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Alarming reduction of
investment into gas production, transmission and storage
On October 29, 2007, the
executive board of Gazprom reviewed the company's readiness for the heating
season of 2007-2008.
The
press-release informs about the 2007 results of works on expansion of
underground gas storage facilities (UGSF). According to the document, by the
start of the winter season, the maximum potential storage withdrawal will
reach 608 million cubic meters per day (mmcmd), up 8 mmcmd from the same
period of last year. Note that in 2006 Gazprom has increased the maximum
storage withdrawal by 32 mmcmd.
In
the
press-release of February 5, 2007, Gazprom informed that "the Company
sets out to boost the potential daily send-out of UGS facilities to 758 mln
cu m by the withdrawal period 2010-2011". Apparently, the monopoly planned
to increase the maximum withdrawal rate by about 40 mmcmd every year. It
turns out, that the 2007 result is 80 percent below the target.
Table
1.
Maximum
Potential Storage Withdrawal
|
Winter
season |
Maximum daily withdrawal, mmcm |
|
Plan |
Actual |
2005-2006
|
568 |
568 |
2006-2007
|
600
|
600 |
|
2007-2008 |
640 |
608 |
|
2008-2009 |
679 |
|
|
2009-2010 |
719 |
|
|
2010-2011 |
758 |
|
Source:
OAO Gazprom.
UGSF expansion is the least
capital-intensive way to increase gas deliveries. Production and
transmission volumes go up because of the growth of load factor of existing
wells and pipelines, respectively. Gazprom executive board's decision to
expand UGSFs was very timely and highly professional. Relatively small
investment into UGSFs could help to postpone the large-scale investment into
new gas production by a year or two.
The serious setback in the UGSF
program combined with the reduction of investment into gas production and
transmission indicates that Gazprom may not have enough reserves to
fulfill its contractual obligations in the period before the commissioning
of the Bovanenkovo field in Yamal peninsula. Gazprom's policy of buying
different assets all over the world instead of investing capitals into the
core business in Russia becomes alarming. Even if Gazprom does
it to warm up the European market, it may hurt the shareholders of Russian
gas monopoly.
Mikhail Korchemkin,
managing director
October 29, 2007
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