rally 2013 website to read blog
posts, view photos and watch videos from each of the rally
stops, www.bluecorridor.org.
GAZPROM Germania Enters the
Decentralized Energy Supply Business
Within a pilot project launched in the German city of Erfurt,
GAZPROM Germania has brought online two gas-fired
Combined Heat and Power (CHP) plants with an electric
capacity of 20 kW each. The plants were developed and are
now operated by GAZPROM Germania’s project partner
Gesellschaft für umweltfreundliche Energieerzeugung (GfU).
Both plants are supplying housing and commercial properties
in central Erfurt with electricity and heat in an area of 12,000m².
The overall energy supply system includes two peak load
heating boilers of 237 kW and three hot water storages of
1,500 liters each.
GAZPROM Germania is currently developing further pilot
projects with external partners to gain technical experience and
to prove the markets attractiveness.
“Gas-fired combined heat and power will play an essential role
for Germany’s energy transition, as it can be used to provide
the energy where it is needed—regardless of the weather. We
will investigate further opportunities in the area of decentralized
energy supply in the future,” said Timo Vehrs, Director of
Business Development at GAZPROM Germania GmbH.
Gas-fired CHP plants utilize the waste heat produced during
power generation to be used on-site. Thus, the plants make
better use of the energy available, being much more efficient
than conventional energy supply consisting of large, centralized
power generation and individual domestic heating units.
The German small scale CHP market has seen impressive
growth in recent years. CHP systems fueled by natural gas are
particularly suited to equip large apartment complexes as well
as commercial and small industrial buildings.
To make the technology even more favorable, support
systems have been installed by the German government
which incentivizes the use of highly efficient small scale CHP
technology (≤ 2 MWel) in order to reach its challenging aim of
a 25% co-generation share from total electricity production
by 2020 and to remain the European forerunner of energy
transition. Therefore, GAZPROM Germania expects the small
scale CHP market to show high growth rates until 2020.
15
Natural Gas for Transport: GAZPROM
Expands Operations in Germany
commitment to motorsports that are kind
on the environment without detracting from
the fun of driving. The cup shows that high
performance, eco-friendliness, and high
emotions are not mutually exclusive—and the
sound of the natural-gas powered Scirocco
is music to any motorsports fan’s ears,” said
former Formula 1 driver Hans-Joachim Stuck.
Former Formula 1 driver Hans-Joachim Stuck attended
the Scirocco R-Cup.
GAZPROM Germania has acquired 12 natural
gas filling stations in southern Germany
from the Bavarian energy supplier FGN.
The acquisition, which became effective on
1 September 2013, will see GAZPROM’s
German subsidiary expand its network of eight
filling stations to 23 by the end of 2013.
“With this acquisition, we are expanding
our network of natural gas filling stations in
Germany and strengthening our commitment
to the use of natural gas as environmentallyfriendly motor fuel,” said Vyacheslav
Krupenkov, Senior Managing Director of
GAZPROM Germania.
The acquisition is part of GAZPROM’s
comprehensive strategy to position itself in
Germany in the long term. “We expect that
demand for environmentally-friendly motor
fuels will continue to grow. We believe in
natural gas’s growth potential in the transport
sector and will continue our commitment to
this area,” said Krupenkov.
That commitment includes supporting
the Volkswagen Scirocco R-Cup, which
GAZPROM began sponsoring this year.
GAZPROM is the exclusive motor-fuel
supplier to the Scirocco Cup, which acts
as a showcase for environmentally-friendly
motorsport. It is the world’s only singlemake race that features natural gas vehicles
exclusively, combining awareness for the
environment with engines of up to 285
horsepower. Scirocco Cup vehicles also
feature push-to-pass buttons that make for
exciting overtaking manoeuvres.
“GAZPROM’s collaboration with VW on the
Scirocco R-Cup is a strong signal of their
16
Natural gas-powered vehicles emit over
80 % less CO2. Their main advantage over
conventional petrol or diesel engines is that
they burn fuel much more cleanly, resulting
in fewer carbon-dioxide emissions than with
other fossil fuels. Environmentally-friendly
drive technologies are becoming increasingly
important in motorsport, and using natural
gas as a motor-fuel has great potential.
GAZPROM’s collaboration with Volkswagen
on the Scirocco R-Cup sends a strong signal.
With this partnership, two global players are
joining forces,” said Stuck.
Natural gas vehicles generally run on
one of two variants: CNG or LPG. CNG
(compressed natural gas) is more widespread
in Germany, and has higher energy content
than LNG (liquefied natural gas). CNG
vehicles can also run on biogas; this is
a major advantage for customers given
that today’s network of natural gas filling
stations is still growing. Customers also
benefit financially from natural gas vehicles:
Unlike other fossil fuels, natural gas’s ecofriendliness has led it to be given preferential
tax treatment in Germany until 2018.
There are just under 100,000 natural gas
vehicles registered in Germany, and that
number is increasing fast: Experts predict
Vyacheslav Krupenkov, Senior Managing Director of
GAZPROM Germania.
that natural gas vehicles will see growth of 25 %. There are
also more than 18 million natural gas vehicles around the
world. Alongside electric and hybrid drive technologies, auto
manufacturers are focusing on highly efficient diesel engines
and diesel engines powered by natural gas.
“We need to spend more time on natural gas in the next few
years than we have in the past,” admits Volkswagen chairman
Martin Winterkorn. Volkswagen is reacting to the growing
demand by rolling out its CNG technologies to more of its
brands and vehicle segments using its MQB modular toolkit
platform, ensuring that CNG technology has high product
coverage across the company. With the MQB platform, CNG
engines are available in any vehicle, regardless of make or
model. For example, the Golf IIV is available with a CNG
engine, as will be the new Audi A3.
Shortly after Volkswagen Motorsport and GAZPROM
sealed their cooperation, Volkswagen chairman Winterkorn
commented on the potential of natural gas drive technology
at the Vienna Motor Symposium: “The gas engine is
environmentally-friendly, economical and suitable for everyday
use. The technology is fully developed and the vehicles are
already on the market. We need to make the public even more
aware of the benefits of natural gas engines.”
Meanwhile, the European Union’s clean-fuel strategy
calls for a pan-European network of filling stations with a
BLUE FUEL
maximum distance of 150 km between CNG filling stations
and 400 km between LNG filling stations, while its LNG
Blue Corridors project has assigned EUR 8 million towards
constructing LNG filling stations and fitting heavy-duty
vehicles with LNG tanks. Therefore, the groundwork for this
eco-friendly technology is well under way.
Elsewhere, the annual Blue Corridor NGV Rally organized
by GAZPROM and other energy companies proves
that it is possible to cover long distances in natural gas
vehicles. The event is being held again this year, and will
see a convoy of 15 natural gas vehicles of various makes
driven by drivers from Russia, Belarus, Finland, the Czech
Republic, Canada, and Germany travel many thousand
kilometers across Europe—all without resorting to petrol
or diesel. Roundtables will be held with representatives of
government, business, and media at selected cities at which
Blue Corridor will stop.
An additional task is to promote to the public the
environmental and commercial benefits of using natural gas
as a motor fuel and encourage a shift in paradigm away from
conventional motor fuels and towards the environmentallyfriendly alternative, natural gas, through continued presence
in high-circulation media. This is another small part of
GAZPROM’s long-term efforts to position natural gas as a
motor fuel, which GAZPROM has successfully commenced
with a variety of public relations campaigns.
GM&T Unveils Its New LNG Carrier ‘Lena River’
became famous last year for being the world’s first LNG carrier
to pass through the Northern Sea Route, and ‘Yenisei River.’
GM&T’s steadily expanding fleet of LNG vessels will be used to
support its growing global LNG trading portfolio.
The state-of-the-art ‘Lena River’ features membrane tanks,
has a cargo capacity of 155,000 cubic meters and is powered
by a tri-fuel diesel-electric propulsion system. The ships 1A
ice class and winterization equipment allows sailing in ice
conditions, including through the Northern Sea Route during
open navigation.
Hyundai Heavy Industries (HHI) introduced its new LNG
vessel, Hull Number 2557, at a ceremony at the HHI shipyard
in Ulsan, South Korea on Friday, 4 October. The vessel was
named ‘Lena River.’
The Gazprom Marketing & Trading (GM&T) group will time
charter ‘Lena River’ from Greek LNG tanker operator Dynagas
for several years. She will be the third vessel on charter
between GM&T group and Dynagas after ‘Ob River,’ which
Like the ‘Ob River’ and ‘Yenisei River,’ the vessel will be
operated by an international crew, including graduates of
the Admiral Makarov State University of Maritime and Inland
Shipping (SUMIS), St. Petersburg, Russia.
‘Lena River’ is named after one of the three great Russian
Siberian rivers that flow into the Arctic Ocean, completing the
tradition established with ‘Ob River’ and ‘Yenisei River.’
17
GM&T Unveils Its New LNG Carrier ‘Lena River’
About Gazprom Marketing &
Trading Ltd
Gazprom Marketing & Trading Limited
(GM&T) is a UK-registered wholly-owned
subsidiary of OAO Gazprom (“Gazprom”),
the world’s largest gas company by asset
base, accounting for 18% of the world’s total
natural gas reserves and for about 70% of
natural gas reserves in Russia.
GM&T is headquartered in London and was
established in 1999 to manage Gazprom’s
marketing and trading activities in the
liberalized markets of Europe. GM&T is
responsible for the optimization of Gazprom’s
energy commodity assets and downstream
expansion through its marketing and
trading network. With subsidiaries in the
U.S., Singapore, France, Germany, UK
and Switzerland, GM&T trades energy
commodities including gas, power, oil and oil
products, carbon, LNG and FX.
The Shipping & Logistics (S&L) business
unit provides safe, reliable and economical
shipping solutions to the Gazprom
Marketing & Trading Group (GM&T) with
responsibility for supporting the multicommodity trading activities of GM&T,
shipping a diverse range of products from
LNG, LPG, Oil, Oil Products and Helium.
Gazprom Energy Signs Long Term
Hydropower Offtake Deal With Infinis
Business energy supplier Gazprom Energy
has signed a seven-year deal with Infinis,
the UK’s leading independent renewables
generator, to purchase hydroelectric power
and associated renewable certificates from
10 sites across the UK.
The deal, which becomes effective starting in
October 2013, will see Gazprom Energy, the
Manchester-headquartered European energy
supplier, purchase up to 17MW of renewable
power per year from Infinis. This constitutes
enough energy to power thousands of the
UK’s small and micro businesses.
The deal includes trading power generated
at 10 Infinis hydro sites across England and
Wales - Barton Lock in Greater Manchester,
Beeston Weir in Nottingham, the Elan Valley
in South Wales and Duror in the Scottish
Highlands, among others. The transaction
also includes the ability for Infinis to trade the
Renewables Obligation Certificates (ROCs)
and Levy Exemption Certificates (LECs)
associated with the power purchased.
This offtake agreement follows Gazprom
Energy’s commitment to purchase power
18
(and associated certificates) generated from
37 of Infinis’ landfill gas sites in 2011.
Andrew Morris, Manager of Clean Energy
at Gazprom Energy said, “This agreement
strengthens our relationship with one of the
UK’s leading renewable energy generators,
providing Infinis with a flexible route to market
and making a significant renewable power
contribution to the UK energy market.”
Steven Hardman, Commercial Director
at Infinis said, “Gazprom Energy has
structured an innovative contract that helps
us to maximize the value of our hydro
power generation.”
Infinis’ hydroelectric sites harness the flow of
both natural and man-made bodies of water
through water turbines to produce electricity
that is free of greenhouse gas emissions.
Gazprom Energy’s embedded generation
team works closely with independent
energy producers, helping them trade the
power they produce from wide range of
sources, including hydro and biomass, LFG,
wind, anaerobic digestion, solar and energy
from waste.
Infinis is the third largest generator of renewable power in the
UK, having produced approximately 7% of the UK’s renewable
power in the year through 31 March 2013. The company has
an installed renewable energy generating capacity of 621 MW1,
comprising landfill gas, onshore wind and hydro generation.
Infinis is currently the largest generator of electricity from landfill
gas in the UK, with a market share of approximately 40%.
Background
Gazprom Energy is the brand name for Gazprom Marketing &
Trading Retail Limited, a 100% owned subsidiary of Gazprom
Marketing & Trading Limited (GM&T). After entering the energy
retail market in 2006, Gazprom Energy became the first
Gazprom brand outside Russia to sell energy to end users.
1.
BLUE FUEL
Since then, the company has increased the volume of its gas
sales in the UK by more than 500%, and has opened offices in
France, Germany and the Netherlands.
Gazprom Energy currently supplies over 13,000 business
customers at 45,000 sites across Europe with flexible energy
solutions that are designed to meet individual business
needs. Customers in the UK include Heinz, David Lloyd
Leisure Group, the University of Oxford and Chelsea Football
Club. Gazprom Energy has an additional 65,000 residential
customers in Germany. It provides smart metering services
to all its customers and offers carbon trading services for
companies in the EU Emissions Trading Scheme and power
purchase agreements to independent generators.
Includes Tedder Hill wind power plant (7.5 MW) which is fully constructed and undergoing final stages of commissioning.
Vemex Opens a CNG Gas Fueling Station on the D5
Highway in the Czech Town of Králův Dvůr
The Gazprom Group company Vemex s.r.o, together with
LUKOIL Czech Republic and Gascontrol s.r.o, continues to
jointly develop public compressed natural gas (CNG) fueling
stations, expanding the portfolio of available motor fuels by this
modern, eco-friendly and cost-decreasing alternative.
One of these fueling stations opened on 2 September at
LUKOIL’s station, based in the town of Králův Dvůr, on the
D5 highway that connects Prague through Pilsen across
the German border. The gas fueling equipment involves the
Swiss-made GREENFIELD DM type oil-free compressor,
with output capacity of 85 cubic meters per hour. With
pressure of up to 300 bar, the fueling equipment can serve up
to 10 vehicles in one hour. The CNG costs 26,00 Kč/kg (about
1 euro/kilogram). The self-storage fueling unit is opened
twenty four hours a day, seven days a week.
It is already the fourth gas fueling project on the base of LUKOIL
petrol station, made possible by the cooperation of Vemex,
Gascontrol and LUKOIL. Three other stations already operate
in Ostrava, Opava and Olomouc. The joint work relies upon the
memorandum of cooperation signed 20 May 2011, targeting the
expansion of the gas fueling network in the Czech Republic.
CNG is an eco-friendly fuel with minimal impact on the
environment. By developing its fueling network, Vemex follows
its strategy of active support of natural gas as an alternative to
the traditional fuels and as the eco-fuel of the future.
Russia and Germany’s 40 Year Natural Gas Relationship—
An Energy Industry Success Story
By Dr. Karsten Heuchert, Chairman of the Executive Board, VNG
This year marked a milestone anniversary for the energy
industry: 40 years of close natural gas relations between
Russia and Germany. There are two main reasons why this
event is so important for us—and by “us” I mean for both
Germany and for VNG. The first is that the Sayda delivery
station, which first received Russian natural gas on 1 May
1973, in what was then the German Democratic Republic, is
19
Russia and Germany’s 40 Year Natural Gas
Relationship—An Energy Industry Success Story
today part of the grid operated by our network
subsidiary ONTRAS. Germany still receives
significant volumes of natural gas at Sayda.
We are proud of these achievements because
we were the first “landfall” for the Russian
natural gas that continues to flow to Germany
through this important delivery station today.
The second reason why this event is so
important cannot be emphasized enough:
the energy partnership between Germany
and Russia is unparalleled in economic
history. It has always stood firm, even during
turbulent times such as the Cold War or the
political transition in Germany. We felt this
was sufficient cause to celebrate 40 years of
deliveries with our partners and friends. On
6 June, we were therefore joined by many
prominent representatives from the spheres
of politics, industry and culture in the festive
atmosphere of Leipzig’s New Town Hall to
look back on a successful partnership as
well as to look forward to the future. We were
especially pleased to welcome Alexander
Medvedev, Gazprom export CEO. Vladimir
M. Grinin, Ambassador of the Russian
Federation in Germany, Prof. Dr. Klaus Töpfer,
retired Federal Minister for the Environment
and patron of the German-Russian Raw
Materials Forum, and the former German
Minister of Economics, Philipp Rösler, also
honored us with their presence at the event
in Leipzig. Our anniversary celebrations were
both an expression of thanks to our Russian
partners and a demonstration to the German
public of how well cooperation between
German and Russian partners works and
how secure our gas supplies are. Our mission
was undoubtedly a success.
German energy mix needs
Russian natural gas
When the first Russian natural gas arrived at
Sayda 40 years ago, no one had any idea of
the success story for the energy industry that
would develop from these deliveries. Russia
has since become our most important natural
gas supplier, and around 40% of our gas
20
imports come from Russian sources. Since
1973, Russia has delivered more than a trillion
cubic meters of natural gas to Germany, of
which some 250 billion cubic meters has
been taken by VNG. This impressive quantity
helps to quantify the success of the energy
partnership. Nowadays, it is impossible to
imagine Germany without natural gas—
which means that it is impossible to imagine
Germany without Russian natural gas. The
fuel has become a key building block in
secure, reliable and efficient energy supplies.
In fact, given Germany’s energy transition
and the associated restructuring of energy
supplies towards a larger share of renewable
energies, natural gas will assume even
greater importance going forward. This is
because an energy mix where renewables
play a prominent role needs the safe
anchor that natural gas provides to balance
all weather-related fluctuations with the
necessary flexibility.
Recipes for success: win-win
situation and cooperation projects
Today, Russia is a vital raw materials supplier
for Germany, not only as far as oil and gas are
concerned, but also in terms of non-energy
raw materials. Our partnership has always
been characterized by a balance of interests,
and by a system of give and take. With regard
to our energy partnership, this reciprocity is
an important, perhaps even crucial, success
factor. Just as Germany can always rely on
the delivery of raw materials from Russia,
Russia can always count on Germany’s
reliable sales market with strong marketing
partners. Russia is our number one supplier
and we are Russia’s number one customer. In
my opinion, that is a prime example of a winwin situation. The same applies with regard
to VNG, for 40 years Gazprom has been a
reliable natural gas supplier for VNG, and for
40 years we have always made sure this gas
is successfully marketed.
A second key success factor is the fact that
over the last 40 years we have always sought
to look at the bigger picture and to not restrict ourselves to
merely economic perspectives. Our cooperation covers many
economic, political, scientific and cultural fields and we have
thus established a special relationship of trust and mutual
respect. For example, VNG and Gazprom enjoy very close
collaboration in the field of storage technology, we have initiated
university cooperation projects, we discuss issues relating to
sustainable raw material supplies within the framework of the
German-Russian Raw Materials Forum, and we organize joint
cultural projects.
German energy transition offers a golden
opportunity for natural gas
At the June anniversary celebrations in Leipzig, we looked
back on past successes and looked forward to what the
future holds. One task for the future may well be to anchor
The first natural gas pipeline for imports from Russia was laid near Sayda
more than forty years ago; the first Russian natural gas for East Germany was
transported through this pipeline on May 1, 1973.
VNG and Gazprom organize many joint cultural projects, including the
international “OPEN WORLD” music festival, which was held for the seventh
time this year in Leipzig. For both partners, cultural events like this are a key
element of their cooperation.
BLUE FUEL
the perception of natural gas as a flexible fuel more strongly.
Natural gas can be used in all energy segments, for heat
and power generation as well as in the transport sector.
I believe that this is a decisive advantage for natural gas,
particularly in the context of the German energy transition.
I also believe that brings a special responsibility to VNG as
a marketing specialist for natural gas. We must make sure
that gas does justice to its key role as a partner for renewable
energies and that it remains the reliable, innovative, flexible
and environmentally-friendly fuel that it already is today. We
are already supporting the development of new gas-fired cogeneration plants, gas heat pumps and fuel cells. Furthermore,
we are the co-initiator of the natural gas campaign that has
spread across Germany, advertising the benefits of natural
gas and outlining the possibilities for combining natural gas
To commemorate 40 years of supply relations VNG presented its Russian
partners with one of the first gas valves from Sayda. The device weighing
almost 50 kilograms is a valve from the 1970s, when Russian gas supplies
were just getting underway. It was used to open and close the pipeline.
Photo (from left): Philipp Rösler, Federal Minister of Economics and
Technology, Dr. Karsten Heuchert, Chairman of the Executive Board of
VNG—Verbundnetz Gas AG, Rolf Trischler, retired VNG employee who
worked at the Sayda delivery station when it began operating, Alexander I.
Medvedev, Gazprom Export CEO, Sven Morlok, State Minister for Economic
Affairs, Labour and Transport and Deputy Prime Minister in Saxony.
Copyright: VNG/ Oliver Hopf.
For many years now, VNG has been committed to natural gas as an
automotive fuel. Together with Gazprom export, the company also takes part
in the annual Blue Corridor NGV Rally 2013 through Russia and Europe.
21
Russia and Germany’s 40 Year Natural Gas
Relationship—An Energy Industry Success Story
and renewable energies. I am particularly
pleased with the cooperation between
Gazprom and VNG, which began many years
ago, to highlight the environmental benefits
of natural gas, particularly in the transport
sector. The annual Blue Corridor NGV Rally
that traveled through Russia and Europe is a
great example. Organized by Gazprom and
supported by VNG, the Rally impressively
confirms that natural gas is a practicable
option for road traffic between Western and
Eastern Europe. I believe that projects like
the Blue Corridor Rally are a necessary
platform to widen awareness of NGVs, while
offering great potential for natural gas as an
automotive fuel. Exciting innovations and
trends, which we can jointly promote, are
emerging, for example, in the truck sector and
in shipping. However, we—and I am referring
in particular to VNG in this context—must also
prepare for the future of power generation, and
more specifically, of the heat energy market.
The current energy debate presents a golden
opportunity to profile natural gas as a source
of energy that is competitive and climatefriendly in the long term.
Russia and Germany are not only raw
materials partners with decades of close ties.
In order to secure the long-term success
of our relations in the future, our common
goal must be to continue this partnership
as friends, and to extend it even further. We
are looking forward to working together to
achieve this goal.
Dr. Karsten Heuchert is Chairman of the
Executive Board of the German gas company
VNG—Verbundnetz Gas AG, whose
shareholders include Gazprom. Heuchert
is also Chairman of the Raw Material
Cooperation Working Group of the Committee
on Eastern European Economic Relations.
Energy Security as an Important
Element of National Security
Tasko Ermenkov, Member of the Bulgarian Parliament
Energy security is an important element
of each country’s national security,
encompassing a range of concerns from
security of supply to environmental issues.
Natural gas, due to its low carbon emissions
and generally environmentally-friendly nature,
is becoming an increasingly important energy
source in Europe.
22
Forecasts of the International Energy
Agency indicate that natural gas
consumption in Europe will increase by
10% to 20% until 2030 or to 592-640 bcm
annually from the current 536 bcm. At the
same time, Europe’s own gas reserves are
depleting. While in 2010 its own production
satisfied 38% of the consumption, it is
expected that by 2030 it would only cover
18-20% of its needs. This means Europe
would have to find additional sources of
natural gas, including increased imports.
As a member of the European Union,
Bulgaria supports all measures that aim to
provide better energy security, including
diversification of the supply routes. Nord
Stream and South Stream are very
BLUE FUEL
important projects in this regard, as they are designed to
diversify the supply routes and will be instrumental in at least
decreasing the emerging natural gas supply gap in the EU.
Bulgaria should play a positive role in this process.
South Stream is especially important for Bulgaria for several
reasons. Providing a direct link to the largest natural gas
reserves in the world in Russia, South Stream will improve our
security of supply and will help avoid the future cut-offs like the
one experienced in the winter of 2009. South Stream is also a
giant and highly technological project, which will bring jobs and
know-how to Bulgaria.
Many experts and politicians consider the expected significant
transit fees from the project to be the most important benefit.
The indirect benefits though may actually surpass the obvious
financial interest in the transit fees. Participation of Bulgaria
in the implementation of this project will make it a key transit
country for Europe. Having a state-of-the-art gas infrastructure
on our territory is an important asset in itself. Maintenance
and expansion of this infrastructure will result in more jobs, an
increased economic activity, more reliable and stable supplies
for users of natural gas, lower carbon emissions and higher
efficiency, thus contributing to the competitiveness and overall
development of the economy.
In addition, Bulgaria has a domestic interest in this project.
Natural gas consumption has never been high in our country.
In peak years it reached about 3.7 bcm. Currently the use of
this important resource is below the optimal level. Household
gasification in Bulgaria is at the meager level of 2.6%. There
are plans to bring it up to 30% by 2030. This is by all means a
very ambitious goal. Some experts, considering the very low
starting point, offer a more realistic figure of 16% gasification
as a feasible target. But even this more modest figure would
mean a significant increase of gas consumption in Bulgaria.
One current example of this trend is a gradual increase in
a number of vehicles powered by natural gas. This process
deserves special support, as it brings cleaner air and, as a
result, a better quality of life.
In addition to its value as a highly environmental energy
resource, natural gas is an important source for the
chemical and pharmaceutical industries, which are also
expected to grow. The economic crisis that hit the world
has not bypassed Bulgaria, but sooner rather than later our
economy will pick up again.
The expected return to the economic growth actually provides
a good opportunity to invest in more environmentally-friendly
low-carbon energy solutions. Natural gas is an obvious
choice in this regard. The rigid emission control policies of
the EU also provide an incentive to invest more in gas. These
regulations, which are seen by some as restrictions, in fact
stimulate efficient use of resources and improvement of the
environment. It is proven that the European companies, and
indeed also countries, which invest more in environment
protection and resource efficiency, are more competitive and
achieve higher economic results.
All of the above indicate optimistic prospects for the increase
of gas consumption in Europe and Bulgaria. South Stream
has the capacity to respond to such an increase and provide
the country with a stable and reliable natural gas supply,
contributing to the national security of Bulgaria.
GAZPROM Day at Europa-Park
Once a year, GAZPROM holds an event at Europa-Park for its
annual GAZPROM Day, a sports extravaganza for the whole
family featuring football club FC Schalke 04.
All Schalke fans who attended wearing Schalke’s blue jersey
received a welcome gift and an exclusive ride on the blue fire
Megacoaster powered by GAZPROM.
This year, GAZPROM extended its invitation to Europa-Park
in Rust, near Freiburg, Germany on 13 July. The event kept
with its football theme again this year by highlighting sports
for people of all ages. Visitors were able to test their football
skills at a penalty-kick wall with speed control to win great
prizes such as exclusive VIP tickets to a FC Schalke 04
home game.
Discovering the world of energy
One special highlight was the chance to see ex-Schalke
professionals Volker Abramczik, Mathias Schober, Martin
Max, and world champion Olaf Thon, who were on hand to
assist with football kicking in addition to the regular program of
autographs and photos. The event also featured a variety of
artists including acrobats and jugglers.
GAZPROM has been a premium partner to Europa-Park.
In 2009 its catapult rollercoaster was named the blue fire
Megacoaster powered by GAZPROM. In March 2010,
GAZPROM opened its Experience Energy attraction—a
multimedia experience that covers everything that is natural
gas. The attraction offers visitors an exciting look at natural
gas, its production, its transport, and its diverse range of
everyday uses.
Experience Energy was comprehensively renovated and
expanded in 2012 to incorporate new, high-tech features
23
GAZPROM Day at Europa-Park
and 3D films that communicate the latest
GAZPROM-related developments.
Its Nord Stream Game demonstrates the
challenges of constructing pipelines under
water, while the multi-touch Moving Molecule
wall simulates chemical processes and shows
natural gas’s diversity of applications. It also
has three 360° multimedia cinemas that
impart information on the Nord Stream and
South Stream pipelines, the eco-friendliness
of natural gas using the example of a green
city, and the subject of natural gas for
transport, which also serves to demonstrate
natural gas’s diversity of applications.
Experience Energy is popular with visitors,
and 90 % of the park’s 30,000 daily patrons
visit the interactive exhibition.
Visitors can round off their visit to
the Experience Energy attraction by
experiencing energy for themselves on
the blue fire Megacoaster powered by
GAZPROM, which accelerates from 0 to
100 km/h in just 2.5 seconds. Every year
around 4 million park visitors ride this main
attraction, which has the highest loop of any
catapult rollercoaster anywhere in Europe.
Europa-Park is becoming well-known
internationally, and received two important
awards in 2013. Stern, one of Germany’s
leading news magazines, named EuropaPark, “Germany’s most popular amusement
park” and it also received a first place
TripAdvisor’s Travelers’ Choice award in
Europe and a second place worldwide award.
Feedback by visitors of Europa-Park
Many thanks for the tickets I won on
Antenne 1. I used them last Sunday
and was pleased to visit your interactive
exhibition. My son is now virtually
addicted to your catapult rollercoaster.
We had a brilliant day, and I wanted to
send my thanks!
—Rainer Barth, who won tickets to
Europa-Park in a GAZPROM competition.
Sent via e-mail in August 2013.
Today is 31 May 2013, and it’s raining
persistently in Güglingen—as it likely is all
over Germany. But it certainly brightened
up my day to receive your pleasant letter
containing four free tickets to EuropaPark that I won in the competition held
by the Heilbronner Stimme and your
company. Many thanks!
—Ingbert Unterseher, who won tickets to
Europa-Park in a GAZPROM competition.
Sent via e-mail in May 2013.
24
BLUE FUEL
We’re sending these pictures by way of thanks for the prizes you donated and we
subsequently won in Yuno magazine. The 7 children had a huge amount of fun. After
ten rides on the blue fire Megacoaster powered by GAZPROM in quick succession,
nothing else in the park even comes close. Many thanks for giving us the chance to
fulfill our children’s wish!
—Andrea Grzeschik, who won a short-stay package at Europa-Park
in a GAZPROM competition. Sent via regular mail in July 2012.
... I’d like to thank you on behalf of
my sons, Tino and Marlon, for the
wonderful day we had at EuropaPark. They especially enjoyed
meeting Erwin. It was a great day,
and promotion staff were motivated;
a great team, despite the hot
weather. Thanks to all involved.
—Tino, Marlon, Rüdiger Weber, who
attended GAZPROM Day 2013.
Sent via e-mail in August 2013.
... On behalf of our children, thanks again for the two days we spent as guests of
GAZPROM and Schalke 04. Everyone involved noted how well everything was
organized—just superb. The kids and their chaperones all had sparkles in their eyes
and faces lit up with joy. It was just fantastic —especially on Schalke’s team bus.
Our chaperones overheard the kids talking about it, “Wow, that was great.” “This is
something to remember.” “That was awesome.” I’ve been doing voluntary work with
Tafel organizations for 15 years, and I’ve collected a lot of donations—large and
small, financial donations, donations of goods or services—but a donation like this,
one that really only thinks of the children and the joy they will have using it and not
just the sponsor’s interests, is the best kind of donation. Thanks to all who helped
prepare and otherwise assisted, thanks to the fans who made the trip possible for our
organization, thanks to Schalke 04, and special thanks to GAZPROM, the sponsor—
you’re all the greatest.
—Manfred Baasner, chairman of charity organization Wattenscheider Tafel e. V.,
Bochumer Tafel e. V. and Kinder Tafel. Sent via e-mail in February 2013.
25
Gazprom Export and Natalia
Vodianova Foundation
Making education possible for
children with autism
A joint educational program spearheaded
by the Naked Heart Foundation of Natalia
Vodianova and Gazprom Export is gaining
momentum. The foundation is working to
enable children with autism and severe
communication-related, mental and behavioral
disorders to study in school. The main focus will
be on training teachers to develop curriculum
for children with special needs.
In Russia, about 90% of children and
adolescents with autism spectrum disorders
(ASD) are excluded from the educational
system. Parents are given the option to
homeschool their child or wait another year
to put them in a traditional classroom. As
a result, the vast majority of these children
are deprived the opportunity to develop their
social skills and acquire knowledge, and their
parents are forced to give up work to be at
home with their child.
A large portion of these children are capable
of learning and achieving positive results.
However, the diagnosis of “autism” implies
certain peculiarities of behavior, such as;
early fatigue and distractibility, difficulty in
social interaction and communication, as
well as issues with sensory integration.
Therefore, traditional education methods are
virtually impossible.
26
“The vast majority of Russian teachers do
not know the methods for teaching children
with autism spectrum disorders,” said Natalia
Vodianova. “So far programs on how to work
with these children don’t exist in general
education schools or special schools. We
are very pleased that Gazprom Export has
agreed to support training school teachers to
become experts in this field.”
“Our company has decided to become
a trustee of the program, given the
importance of helping children with
special needs” said Gazprom Export
CEO, Alexander Medvedev. “As part of
our charitable activities, over the years
we have been developing projects related
to the treatment and social adaptation of
children. I hope that our collaboration with
the Foundation will enable children with
autism to study and successfully integrate
into modern society.”
Gazprom Export actively carries out its own
charitable projects aimed at helping children
with disabilities, which are implemented on
a long term basis and are characterized by
a comprehensive approach to treatment and
rehabilitation of children. Children not only
receive quality medical care, but are also
engaged in a variety of adaptation programs,
allowing them to gain new social skills and
facilitating the process of integration into
normal life.
BLUE FUEL
BLUE FUEL
+7 (499) 503-61-61 | [email protected]
27

October

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