Gazprom prioritizes projects in economic downturn

Uchenna Izundu
OGJ International Editor

LONDON, Feb. 10 -- OAO Gazprom is prioritizing gas projects, determining which projects it will proceed with, because of decreasing gas demand and challenging financing issues amid the economic downturn.

Speaking through an interpreter, Chief Financial Officer Andrey Kruglov told reporters in London that the company had not yet confirmed its list. "We have also been prioritizing projects in our investment program…and this will allow us to see which projects will be financed and which projects are going ahead," he said. Its key Yamal Peninsula project is expected to go ahead.

Gazprom management came to London Feb. 10 to give a strategy and budget update to investors.

Kruglov said the company would wait until it determines this year's first quarter results before assessing how the global and Russian financial situation would impact its budget. "But we have started developing different scenarios which depend on oil price levels," he said.

Last December, the company approved a draft investment program of 920.44 billion rubles, another 699.88 billion rubles in capital investments, and 220.56 billion rubles for long-term financial investments. He said these investment figures remain unchanged.

The company will focus on improving efficiency and better handling of its liquidity. It intends to keep a tight reign on costs by cutting back on sponsorships, social activities, and personnel by 10%. It also has launched an advanced payment system to ensure that its customers don't fall behind on their bills. This applies to 1-year contracts and primarily Russian customers.

Priorities
Gazprom sait its major Shtokman gas condensate project in the Barents Sea is on track, however, and the shareholders, including Total SA and StatoilHydro, are to make a final investment decision in first-quarter 2010, said Alexander Medvedev, deputy chief executive of Gazprom.

The partners expect to run up high costs before they make the decision whether to execute it, which is unusual, Medvedev added, pointing out that this demonstrated how confident they were about it.

Shtokman is scheduled to export gas by pipeline in 2013 and the 7.5 million tonnes/year liquefaction plant would start in 2014.

Other major Gazprom projects include predevelopment work in Bovanenkovo and Prirazlomnoye fields; the Apt-Albian deposits in the Nyda area of Medvezhye gas and condensate field; the Zapadno-Pestsovaya area of Urengoy oil and gas condensate field; the Kharvutinskaya area of Yamburg gas and condensate field; and other fields.

Gas transportation priorities include construction of the Bovanenkovo-to-Ukhta and Ukhta-to-Torzhok trunkline systems; the Gryazovets-to-Vyborg, Pochinki-to-Gryazovets, and Murmansk-to-Volkhov gas pipelines; and the SRTO-to-Torzhok gas trunkline.

Gazprom's presence in London reignited rumors that it was interested in buying Centrica PLC. "We are not in talks with either the shareholders or the management of Centrica," Medvedev said.

Contact Uchenna Izundu at uchennai@pennwell.com.

Related Articles

NCOC lets $1.8-billion pipeline contract for Kashagan field

02/06/2015 North Caspian Operating Co. (NCOC) has let a $1.8-billion engineering and construction contract to ERSAI Caspian Contractor LLC, a subsidiary of Sa...

AOPL releases 2015 safety performance and strategic planning report

02/06/2015 The Association of Oil Pipe Lines is committed to further improvements despite a 99.99% safe petroleum liquids delivery rate, AOPL Pres. and Chief ...

PAA to expand Delaware basin crude pipeline systems

02/05/2015 Plains All American Pipeline LP (PAA) plans to build two Delaware basin crude oil pipelines and related gathering systems, to expand its existing B...

Alberta’s premier seeks more North American energy integration

02/05/2015 Better policy integration and cooperation will be needed for Canada, Mexico, and the US to fully realize the North American energy renaissance’s po...

Oil, gas infrastructure investments essential, House panel told

02/04/2015 Investments in oil and gas transportation and storage should move ahead because they are essential in continuing the US economic recovery and North...

Inpex starts development drilling at Ichthys field

02/04/2015

Inpex Corp. has started development drilling in Ichthys gas-condensate field in the Browse basin, about 200 km offshore Western Australia.

BG’s 2015 budget ‘significantly lower than 2014’

02/03/2015 BG Group plans capital expenditures on a cash basis of $6-7 billion in 2015, a range it says is “significantly lower than 2014” due to “a lower oil...

Live Oak LNG to build Calcasieu Ship Channel liquefaction, export site

02/03/2015 Live Oak LNG LLC, a subsidiary of Parallax Energy LLC, Houston, will invest $2 billion to develop a 5-million tonne/year liquefaction plant and LNG...

EPA suggests DOS reconsider Keystone XL climate impact conclusions

02/03/2015 The US Department of State might want to reconsider its conclusions regarding potential climate impacts from the proposed Keystone XL crude oil pip...
White Papers

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by
Available Webcasts

On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected