Gazprom: Board of Directors discusses prospects for gas supply and gas infrastructure expansion in Russian regions through 2030

The Gazprom Board of Directors took note of the information about the prospects for the expansion of the gas supply and gas infrastructure network in Russian regions through 2030.

It was noted that Gazprom, being a socially-oriented company, has for many years pursued the creation of conditions for connecting residential and industrial consumers to gas as one of its key activities.

As per the list of instructions of Vladimir Putin, President of the Russian Federation, dated May 31, 2020, gas infrastructure expansion in Russia is to be completed in a stage-wise manner by 2024 and 2030, and residential consumers must not bear any expenses for the connections to gas distribution networks.

Gazprom carries out comprehensive work to reach the goals set by the Russian Government. In 2020, the Company and 67 Russian regions signed gas supply and gas infrastructure expansion programs for a new five-year period, i.e. for 2021–2025. The amount of financing channeled by Gazprom is 2.9 times higher than that in 2016–2020. Over two-thirds of the investments will be provided to rural areas. By 2026, gas grid expansion will be completed to the fullest extent possible in 35 regions of Russia.

The implementation of the programs is well underway in strict compliance with the schedules. Each of the 67 Russian regions has in place joint task forces which include representatives of Gazprom and regional authorities. They coordinate the efforts of the parties so as to make the gas infrastructure expansion operations as timely and efficient as possible.

On April 30, 2021, the Russian Government, in line with the instructions of the country’s leadership, approved the Action plan (roadmap) for the implementation of a socially-oriented and cost-effective system of gas infrastructure expansion and gas supplies to serve the needs of the constituent entities of the Russian Federation.

Among the significant novelties provided for by the document is the introduction of the role of a “single operator of gas infrastructure expansion.”

In June 2021, a number of important amendments were introduced into Federal Law No. 69-FZ on Gas Supplies in the Russian Federation. In particular, the concepts of a single operator of gas infrastructure expansion and a regional one were established in said document. The Russian Government was vested with the authority of designating the single operator of gas infrastructure expansion, schemes of cooperation between the parties to gas grid expansion activities, and oversight schemes for the works.

In July 2021, the Russian Government appointed Gazprom Gazifikatsiya (established by Gazprom Mezhregiongaz and Gazprom Gazoraspredeleniye) as the single operator of gas infrastructure expansion and approved the list of territories falling under the purview of said single operator, which includes 66 constituent entities of the Russian Federation and the Sirius federal territory.

The single operator will build gas pipeline branches, gas distribution stations, inter-settlement gas pipelines, and gas distribution networks up to the boundaries of land plots, thus making it possible to synchronize to a great extent the construction of gas infrastructure expansion facilities, achieve a considerable optimization of the construction costs, and significantly reduce the time required for connecting consumers to gas supply networks.

The establishment of the role of a single operator of gas infrastructure expansion will also serve to fulfill the instruction of Vladimir Putin, President of the Russian Federation, voiced by him in the speech to the Federal Assembly on April 21, 2021. According to the instruction, the Russian Government jointly with the executive bodies of the constituent entities of the Russian Federation, Gazprom, and other gas distribution companies shall ensure that by 2023 additional gas infrastructure expansion is completed, i.e. gas pipelines are laid up to the boundaries of households and gardeners’ non-commercial partnerships that are not connected to gas, but are situated within localities already covered by the gas grid, provided that these activities do not cause the need to expand the flowrate of gas distribution stations. Said additional gas infrastructure expansion shall not require any payments from the population.

Gazprom, jointly with the administrations of the constituent entities of the Russian Federation and the Russian Ministry of Energy, has completed the consolidation of data on the number of households that are not connected to gas in the area of presence of the Gazprom Group’s gas distribution entities. A preliminary procedure of application submission for gas grid connections from potential consumers is in progress.

The roadmap also stipulates that gas supply and gas infrastructure expansion programs for Russian regions will be drawn up and updated on the basis of regional targeted fuel-and-energy balance plans (FEBPs). The FEBPs shall take into account the forecasted energy consumption levels with due regard to the prospects for the regions’ development, as well as the possibility of using alternative gas sources (liquefied natural or petroleum gas) or other types of fuel instead of pipeline gas. The Russian regions are currently working to develop new or update the existing FEBPs. The procedure for drawing up FEBPs is subject to approval by the Russian Ministry of Energy.

Another objective of relevance for Gazprom is to enhance the user-friendliness of its services. It is planned to provide consumers with the possibility of signing a comprehensive contract for gas supply, gas connection, construction of gas pipelines on the applicant’s land plot, and installation and maintenance of gas-using equipment in a single-window mode, i.e. via the client service centers of the Gazprom Mezhregiongaz Group companies, multifunctional centers, or special-purpose website. The website was launched in August. There, one can, inter alia, apply for gas connection and track the status of the application, see the list of documents required, make a preliminary calculation of how much it will cost to build the networks within the boundaries of the land plot, and get answers to additional questions.

The Management Committee was tasked with continuing the work on the expansion of the gas supply and gas infrastructure network in the Russian regions in furtherance of the instructions of Vladimir Putin, President of the Russian Federation.