PJSC Gazprom Annual Report
2019
Going beyond the Arctic Circle
Yamal offers vast hydrocarbon reserves. In the challenging
Arctic conditions, Gazprom has built from scratch a strong
production complex, transportation infrastructure, and a full
life-support system. Specifically, Obskaya–Bovanenkovo–
Karskaya rail line with the world’s longest bridge beyond the
Arctic Circle and the first new airport in modern Russia’s
history were built.
Less Metal for Improved Efficiency
The gas produced in the Yamal Peninsula is delivered
to the Unified Gas Supply System (UGSS) of Russia via the
Bovanenkovo–Ukhta and Bovanenkovo–Ukhta 2 next-
generation trunk gas pipelines operating at a record-high
onshore pipeline pressure of 120 atm. This was achieved
primarily by using domestic heavy-duty steel pipe
commissioned by PJSC Gazprom to significantly reduce
the metal intensity of the project and improve gas
transportation efficiency.
Gazprom actively develops a new gas production hub
in the Yamal Peninsula, which will become the key
contributor to the Russian gas industry development
in the 21st century.
The peninsula’s gas reserves are equivalent to over
100 years of production by Gazprom.
Automation
Gazprom uses advanced technical solutions and highly
reliable equipment to tap Yamal gas. All production sites
across the Bovanenkovskoye field — a core of the Yamal
hub — are equipped with advanced automation systems and
minimally manned technologies. A particular emphasis is
made on ensuring a high level of industrial safety and caring
for the Arctic environment.
Environment-friendly Advanced Technologies
When constructing various facilities, Gazprom is primarily
concerned with preserving Yamal’s unique natural
environment. The Company seeks to limit its facilities to
a minimum area and uses two-phase thermal piles and
insulated pipe for wells to considerably alleviate impacts
on the permafrost. Zero-discharge water systems prevent
water reservoir and soil pollution.
Power of Siberia is the largest gas transportation
system in eastern Russia designed to supply gas from
the Irkutsk and Yakutia gas production hubs to Russian
consumers in the Far East and to China.
A New Dimension of Cooperation
On 2 December 2019, an official ceremony was held to
celebrate the start of the first-ever Russian pipeline
gas supplies to China, the world’s most promising gas
market. Gazprom will supply over 1 tcm of gas over the next
30 years to the People’s Republic of China via Power of
Siberia, which is also a key element of a gas supply system
for Russia’s eastern regions and their gas infrastructure.
Advanced Technologies
The Power of Siberia gas pipeline was constructed using
domestically-produced steel pipe with internal flow coating
to reduce pipe roughness and, accordingly, friction, thus
making gas transmission less energy-consuming. External
insulation coating is made of innovative domestic
nanocomposite materials, which ensures high corrosion
resistance of the gas pipeline. Unique pipes with enhanced
deformation properties to cross active tectonic faults were
commissioned by PJSC Gazprom from domestic
manufacturers.
Optimised Solutions
The Chayandinskoye field in Yakutia, which was the first
to supply gas to Power of Siberia, is operated using minimally
manned technologies. Equipment control and operations
management are carried out in an automatic mode.
The field spans a large area and in order to reduce costs for
the construction of power lines at remote gas well pads,
independent energy sources (based on renewables) were
introduced.
Efficient Use of Resources
Natural gas from eastern fields is rich in valuable
components: ethane, propane, butane and helium, used
in gas-to-chemicals and other industries. To separate these
components from the gas supplied via Power of Siberia,
Gazprom is constructing the Amur Gas Processing Plant
(GPP), which will become one the largest GPPs globally in
terms of production capacity (42 bcm per year) and an
absolute leader in terms of helium output (up to 60 mmcm).
Gazprom operates the only helium production facility in
Russia, and the launch of the Amur GPP will result in
a 13 times increase in helium output for Gazprom, which
amounts to a third of the world’s current demand for
the sun gas.
TurkStream is a new export gas pipeline stretching
from Russia to Turkey across the Black Sea. The first
of the pipeline’s two strings is intended for Turkish
consumers, while the second one carries gas to
southern and southeastern Europe. The project has
an annual design throughput capacity of 31.5 bcm.
Commercial supplies via the gas pipeline commenced
in January 2020.
Unique Technology
TurkStream is the first offshore gas pipeline with a pipe
diameter of 813 mm installed at a depth of 2,200 m. The
pipeline uses 12 m long concrete- and polypropylene-coated
pipes designed specifically for the project. TurkStream was
installed at a rate of over 6 km per day (less than three
minutes per pipe) — a world record for offshore gas
pipelines.
Monitoring and Maintenance
Special equipment is used to monitor the pipeline’s condition,
including inline inspection and cleaning tools, travelling
through the pipeline from the Russian to the Turkish coast.
High standards of safety, including environmental safety, are
observed with continuous environmental monitoring.
Energy Security
According to some experts, the Balkans is Europe’s most
vulnerable region in terms of energy supply. TurkStream will
significantly improve the reliability of gas supplies, which
means enhanced energy security for the Balkans and the
entire Southern and Southeastern Europe.
Energy Flow
The starting point for feeding gas into TurkStream is the
Russkaya compressor station, which maintains the pressure
required for transmitting gas over a distance of more than
900 km. In order to successfully resolve this challenge,
hi-tech Russian equipment, such as the Ladoga gas pumping
units and Iceberg aerial coolers, was installed at the station.
Gazprom is the leader in electricity and heat
generation among domestic heat-producing
companies.
In 2019, the Group completed an ambitious
capex programme to build new generating
capacity under capacity supply agreements
(CSAs).
Energy for Growth
The total installed capacity of the Unified Energy System
of Russia was over 243.2 GW in 2019 with the share of TPPs
at 67.66%. Gazprom energoholding operates over 80 thermal
power plants (mostly gas-fired and some coal-fired) with
39 GW and 71.2 Gcal/h of installed electrical and heat
capacity, respectively. TPPs are major consumers of energy
resources, primarily natural gas. These assets generate an
additional economic benefit for Gazprom, with the volume of
gas supplies to one large TPP comparable to the volumes
supplied to countries such as Slovakia, the Netherlands or
Hungary.
New Capacity
By completing the long-term CSA programme, Gazprom has
expanded its generating capacities in Russia by 9 GW and
improved their efficiency. The introduction of combined cycle
gas turbines and circulating fluidised bed technology has
helped Gazprom to considerably reduce specific fuel and
energy consumption across its heat and electricity
generation assets.
A Forward-looking Strategy
Gazprom energoholding will continue evolving as Russia’s
largest power generation holding with reliable power supplies
to consumers, financial stability, steady profit growth and the
use of Russian equipment its highest priorities.
Gazprom Energoholding’s First Project in Europe
In 2019, the construction of Serbia’s first CCGT power plant
commenced — Gazprom energoholding’s first project
outside Russia. CCGT units offer significant economic and
environmental benefits, specifically when compared to brown
coal-fired plants historically operated in Serbia. CCGT units
do not generate huge volumes of waste (coal ash), and there
are no particulate matter or sulphur oxide emissions.
A New Business Model
The project is an example of the practical implementation
of Gazprom’s new business model for monetisation of
hydrocarbon reserves. Consolidation of liquefied natural gas
(LNG) and ethane production into a single site significantly
improves the project’s economics, including unit economics,
and helps to significantly reduce resource and price risks.
The gas remaining after processing and liquefaction
will be supplied to the gas transmission system (GTS) of
PJSC Gazprom.
Gas-to-Plastic
The ethane-rich natural gas produced by Gazprom from
the Nadym-Pur-Taz region in Western Siberia will be used
as a feedstock for the facility. Ethane fraction separated at
the complex will then go to further processing. The gas
chemical plant will produce multiple polyethylene grades
which are in demand in other industries.
LNG
The new plant near the seaport of Ust-Luga will be the
largest in Northwestern Europe in terms of LNG output:
13 mm tonnes per year.
PJSC Gazprom and AO RusGazDobycha finalised
the configuration of a project to construct an integrated
complex for gas processing and liquefaction near
the seaport of Ust-Luga (Leningrad Region). Taking
into account AO RusGazDobycha’s gas chemical
enterprise technologically interconnected with
the complex, the project will create a major modern
industrial cluster in northwestern Russia.
The commissioning of the facilities has been
synchronised.
Environment-friendly and Profitable Product
Natural gas-powered vehicles offer significantly improved
environmental performance vs vehicles powered by traditional
Euro 5 compliant fuels. Natural gas is also 2.5 times cheaper
than AI-95 gasoline. Natural gas sales at Gazprom’s filling
facilities continued to grow, demonstrating a 30% increase
in 2019.
Country-wide Filling Network
Gazprom’s methane filling network in Russia currently
comprises over 300 facilities and grows every year, with
a focus on constructing refuelling infrastructure for cars,
buses and trucks on federal highways, such as M-1 Belarus,
M-4 Don, M-5 Ural, M-7 Volga, M-10 Russia, M-11 Neva
and the Central Ring Road.
Accelerated Development
The Company is also running a number of pilot projects for
accelerated development of the NGV infrastructure jointly
with the administrations of Russian constituent entities,
namely in the Belgorod, Kaliningrad, Leningrad and Rostov
Regions and the city of Saint Petersburg. In addition to
building new gas filling stations, the projects provide for the
expansion of NGV fleets and the creation of new service
centers for the retrofitting and maintenance of such vehicles.
Operational Needs
Between 2014 and 2019, Gazprom has increased its corporate
NGV fleet by 2.7 times to 12.3 thousand, representing more
than 50% of Gazprom vehicle fleet suitable for conversion to
natural gas.
Production and sales of natural gas (methane)
as a motor fuel is a strategic priority for PJSC Gazprom.
OOO Gazprom gazomotornoe toplivo is a specialist
company established to ensure consistent development
of the NGV fuel market.
Gazprom has traditionally supported various
social initiatives in culture, science, education
and promotion of a healthy lifestyle.
Oh Football, You are Peace!
In partnership with the Union of European Football
Associations (UEFA), Gazprom runs the Football for Friendship
International Children’s Social Programme. In 2019, the
programme culminated in the events held in Madrid as part
of the UEFA Champions League Final official closing events.
Over 800 children and adults from Europe, Asia, Africa, South
and North America took part in the programme events. Young
athletes of Football for Friendship from different countries
took part in the most diverse football lesson on the planet
and set the Guinness World Record. The International Football
for Friendship Coaches Academy, a unique free online
platform offering a set of practical exercises, was also launched
as part of the project in 2019. The course was developed by
training managers and coaches from various football club
academies and experts from FIFA’s humanitarian activities.
Preserving the Cultural Heritage
Gazprom helps preserve Russia’s cultural heritage by
restoring the historical look and feel of our cities, returning
lost artifacts and sacred objects, restoring pieces and works
of art. Gazprom helped complete the restoration of the
Imperial Court Church of the Resurrection and the Lyons
Hall in the Tsarskoe Selo State Museum and Heritage Site’s
Catherine Palace. PJSC Gazprom also supported the complete
restoration of the Holy Rus by Mikhail Nesterov, which returned
to the permanent display of the State Russian Museum. The
Company continued a large-scale programme to finance the
beautification of Saint Petersburg in 2019. PJSC Gazprom was
also an official partner of the 14th Stars on Baikal International
Music Festival and a general partner of the Blue Bird Open
National Young Talent Competition held by State Television
Company Rossiya Channel. The Company also supports
cultural and educational programmes of the Russian
Orthodox Church.
Flames of Victory
Gazprom Group helps preserve the historical memory of the
Great Patriotic War. In 2019, the Company made donations
for maintaining 62 Eternal Flame memorials in Russia’s Hero
Cities and Cities of Military Glory. Over the same period,
Gazprom’s subsidiaries performed maintenance, repairs and
renovation of gas equipment and prepared gas infrastructure
at 1,331 Eternal Flame memorials for the Victory Day. In some
regions, the memorials were connected to the gas grid.
Helping People around Us
PJSC Gazprom finances costly treatment for people with
disabilities and severely ill children and provides charitable
support in acquiring specialist medical devices (rehabilitation
machines, prosthetics, wheelchairs, electric lifts and required
accessories).
In December 2019, Gazprom sponsored New Year charity
events held in Moscow and Saint Petersburg for children
from vulnerable groups.
Conventions used in the Annual Report
External factors
Results
Goals and plans
Resources and capital
Human capital
Governing bodies
Documents
Information
Additional information sources
This Annual Report has been prepared based on Resolution No. 1 of
PJC Gazprom’s Management Committee On Organising Activities Related
to Holding PJSC Gazprom’s Annual General Shareholders Meeting dated
23 January 2020.
The terms “PJSC Gazprom” and the “Company” used in this Annual
Report refer to the parent company of Gazprom Group, i.e. to Public
Joint Stock Company Gazprom (Open Joint Stock Company Gazprom,
JSC Gazprom, before 17 July 2015). The terms “Gazprom Group”, the
“Group” or “Gazprom” mean an aggregate of entities which includes
PJSC Gazprom and its subsidiaries and entities. For the purposes of this
Annual Report, the lists of Gazprom Group subsidiaries and entities,
associates and joint ventures, as well as entities in which Gazprom has
investments classified as joint operations, were prepared based on the
principles used in the preparation of PJSC Gazprom’s IFRS consolidated
financial statements.
Similarly, the terms “Gazprom Neft Group” and “Gazprom Neft”
refer to PAO Gazprom Neft and its subsidiaries and entities; “Gazprom
energoholding” refers to OOO Gazprom energoholding and its subsidiaries;
and “Gazprom neftekhim Salavat” refers to OOO Gazprom neftekhim
Salavat and its subsidiaries.
This Annual Report determines some operating and economic metrics
in accordance with the IFRS principles for Gazprom Group companies
included in the IFRS consolidated financial statements of PJSC Gazprom
for the year ended 31 December 2019. Therefore, they may differ from
similar metrics used in reports of PJSC Gazprom, which are prepared
under Russian statutory requirements.
Moreover, some operating metrics of PJSC Gazprom, its subsidiaries,
entities, associates, and joint ventures are determined in accordance
with the principles underlying management reporting. Metrics calculated
using these methods might be not comparable between each other due
to differences in the methodologies used for preparing consolidated
financial statements and for management reporting.
Analysis of financial results should be read in conjunction with the
audited consolidated financial statements of PJSC Gazprom for the year
ended 31 December 2019, prepared in accordance with IFRS.
Among other things, the Annual Report discloses information on the
future production and economic activities of Gazprom Group, based on
Gazprom management’s forecasts and estimates considering the current
situation. Actual results may differ from the said forecasts and estimates
due to the effect of various objective factors.
14
PJSC Gazprom Annual Report 2019
PJSC Gazprom
Annual Report
2019
15
PJSC Gazprom Annual Report 2019 Letter to Shareholders
by the Chairman of PJSC Gazprom’s
Board of Directors
and the Chairman of PJSC Gazprom’s
Management Committee
Dear Shareholders,
In many respects, 2019 was a hallmark year for Gazprom, as the Company implemented
strategic projects to diversify its business, strengthen its position in the global energy industry
and develop the Russian economy.
In 2019, Gazprom launched the first-ever Russian pipeline gas supplies to China, one of
the world’s most promising gas markets. Having been commissioned by the Company, the
Power of Siberia gas pipeline became the mainstay of a new powerful system of gas exports
and gas supply to Russia’s eastern regions.
Gazprom finished the construction of TurkStream, a new, high-tech pipeline for exporting
gas to Europe, with January 2020 seeing the launch of commercial gas supplies across the
Black Sea. The Company also continued the construction of the Nord Stream 2 gas pipeline
linking Russia and Germany via the Baltic Sea. Green energy supplies taking low carbon
footprint routes are fully in line with the interests of our customers.
In 2019, Gazprom’s gas exports to Europe, Turkey and China were 199.3 bcm — one of
the best results in the Company’s history. The Company continued to live up to its reputation
as a responsible supplier by flexibly responding to market demand and offering a wide
choice of contract terms to its customers. The extension of contracts for gas transportation
across Belarus and Ukraine negotiated in 2019 was also an important factor in this context.
In 2019, Gazprom Group produced over 500 bcm of gas, the highest level for the last eight
years starting from 2012.
The Bovanenkovskoye field is becoming an increasingly significant contributor to produc-
tion, serving as a core asset for the Yamal gas production hub. The Company has already
started field infrastructure construction at the Kharasaveyskoye field, another core asset of
the Yamal megaproject.
The Yamal Peninsula is a giant gas-bearing basin which will supply Russian and inter-
national consumers for more than 100 years.
During the year, the Company continued to actively ramp up the capacity of the Northern
Gas Transmission Corridor to the Baltics, in order to supply Yamal gas to Europe, while for the
eastern route, the Power of Siberia 2 gas pipeline entered the pre-investment phase in 2020.
Further streams of revenue for the Group in the coming years will include projects for
processing and recovering valuable components from natural gas produced in Eastern and
Western Siberia. Overall project completion for the Amur Gas Processing Plant (GPP) stood
at 55.2% at end-2019, with the first trains to be commissioned as early as 2021, while the
Ust-Luga complex is already in early stages of construction.
Letter to Shareholders
by the Chairman of PJSC Gazprom’s
Board of Directors
and the Chairman of PJSC Gazprom’s
Management Committee
In 2019, as in previous years, Gazprom fully supplied the domestic demand, as Russia is
a priority market for the Company. Gazprom will continue to secure domestic gas supplies in
the future, enhancing supply reliability and creating new options. For example, since January
2019, the Kaliningrad Region has been able to draw supplies from an offshore gas receiving
terminal and the Marshal Vasilevskiy fl oating storage and regasifi cation unit. The creation
of this alternative supply option has fundamentally improved the energy security of the region.
The Company has historically placed a special focus on the expansion of gas infrastructure.
This socially signifi cant project covered 66 Russian regions in 2019, focused primarily on rural
areas. In total, gas network grew by 1,880 km over the year to cover 305 new locations. As at
1 January 2020, the gas penetration rate in Russia reached 70.1%.
The expansion of gas infrastructure is fi rst and foremost focused on creating the necessary
environment to improve the country’s quality of life and boost its industrial output. With the
support of Russian regional authorities, Gazprom has started work on new gas infrastructure
expansion programmes for the fi ve-year term up to 2026.
Another highlight of 2019 is the successful completion of Gazprom Group’s large-scale
power generation capex programme. Since 2007, Gazprom energoholding companies have
built close to 9 GW of advanced generating capacities, including Unit 2 at the Grozny TPP
commissioned in summer 2019. Additionally, Gazprom energoholding has commenced the
construction of its fi rst international power plant in Pančevo, Serbia.
PAO Gazprom Neft has continued improving its operational performance, consistently
ramping up its annual production to the 100 million tonnes of oil equivalent target. The subsidiary
will reach this target, among other factors, through further integration with Gazprom Group’s
operations. Gazprom has decided to use Gazprom Neft’s broad experience and expertise to
develop complex hydrocarbon deposits.
Dear Shareholders, The Company continues to steadily grow while maintaining a consider-
able safety margin, improving its effi ciency across all business lines and achieving excellence
in corporate governance. The headwinds faced by the global economy in 2020 will not prevent
PJSC Gazprom from making progress towards its long-term strategic goals.
Viktor Zubkov
Chairman of PJSC Gazprom’s Board of Directors
Alexey Miller
Chairman of PJSC Gazprom’s Management Committee
Contents
1
2
3
4
5
6
18
PJSC Gazprom Annual Report 2019 Company Information 20
Strategy 52
Performance Results 80
Environmental and Social Responsibility 138
Corporate Governance 162
Appendices 218
19
PJSC Gazprom Annual Report 2019 Company
Information
20
PJSC Gazprom Annual Report 2019
PJSC Gazprom Annual Report 2019 n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
Gazprom Group Today 22
Gazprom Group’s Position
in the Global and Russian Energy Industry 27
Natural Gas 27
Oil and Gas Condensate 30
Electricity and Heat Generation 31
Operations and Marketing Geography 32
Business Model 36
PJSC Gazprom’s Board of Directors 41
PJSC Gazprom’s Management Committee 44
The Company’s History 48
2019 in the Company’s History 50
21
PJSC Gazprom Annual Report 2019
Gazprom Group Today
Gazprom is one of the world’s largest oil and gas
companies in terms of reserves, production, and market
capitalisation.
Key Figures for 2019
Gazprom Group’s net sales revenue
RUB 7,659.6 bn
Natural gas reserves in Russia
as at 31 December 2019*
34,899.0 bcm
Gazprom Group’s net sales revenue breakdown, RUB bn
Net revenue from gas sales
3,800.7
Natural and associated gas production in Russia**
Net revenue from sales
of refined products
Net revenue from sales
of crude oil and gas condensate
Net revenue from sales
of electricity and heat
Net revenue from sales
of gas transportation services
Other revenues
2,111.2
752.8
518.4
215.3
261.2
Capital expenditures
RUB 1,818.7bn
Profit for the year
attributable to the owners of PJSC Gazprom
RUB 1,202.9 bn
501.2 bcm
Total headcount as at 31 December 2019
473.8 thousand people
Cost of debt as at 31 December 2019
4.8 %
* Russian classification of reserves. A+B1+C1 gas reserves, including reserves of entities in which Gazprom has investments classified as joint operations.
** Including the Group’s share in the production volumes of entities in which Gazprom has investments classified as joint operations.
22
PJSC Gazprom Annual Report 2019 Gazprom Group Today
n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
Mission
Strategic Goal
Reliable, efficient and balanced supply
of natural gas, other energy resources
and their derivatives to consumers.
Strengthening its leadership
among global energy companies
by diversifying sales markets,
maintaining energy security and sustainability,
driving operational efficiencies
and leveraging R&D capabilities.
The Company’s Ranking Positions and Certification
of PJSC Gazprom’s Management Systems
to Internationally Recognised Standards
International and National
Sustainability Initiatives
PJSC Gazprom has Committed to
— According to the CDP’s international rating, Gazprom
has been a top player in the energy sector of the
Russian investment partnership rating for eight years —
a strong position reflecting the effectiveness of the
corporate climate policy
—
In 2019, PJSC Gazprom became a leader in the Russian
Union of Industrialists and Entrepreneurs’ Transparency
and Responsibility, and Sustainable Development
Vector sustainability indices
— PJSC Gazprom is No. 1 in the 2019 Ranking of Russia’s
Most Attractive Employers according to University
Students majoring in Business, Engineering / Natural
Science, Healthcare / Medicine, compiled by Universum
— OHSAS 18001:2007 — certificate of compliance for
PJSC Gazprom’s Unified Occupational Health and
Safety Management System (UOHSMS), also covering
58 of its subsidiaries and entities
— The Universal Declaration of Human Rights (UDHR),
adopted by the UN General Assembly on 10 December
1948
— The Declaration on Fundamental Principles and Rights
at Work, adopted by the International Labour
Organization (ILO) on 18 June 1998
— UN Global Compact Principles
— Transforming Our World: the 2030 Agenda for
Sustainable Development, the Resolution adopted by
the UN General Assembly on 25 September 2015
— Russian Standard GOST R ISO 26000:2012 — Guidance
on Social Responsibility
— Presidential Decree No. 204 On National Goals and
Strategic Objectives of the Russian Federation through
to 2024, dated 7 May 2018
ISO 9001:2015 — certificate of compliance for
PJSC Gazprom’s Quality Management System, also
covering 64 of its subsidiaries and entities
— Public Non-Financial Reporting Development Concept
and the Concept Implementation Plan approved by
Russian Government Decree No. 876-r dated 5 May 2017
ISO 14001:2015 — certificate of compliance for
PJSC Gazprom’s Environmental Management System
(EMS) covering 34 of its wholly-owned subsidiaries
and entities
— Corporate Governance Code approved by the Board of
Directors of the Bank of Russia on 21 March 2014
— Anti-Corruption Charter of Russian Business
— Social Charter of Russian Business
—
—
2323
PJSC Gazprom Annual Report 2019
6,546.1
8,224.2
7,659.6
1,467.7
2,599.3
1,859.7
1,504.6
1,795.9
1,818.7
−218.8
−22.1
−66.5
1.6
1.2
1.7
Note. Calculated as the ratio of net debt to adjusted EBITDA denominated in Russian
roubles.
Gazprom Group Today
Operating Highlights
Financial Highlights
Natural and associated gas production in Russia, bcm*
Net sales revenue, RUB bn
2017
2018
2019
Oil production in Russia, mm tonnes*
2017
2018
2019
472.1
498.7
501.2
48.6
48.3
48.0
2017
2018
2019
Adjusted EBITDA, RUB bn
2017
2018
2019
Gas condensate production in Russia, mm tonnes*
Capital expenditures, RUB bn
2017
2018
2019
15.9
15.9
16.7
2017
2018
2019
Total hydrocarbon production in Russia, mm boe*
Free cash flow, RUB bn
2017
2018
2019
3,550.2
3,720.7
3,741.2
2017
2018
2019
Liquid hydrocarbon processing, mm tonnes**
Net debt / adjusted EBITDA
2017
2018
2019
Electricity generation, bn kWh
2017
2018
2019
64.1
67.4
67.1
156.5
153.2
149.0
2017
2018
2019
* Including the Group’s share in the production volumes of entities in which Gazprom has investments classified as joint operations.
** Excluding tolling arrangements.
24
PJSC Gazprom Annual Report 2019 n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
Share Capital
Shares are listed on:
the Moscow Exchange — ordinary shares
the London Stock Exchange (LSE) — ADRs
Tickers: GAZP, OGZD
Industry: Integrated Oil and Gas
PJSC Gazprom’s shareholding structure
as at 31 December 2019, %
The Russian Federation represented
by the Federal Agency for State
Property Management
AO ROSNEFTEGAZ*
AO Rosgazifikatsiya*
ADR holders**
Other registered holders
Dividends
38.37
10.97
0.89
19.70
30.07
3,266.5
3,863.8
3,863.9
2,397.5
3,014.4
3,167.8
869.0
849.4
696.1
PJSC Gazprom’s balanced dividend policy reflects the
Company’s commitment to achieve long-term growth
targets while protecting the rights of shareholders and
increasing shareholder returns.
PJSC Gazprom’s dividend history and dividend yields, 2015–2019
2015
2016
2017
2018
2019
Dividend per share***,
RUB
PJSC Gazprom’s
dividend yield****, %
7.89
8.0397
8.04
16.61
15.24
5.8
5.2
6.2
10.8
5.9
Gazprom Group Today
Debt Capital
Total debt, RUB bn
2017
2018
2019
Net debt, RUB bn
2017
2018
2019
Cash and cash equivalents, RUB bn
2017
2018
2019
Debt maturities as at 31 December 2019, %
Less than 1 year (inclusive)
1–2 years (inclusive)
2–5 years (inclusive)
Over 5 years
20
12
42
26
Credit ratings of PJSC Gazprom
Rating agency
Standard & Poor’s
Fitch Ratings
Moody’s
Dagong
ACRA
Long-term
foreign currency rating
Rating date
BBB−
(stable outlook)
BBB
(stable outlook)
Baa2
(stable outlook)
AAA
(stable outlook)
AAA
(stable outlook)
27 February 2018
15 August 2019
12 February 2019
30 October 2018
2 February 2018
* The cumulative share in PJSC Gazprom controlled directly or indirectly by the Russian Federation and calculated by direct addition totals 50.23% and is owned through the full
ownership of AO ROSNEFTEGAZ, which also holds a 74.55% stake in AO Rosgazifikatsiya.
** The Bank of New York Mellon issued ADRs on PJSC Gazprom shares.
*** Recommended dividend shown for 2019.
**** Dividend yield for the relevant period is calculated as a ratio of total dividend paid per share for the relevant year to the share price as at 31 December.
2525
PJSC Gazprom Annual Report 2019
275
259
−6%
4,179
3,242
−22%
4,831
3,337
−31%
Gazprom Group Today
Environmental and Social Responsibility
With a relentless focus on sustainable development,
PJSC Gazprom is guided by Russian laws and internationally
recognised sustainability initiatives.
The Company has published its GRI-compliant sustain-
ability reports since 2008.
Gazprom improved its MSCI ESG rating in 2019.
Relative greenhouse gas emissions
from Gazprom Group’s gas operations vs the 2014 baseline,
kg of CO2 equivalent per toe of products sold
2014
2019
Change 2019/2014
Gazprom Group’s wastewater discharge
into surface water bodies vs the 2014 baseline, mmcm
2014
2019
Change 2019/2014
Gazprom Group’s waste generation vs the 2014 baseline,
thousand tonnes
2014
2019
Change 2019/2014
Gazprom Group’s environmental protection costs in Russia
in 2019, RUB bn
Current environmental protection
costs
Capital expenditures for
environmental protection and
sustainable use of natural resources
Negative environmental impact
charges
Total
32.18
20.42
0.62
53.22
0.11
0.17
0.09
1.17
0.57
1.35
MSCI ESG rating in 2019
Company
Shell
Gazprom
NOVATEK
Chevron
LUKOIL
Rosneft
Rating
A
BBB
BBB
BBB
BBB
B
Lost-time injury frequency rate (LTIFR)
across entities covered by the UOHSMS
2017
2018
2019
Fatal accident rate (FAR)
across entities covered by the UOHSMS
2017
2018
2019
26
PJSC Gazprom Annual Report 2019 Gazprom Group’s Position
in the Global and Russian Energy Industry
(in or as at December )
n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
Natural Gas
Gazprom is the global leader by natural gas reserves and gas
production, ahead of national oil and gas companies, as well
as major global public oil and gas companies.
PJSC Gazprom is the biggest supplier of natural gas to
European far abroad countries. Gazprom Group is the
absolute leader by sales in the Russian market.
Exploration
Reserves
Largest
hydrocarbon discoveries
globally
No. globally
by natural gas
reserves
Major fi eld discoveries in , bboe
Proved natural gas reserves
of major public oil and gas companies, tcm
Dinkov fi eld
(Gazprom)*
Nyarmeyskoye fi eld
(Gazprom)*
Eram
(NIOC)
Glaucus
(ExxonMobil)
Namavaran
(NIOC)
Orca
(BP)
. . . . .
Range of estimates
Gazprom**
NOVATEK
Rosneft
ExxonMobil
PetroChina
Sources: PJSC Gazprom, Bloomberg, companies’ reports
%
Sources: PJSC Gazprom, data of leading world analytical agencies available as at the
time of writing this Annual Report
of global natural gas reserves***
%
of Russia’s natural gas reserves***
* C+C reserves under the Russian classifi cation.
** Gazprom Group’s proved natural gas reserves under PRMS, including the share in the reserves of entities in which Gazprom has investments classifi ed as joint operations and
excluding the share in the reserves of associates and joint ventures. .% of Gazprom Group’s A+B+C reserves (as per the Russian Classifi cation of Reserves and Resources) were
estimated under PRMS standards as totalling . tcm. Data on other major public oil and gas companies includes share in the reserves of associates and joint ventures.
*** Including the Group’s share in the reserves volumes of entities in which Gazprom has investments classifi ed as joint operations.
PJSC Gazprom Annual Report 2019
Gazprom Group’s Position
in the Global and Russian Energy Industry
Natural Gas
Production
Transportation
No. 1 globally
by gas production
Gas production by major public oil and gas companies, bcm
Gazprom*
BP
ExxonMobil
PetroChina
Shell
Sources: PJSC Gazprom, Bloomberg, companies’ reports
100 200 300 400 500
12 %
of global natural gas production**
68 %
of Russia’s natural gas production**
No. 1 globally
by total length
of gas transportation
system (GTS)
175.2 thousand km
total length of GTS in Russia
Processing
No. 1 in Russia
by gas processing
volumes
More than 50 %
of Russia’s total gas processing volumes
* Natural and associated gas production of Gazprom Group in Russia including the share in the production volumes of entities in which Gazprom has investments classifi ed as joint
operations, and including the share in the production volumes of associates and joint ventures for data comparability with major public oil and gas companies.
** Including the Group’s share in the production volumes of entities in which Gazprom has investments classifi ed as joint operations.
28
PJSC Gazprom Annual Report 2019
Gazprom Group’s Position
in the Global and Russian Energy Industry
Natural Gas
n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
Marketing
Carbon Footprint
The lowest
products’ carbon footprint
among the world’s largest
oil and gas companies
Relative greenhouse gas emissions,
kg of CO2 equivalent per boe of products sold
Gazprom
BP
Chevron
ConocoPhilips
Eni
Equinor
ExxonMobil
Petrobras
Shell
Total
Source: CDP
65 130 195 260 325
No. 1 globally
by gas exports
Gas sales by Russia’s major gas suppliers, bcm
Gazprom
NOVATEK
Rosneft
Source: PJSC Gazprom’s IFRS consolidated fi nancial statements
40 80 120 160 200
Gas sales by major gas suppliers
to European far abroad countries, bcm
Gazprom*
Equinor**
Qatar Petroleum***
Sonatrach***
40 80 120 160 200
Note. PJSC Gazprom, companies’ reports and website data available as at the time
of writing this Annual Report. Volumes of natural gas are given according to the Russian
standard conditions (calorifi c value of 8,850 kcal per cu m at 20°C).
35.5 %
share of PJSC Gazprom’s gas sales
under OOO Gazprom export’s contracts
in the total gas consumption in European
far abroad countries****
* IFRS consolidated fi nancial statements.
** Excluding volumes of gas sold from the SDFI portfolio.
*** Sales volumes of joint ventures are taken into account proportionally to share of participation.
**** Including commodity (gas) repo agreements.
2929
PJSC Gazprom Annual Report 2019
Gazprom Group’s Position
in the Global and Russian Energy Industry
Oil and Gas Condensate
Gazprom Neft is one of Russia’s leading oil companies in
terms of production and refi ning of liquid hydrocarbons.
Production
Processing
No. in Russia
by oil and gas condensate
production
Liquid hydrocarbon production in Russia
by largest Russian oil and gas companies, mm tonnes
Gazprom*
Including Gazprom Neft*
LUKOIL**
Rosneft**
Surgutneftegas
Sources: PJSC Gazprom, companies’ reports and website data available as at the time
of writing this Annual Report
%
of Russia’s oil and gas condensate production***
No. in Russia
by oil
and stable gas condensate
refi ning volumes
Oil and stable gas condensate refi ning in Russia
by largest Russian oil and gas companies, mm tonnes
Gazprom
Including Gazprom Neft
LUKOIL
Rosneft
Surgutneftegas
Sources: PJSC Gazprom, companies’ reports and website data available as at the time
of writing this Annual Report
%
of Russia’s total oil and stable gas condensate
refi ning volumes
* For data comparability with Russian oil and gas majors, Gazprom Group fi gures include the share in the liquid hydrocarbon production volumes of associates and joint ventures.
** Including the share in the production volumes of associates and joint ventures.
*** Including the Group’s share in the reserves and production volumes of entities in which Gazprom has investments classifi ed as joint operations.
PJSC Gazprom Annual Report 2019
Gazprom Group’s Position
in the Global and Russian Energy Industry
Electricity and Heat Generation
n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
Gazprom Group includes one of Russia’s largest power
generation holding companies, a market leader by installed
capacity in heat generation.
Electricity Generation
Heat Generation
No. in Russia
by heat generation
Heat generation of largest Russian generating companies,
mm Gcal
Gazprom***
Inter RAO**
Siberian Generating
Company**
T Plus
Sources: PJSC Gazprom, companies’ reports and website data available as at the time
of writing this Annual Report
No. in Russia
by installed
electrical capacity
and electricity output
in heat generation
Installed electrical capacity
of largest Russian generating companies, GW
Gazprom*
EuroSibEnergo**
Inter RAO**
Rosenergoatom**
RusHydro**
Sources: PJSC Gazprom, companies’ reports and website data available as at the time
of writing this Annual Report
%
of Russia’s total electricity generation
* Installed electrical capacity of Gazprom energoholding and other generating assets of Gazprom Group in Russia and abroad.
** Including subsidiaries.
*** Heat generation by Gazprom energoholding and other generating assets of Gazprom Group.
PJSC Gazprom Annual Report 2019
Operations and Marketing Geography
(in 2019 or as at 31 December 2019)
Gazprom operates in more than 20 countries, and its
products are supplied to more than 100 markets around
the world.
Gazprom Group’s Operating Geography
Activity
Russia
FSU
countries
Europe
Africa
Near and
Middle East
Asia-Pacific
Central and
South America
Hydrocarbons prospecting
and exploration
Gas and gas condensate
production
Oil production
Gas transportation
Gas underground storage
Gas distribution
Gas processing
Oil refining
Production of oil and gas
chemical products
Electricity and heat generation
32
PJSC Gazprom Annual Report 2019 Operations and Marketing Geography
Gazprom Group’s Marketing Geography
n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
Russia
FSU
countries
Europe
Africa
Near and
Middle East
Asia-Pacific
North
America
Central and
South America
Activity
Trunk pipeline gas sales
Gas sales to end consumers
Oil and gas condensate sales
Refined hydrocarbon products
sales
Large scale LNG sales
Small scale LNG and CNG sales
Oil products retail sales
Electricity and heat sales
For more details on Gazprom’s Operations and Marketing Geography see Gazprom in Figures 2014–2018 Factbook
3333
PJSC Gazprom Annual Report 2019
Operations and Marketing Geography
Gazprom Group’s Major Production Assets and Projects
in Russia, FSU and European Far Abroad Countries
Dublin
London
Oslo
Murmansk
Apatity
Paris
Brussels
Amsterdam
Stockholm
Copenhagen
Helsinki
Tallinn
Vyborg
St.-Petersburg
Petrozavodsk
Berlin
Prague
Riga
Volkhov
Kaliningrad
Pskov
Warsaw
Vilnius
Torzhok
Minsk
1
2
Ukhta
Sosnogorsk
Salekhard
Novyi Urengoy
Cherepovets
Gryazovets
Yaroslavl
Peregrebnoye
Bern
Rome
Vienna
Ljubljana
Zagreb
Bratislava
Budapest
Sarajevo
Belgrade
Podgorica
Tirana
Scopje
Bucharest
Sofia
Chisinau
Athens
Ankara
Cairo
Beirut
Damascus
Amman
Vyazma
Moscow
Ryazan
Nizhniy Novgorod
Serov
Surgut
Khanty-
Mansiysk
А
Kiev
Pochinki
Ekaterinburg
Tyumen
Petrovsk
Pisarevka
Salavat
Troitsk
Omsk
Novocherkassk
Volgograd
Alexandrov Gay
Novorossiysk
Dzhugba
Sochi
Stavropol
6
Astrakhan
Orenburg
5
Nur-Sultan
Grozny
Tbilisi
Yerevan
B
Baku
Baghdad
Tehran
Ashgabat
Dushanbe
Tashkent
Bishkek
Alma-Ata
C
Tomsk
Krasnoyarsk
Kemerovo
Novosibirsk
Barnaul
Biysk
Gorno-Altaysk
Zhigalovo
Irkutsk
Ulan Bator
4
Sobolevo
Petropavlovsk-Kamchatsky
7
Lensk
Aldan
8
Magistralny
Skovorodino
Svobodny
Blagoveschensk
Komsomolsk-on-Amur
Yuzhno-Sakhalinsk
3
Okha
Khabarovsk
to China
n
a
p
a
J
o
t
Vladivostok
n
gio
s
e
c R
a
ore
ntrie
uth K
u
o
cifi
er c
a
P
-
o
to S
d oth
n
a
sia
e A
of th
Tokyo
to China
Beijing
Pyongyang
Seoul
Largest fields
Gas production centres in operation
Underground gas storage facilities
Gas and gas condensate fields
Yamal Peninsula
Existing UGSFs
Oil fields
Nadym-Pur-Taz region
Oil and gas, oil and gas condensate fields
Sakhalin
Major trunk gas pipelines
Gazprom Group’s existing gas pipelines
Other existing gas pipelines
Gas pipelines under construction
and projected gas pipelines
Projected supply destinations
Kamchatka
Orenburg
Astrakhan
Yakutsk
Projected gas production centres
Irkutsk
Other
Existing oil production centres
Existing UGSFs co-invested
by Gazprom Group
UGSFs under construction
and projected UGSFs
Power generation facilities
Existing power generation facilities
Power generation facilities
under construction and projected
power generation facilities
34
PJSC Gazprom Annual Report 2019
Operations and Marketing Geography
1
2
Ukhta
Sosnogorsk
Salekhard
Novyi Urengoy
Peregrebnoye
Vyazma
Moscow
Ryazan
Nizhniy Novgorod
Serov
Surgut
Khanty-
Mansiysk
А
Kiev
Pochinki
Ekaterinburg
Tyumen
Petrovsk
Pisarevka
Salavat
Troitsk
Omsk
7
Lensk
Aldan
8
Magistralny
Skovorodino
Tomsk
Krasnoyarsk
Kemerovo
Novosibirsk
Barnaul
Biysk
Gorno-Altaysk
Nur-Sultan
Zhigalovo
Irkutsk
Ulan Bator
Oslo
Murmansk
Apatity
Helsinki
Tallinn
Vyborg
Petrozavodsk
St.-Petersburg
Riga
Volkhov
Kaliningrad
Pskov
Warsaw
Vilnius
Torzhok
Minsk
Cherepovets
Gryazovets
Yaroslavl
Dublin
London
Paris
Brussels
Amsterdam
Stockholm
Copenhagen
Berlin
Prague
Vienna
Ljubljana
Zagreb
Bratislava
Budapest
Bern
Rome
Sarajevo
Belgrade
Podgorica
Tirana
Scopje
Bucharest
Sofia
Chisinau
Athens
Novorossiysk
Dzhugba
Sochi
Stavropol
Ankara
Novocherkassk
Volgograd
Alexandrov Gay
Orenburg
5
6
Astrakhan
Grozny
Tbilisi
Yerevan
B
Baku
Cairo
Beirut
Damascus
Amman
Baghdad
Tehran
Ashgabat
Dushanbe
Tashkent
Bishkek
Alma-Ata
C
to China
Beijing
Pyongyang
Seoul
Svobodny
Blagoveschensk
Khabarovsk
to China
Vladivostok
4
Sobolevo
Petropavlovsk-Kamchatsky
3
Okha
Komsomolsk-on-Amur
Yuzhno-Sakhalinsk
n
a
p
a
J
o
t
Tokyo
s
a
n
gio
ntrie
e
ore
c R
u
uth K
o
cifi
er c
a
P
d oth
-
to S
sia
e A
of th
n
a
o
n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
A
B
C
Vilnius
Minsk
Kiev
Yerevan
Alma-Ata
Bishkek
Tashkent
Existing refining/processing
and petrochemical assets
GPPs
Refineries
Petrochemical and gas chemical
production
Gazprom Group’s access
to the GPP’s capacity
Gazprom Group’s access
to the refinery’s capacity
Projects in refining/processing,
oil and gas chemistry
Integrated complex for gas processing
and liquefaction near the seaport
of Ust-Luga
Novourengoysky Gas Chemical Complex
Amur GPP
3535
LNG production and regasification assets
Key gas export routes
Kaliningrad regasification terminal
Nord Stream gas pipeline
LNG plant, Sakhalin
LNG production, storage
and shipping complex
near Portovaya compressor station
Phase 3 of LNG plant, Sakhalin
LNG supply routes
Existing LNG supply routes
Projected LNG supply routes
Yamal–Europe gas pipeline
TurkStream gas pipeline
Urengoy–Uzhgorod gas pipeline
Blue Stream gas pipeline
Power of Siberia gas pipeline
Gas transportation projects
Nord Stream 2 gas pipeline
Expansion of UGSS’
gas transportation capacity at the
Gryazovets–Slavyanskaya CS section
in the North-West region
Ukhta–Torzhok 2
and Ukhta–Torzhok 3 gas pipelines
Bovanenkovo–Ukhta 2
and Bovanenkovo–Ukhta 3 gas pipelines
Power of Siberia 2 gas pipeline
PJSC Gazprom Annual Report 2019
Business Model
(in 2019 or as at 31 December 2019)
Gazprom Group encompasses all types of activities required
to ensure uninterrupted supply of energy to consumers.
Its comprehensive vertically integrated business model is
Consumers are the focus of the Group’s business. Stable,
trust-based relationships with our consumers are the founda-
tion for building long-term business value.
aligned with Gazprom’s strategic goal, driving operational
effi ciencies, improving reliability of supplies, and leveraging
the existing production and R&D capabilities.
All elements of Gazprom Group’s business complement
one another. At the same time, each element represents
a complex system, an aggregate of tangible assets, human
resources, and accumulated experience and knowledge
in relevant areas.
Gazprom Group is a major global energy company
whose performance results infl uence a great number
of stakeholders. These stakeholders include shareholders
and investors, federal and local authorities of the Russian
Federation, EU regulators and other gas market participants,
local communities, business partners, mass media, NGOs,
and employees.
Production and Marketing of Gazprom Group
Geological
exploration
Oil
production
Crude
oil
transportation
Pipeline
oil
sales
Gas
and condensate
production
Gas
Gas
transportation
transportation
Oil
storage
Oil
products
sales
Underground
gas
storage
Oil refining
and petrochemical
production
36
PJSC Gazprom Annual Report 2019
Gas processing
and gas chemical
production
Electric power
and heat energy
production
Gas
products
sales
Electric power
and heat energy
sales
LNG
sales
Gas distribution
and supply
Pipeline
gas
sales
Business Model
n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
Competitive Advantages
— The Company’s Extensive Resource Base
and Robust Production Infrastructure
— An Established Portfolio of Long-term Contracts
for Gas Supplies to European and Asian Consumers
— Unique Unifi ed Gas Supply System (UGSS) of Russia
— Vertical Integration of the Company
— Favourable Geographical Position between Europe
and Asia
— Track Record of Cooperation with Foreign Partners
and a Strong Reputation as a Reliable Supplier
— Access to International Capital Markets
on Terms acceptable to the Company
— Extensive Production, Research
and Design Capabilities
— Social Policy that makes the Company
an Attractive Employer
for Highly Skilled Professionals
Gas processing
and gas chemical
production
Electric power
and heat energy
production
Gas
products
sales
Electric power
and heat energy
sales
LNG
sales
Gas distribution
and supply
Pipeline
gas
sales
3737
PJSC Gazprom Annual Report 2019
Geological
exploration
Oil
production
Crude
oil
transportation
Pipeline
oil
sales
Gas
and condensate
production
Gas
transportation
Oil
storage
Oil
products
sales
Underground
gas
storage
Oil refining
and petrochemical
production
Business Model
Exploration
and Production
Gas Transportation
and Underground Storage
Processing/
Refining
Resources and capital
Resources and capital
Resources and capital
34,899.0 bcm
of natural gas reserves in Russia*,**
3,575.3 mm tonnes
of oil and gas condensate reserves
in Russia*,**
7,438
active gas production wells in Russia
7,752
active oil production wells in Russia
175.2 thousand km
total length of trunk gas pipelines in Russia
75.01 bcm
of aggregate working gas capacity across
27 underground gas storage facilities
in Russia
8.5 bcm
of working gas capacity across
OOO Gazprom export’s underground
storage facilities (UGSFs) by the start
of the autumn and winter period
2019/2020***
3 gas processing plants, a helium plant,
condensate pretransportation preparation
plant, and condensate stabilisation plant
in Russia
3 refineries in Russia and 2 refineries
abroad
Gas chemical and petrochemical plants
Performance highlights
679.0 bcm
of gas transported via Gazprom’s GTS
in Russia, including 132.1 bcm of gas
supplied by companies outside the Group
Performance highlights
501.2 bcm
of natural and associated gas production
in Russia**
64.7mm tonnes
of oil and gas condensate production
in Russia**
1.11
natural gas reserves replacement ratio**
Performance highlights
31.5 bcm
natural and associated gas processing
volumes****
67.1 mm tonnes
oil and gas condensate processing
volumes****
50.9 mm tonnes
output of oil products****
4.7mmcm
helium production****
3.7mm tonnes
LPG production****
For more details see the Exploration and Production
section
For more details see the Gas Transportation
and Storage section
For more details see the Hydrocarbon Processing
and Petrochemicals section
* A+B1+C1 reserves under the Russian classification.
** Including the Group’s share in the reserves and production volumes of entities in which Gazprom has investments classified as joint operations.
*** The additional commercial gas storage contracts valid until 31 March 2021 secured another 3.01 bcm of gas storage capacity at UGSFs in Austria, Hungary and Slovakia.
**** Excluding tolling arrangements.
38
PJSC Gazprom Annual Report 2019 Business Model
n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
Power Generation
Marketing
Other Important Aspects
of Activities
Resources and capital
Resources and capital
Resources and capital
40.1 GW
total installed electrical capacity
of generating assets in Russia and abroad
An established portfolio of long-term
contracts for gas supplies to European
and Asian consumers
Reputation as a reliable supplier
Vertical integration of the Company
Access to international capital markets
on terms acceptable to the Company
Human capital
Integrated corporate R&D capabilities
Performance highlights
149.0 billion kWh
total electricity generation in Russia
and abroad
122.4 mm Gcal
total heat generation
Performance highlights
506.9 bcm
of gas sales
27.3 mm tonnes
of oil and gas condensate sales
70.2 mm tonnes
of refined products sales
For more details see the Power Generation section
For more details see the Gas Distribution,
Gas Infrastructure Expansion and NGV Fuel Markets
section and the Marketing section
3939
Performance highlights
Significant contribution to the energy
security of the Russian Federation
Ensuring reliable and stable supplies
of gas and other high-quality products
and services to consumers in Russia
and abroad
Gas infrastructure expansion across
Russian regions, and developing their
social and economic potential, paying
taxes, and contributing to investment
activity and improved business
environment; job creation
Ensuring demand for Russian products;
supporting SMEs
Providing safe working environment
for employees
Staff training and social programmes
Involvement in the efforts to improve tax,
land, natural resources, and environmental
protection laws
Sustainable use of natural resources,
improved energy efficiency of operations,
and better environment in Russian regions
through extending gas infrastructure
to communities and energy and transport
facilities
Support for vulnerable groups;
constructing and developing sports
and social and economic infrastructure
Cooperation with indigenous
small-numbered peoples of the North
Support for education, science, culture,
arts, and sports
For more details see the sections: Gas Distribution,
Gas Infrastructure Expansion, and Development
of NGV Fuel Markets; Marketing; Financial
Performance; Innovations and Import Substitution;
Environmental and Social Responsibility; Procurement
Performance; and Share Capital and Securities
Market
PJSC Gazprom Annual Report 2019
Business Model
Supply Chain
Inventory Procurement
Procurement of Work and Services
—
Gas, energy and liquid hydrocarbons
—
Construction and installation
—
Large-diameter pipes
—
Overhauls
—
Processing equipment
—
Gas pumping units and components
—
Electrical equipment
—
Valves and fittings
—
—
Well construction
(production drilling and associated operations)
Gas and liquid hydrocarbon transportation
and storage
—
Maintenance and repair
—
Exploration
—
FEED services
—
Transportation and logistics services
—
Lease
—
Insurance
Gazprom Group
Products and Services
—
Natural gas
—
Crude oil and gas condensate
—
Refined products
—
Electricity and heat generation
—
Gas transportation and underground storage
services
The Quality Assurance Policy of PJSC Gazprom is available on PJSC Gazprom’s website
www.gazprom.com
40
PJSC Gazprom Annual Report 2019 PJSC Gazprom’s Board of Directors
(as at 31 December 2019)
Viktor
Alekseevich
Zubkov
Chairman of the Board of Directors
Chairman of the Board of Directors’
Commission on Strengthening Financial
Discipline for Domestic Gas Supplies
of PJSC Gazprom
Non-executive director
Born in 1941.
Graduate of Leningrad Agricultural Institute.
Doctor of Economics.
2007–2008: Prime Minister of the Russian Federation.
2008–2012: First Deputy Prime Minister of the Russian Federation.
Since 2012 — Russia’s Special Presidential Representative for
Cooperation with the Gas Exporting Countries Forum.
2012–2014: member of the Board of Directors, Director General,
Chairman of the Management Committee of OOO Gazprom
gazomotornoe toplivo.
2014–2019: Deputy Chairman of the Board of Directors
of OOO Gazprom gazomotornoe toplivo.
Since 2019 — Chairman of the Board of Directors of OOO Gazprom
gazomotornoe toplivo. Chairman of the Board of Directors
of OOO Gazprom LNG Technologies
Chairman of the Company’s Board of Directors since 2008.
n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
Andrey
Igorevich
Akimov
Non-executive director
Born in 1953.
Graduate of Moscow Finance Academy.
Since 2002 — Chairman of the Management Board of Joint Stock
Bank of Gas Industry Gazprombank (Closed Joint Stock Company),
since 2007 — Gazprombank (Open Joint Stock Company),
since 2014 — Gazprombank (Joint Stock Company).
Member of the Company’s Board of Directors since 2011.
Alexey
Borisovich
Miller
Timur
Askarovich
Kulibaev
Deputy Chairman of the Board of Directors
Independent director
Executive director
Born in 1962.
Born in 1966.
Graduate of N.A. Voznesensky Leningrad Finance and Economics
Institute.
Candidate of Economics.
Since 2001 — Chairman of the Company’s Management Committee.
Deputy Chairman of the Company’s Board of Directors since 2002.
Graduate of M.V. Lomonosov Moscow State University.
Candidate of Economics.
Since 2005 — Head of the Association of Legal Entities the Kazenergy
Kazakh Association of Oil, Gas and Energy Companies.
Since 2013 — Chairman of the Presidium of the Atameken National
Chamber of Entrepreneurs of the Republic of Kazakhstan.
Member of the Company’s Board of Directors since 2011.
4141
PJSC Gazprom Annual Report 2019
PJSC Gazprom’s Board of Directors
Denis
Valentinovich
Manturov
Non-executive director
Viktor
Georgievich
Martynov
Independent director
Chairman of the Board of Directors’
Audit Committee, member
of the Board of Directors’ Nomination
and Remuneration Committee
Born in 1969.
Born in 1953.
Graduate of M.V. Lomonosov Moscow State University.
Candidate of Economics.
Since 2012 — Minister of Industry and Trade of the Russian Federation.
Member of the Company’s Board of Directors since 2017.
Graduate of the I.M. Gubkin Moscow Institute of the Petrochemical
and Gas Industry.
Candidate of Geology and Mineralogy, Doctor of Economics.
Since 2008 — Rector of I.M. Gubkin Russian State Oil and Gas
University (a federal budget-funded educational institution of higher
professional education, national research university).
Member of the Company’s Board of Directors since 2013.
Vitaly
Anatolievich
Markelov
Executive director
Vladimir
Alexandrovich
Mau
Independent director
Member of the Board of Directors’
Audit Committee, member
of the Board of Directors’ Nomination
and Remuneration Committee
Born in 1963.
Born in 1959.
Graduate of S.P. Korolev Kuibyshev Aviation Institute.
Candidate of Technical Sciences.
2003–2011: Director General of OOO Tomsktransgaz
(since 2008 — OOO Gazprom transgaz Tomsk).
In 2011 — Director General of OOO Gazprom transgaz Tomsk
and Director General of OOO Gazprom invest Vostok.
Since 2011 — Deputy Chairman of the Company’s Management
Committee.
Member of the Company’s Board of Directors since 2012.
Graduate of the G.V. Plekhanov Moscow Institute of National
Economy.
Doctor of Economics.
2002–2010: Rector of the State Educational Institution of Higher
Professional Education, the Academy of National Economy under
the Government of the Russian Federation.
Since 2010 — Rector of the Russian Presidential Academy of National
Economy and Public Administration under the President of the Russian
Federation (Federal State Budgetary Educational Institution of Higher
Education).
Member of the Company’s Board of Directors since 2011.
42
PJSC Gazprom Annual Report 2019 PJSC Gazprom’s Board of Directors
n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
Alexander
Valentinovich
Novak
Non-executive director
Mikhail
Leonidovich
Sereda
Executive director
Member of the Board of Directors’
Audit Committee, Chairman
of the Board of Directors’ Nomination
and Remuneration Committee
Born in 1971.
Graduate of Norilsk Industrial Institute.
2010–2012: Deputy Minister of Finance of the Russian Federation.
Since 2012 — Minister of Energy of the Russian Federation.
Member of the Company’s Board of Directors since 2015.
Born in 1970.
Graduate of the Saint Petersburg State University of Economics
and Finance.
Since 2004 — Deputy Chairman of the Management Committee, Head
of the Management Committee Administration of the Company.
Member of the Company’s Board of Directors since 2002.
Dmitry
Nikolaevich
Patrushev
Non-executive director
There were no Changes to the Board of Directors in 2019
Note. The independent status of members of the Board of Directors is determined in
compliance with criteria for assessing independence of members of the board of directors
(candidates to the board of directors) set forth in Appendix 4 to the Listing Rules of the
Moscow Exchange.
Born in 1977.
Graduate of the State University of Management, and of the
Diplomatic Academy of the Russian Ministry of Foreign Affairs.
Doctor of Economics.
2007–2010: Senior Vice-President of OAO Vneshtorgbank.
2010–2018: member of the Supervisory Board of AO Russian
Agricultural Bank, Chairman of the Management Board of AO Russian
Agricultural Bank.
Since 2018 — Minister of Agriculture of the Russian Federation.
Member of the Company’s Board of Directors since 2016.
4343
The biographical details of the members of PJSC Gazprom’s Board of Directors are
also available on PJSC Gazprom’s website
www.gazprom.com
PJSC Gazprom Annual Report 2019
PJSC Gazprom’s Management Committee
(as at 31 December 2019)
Alexey
Borisovich
Miller
Chairman of the Management Committee
Elena
Viktorovna
Burmistrova
Deputy Chairwoman of PJSC Gazprom’s
Management Committee,
Director General of OOO Gazprom export
Born in 1962.
Born in 1971.
Graduate of N.A. Voznesensky Leningrad Finance and Economics
Institute.
Candidate of Economics.
Chairman of the Company’s Management Committee since 2001.
Graduate of Moscow State Linguistic University.
Member of the Company’s Management Committee since 2019.
Oversees international business.
Oleg
Evgenievich
Aksyutin
Deputy Chairman of the Management
Committee — Head of Department
(prospective development)
Elena
Alexandrovna
Vasilieva
Deputy Chairwoman of PJSC Gazprom’s
Management Committee —
Chief Accountant of PJSC Gazprom
Born in 1967.
Born in 1959.
Graduate of S.P. Korolev Kuibyshev Aviation Institute.
Doctor of Technical Sciences.
Graduate of N.A. Voznesensky Leningrad Finance and Economics
Institute.
Member of the Company’s Management Committee since 2008.
Member of the Company’s Management Committee since 2001.
Oversees strategic development, long-term planning, design,
development and implementation of the Investment Programme,
procurement operations.
44
PJSC Gazprom Annual Report 2019 PJSC Gazprom’s Management Committee
n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
Vitaly
Anatolievich
Markelov
Famil
Kamil ogly
Sadygov
Deputy Chairman of PJSC Gazprom’s
Management Committee
Deputy Chairman of PJSC Gazprom’s
Management Committee
Born in 1963.
Born in 1968.
Graduate of S.P. Korolev Kuibyshev Aviation Institute.
Candidate of Technical Sciences.
Graduate of the S. Ordzhonikidze State Academy of Management.
Candidate of Economics.
Member of the Company’s Management Committee since 2012.
Member of the Company’s Management Committee since 2019.
Oversees Operations, including hydrocarbon exploration
and production, gas transportation and underground storage,
hydrocarbon processing, sales of hydrocarbons and refined products
in the domestic market; power generation and government relations.
Oversees Economics.
Mikhail
Evgenievich
Putin
Deputy Chairman of PJSC Gazprom’s
Management Committee
Sergey
Fyodorovich
Khomyakov
Deputy Chairman of PJSC Gazprom’s
Management Committee,
Director General of PJSC Gazprom’s
Corporate Security Service
Born in 1967.
Born in 1953.
Graduate of A.S. Bubnov Ivanovo State Medical Institute
and the S. Ordzhonikidze State Academy of Management.
Candidate of Medical Sciences.
Member of the Company’s Management Committee since 2018.
Oversees administrative assistance, inventory and logistics
management and healthcare benefits.
Graduate of V.I. Ulyanov (Lenin) Leningrad Electrotechnical Institute.
Candidate of Economics.
Member of the Company’s Management Committee since 2007.
Oversees HR management and corporate security.
4545
PJSC Gazprom Annual Report 2019
PJSC Gazprom’s Management Committee
Sergey
Ivanovich
Kuznets
Head of Department
(legal support)
Sergey
Nikolaevich
Menshikov
Head of Department
(hydrocarbon exploration
and production)
Born in 1970.
Born in 1968.
Graduate of M.V. Lomonosov Moscow State University.
Member of the Company’s Management Committee since 2019.
Graduate of M.D. Millionshchikov Grozny Petroleum Institute.
Candidate of Economics.
Member of the Company’s Management Committee since 2019.
Vladimir
Konstantinovich
Markov
Head of Department
(government relations)
Elena
Vladimirovna
Mikhailova
Head of Department
(asset management
and corporate relations)
Born in 1955.
Born in 1977.
Graduate of Ryazan Radio Engineering Institute, the Academy
of Social Sciences attached to the Central Committee
of the Communist Party of the Soviet Union, the Moscow Academy
of Economics and Law.
Candidate of Law, Candidate of Economics.
Member of the Company’s Management Committee since 2012.
Graduate of Moscow State Industrial University.
Member of the Company’s Management Committee since 2012.
46
PJSC Gazprom Annual Report 2019 PJSC Gazprom’s Management Committee
Vyacheslav
Alexandrovich
Mikhalenko
Head of Department
(gas transportation
and underground storage)
Born in 1965.
Graduate of Bryansk Transport Machine-Building Institute.
Candidate of Technical Sciences.
Member of the Company’s Management Committee since 2015.
Gennady
Nikolaevich
Sukhov
Head of Department
(hydrocarbon processing,
sales of hydrocarbons
and refined products
in the domestic market,
power generation)
Born in 1961.
Graduate of Saratov Polytechnic Institute.
Member of the Company’s Management Committee since 2019.
n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
Changes in the Management Committee in 2019
Members of the Management Committee
elected by the Board of Directors in 2019
Name
Sergey N. Menshikov
Elena V. Burmistrova
Sergey I. Kuznets
Famil K. Sadygov
Gennady N. Sukhov
Number and date
of the Board
of Directors
resolution
No. 3234 dated
20 March 2019
No. 3237 dated
2 April 2019
No. 3240 dated
2 April 2019
No. 3247 dated
10 April 2019
No. 3255 dated
16 April 2019
Date of election
to the Management
Committee
2 April 2019
1 April 2019
2 April 2019
15 April 2019
15 April 2019
Members of the Management Committee
whose powers were terminated by the Board of Directors in 2019
Name
Valery A. Golubev
Alexander I. Medvedev
Vsevolod V. Cherepanov
Sergey F. Prozorov
Igor Y. Fyodorov
Andrey V. Kruglov
Kirill G. Seleznev
Number and date
of the Board
of Directors
resolution
Date of termination
of powers
of the Management
Committee member
No. 3223 dated
26 February 2019
No. 3224 dated
26 February 2019
No. 3225 dated
26 February 2019
No. 3238 dated
2 April 2019
No. 3239 dated
2 April 2019
No. 3241 dated
2 April 2019
No. 3254 dated
16 April 2019
26 February 2019
26 February 2019
26 February 2019
1 April 2019
1 April 2019
1 April 2019
12 April 2019
The biographical details of the members of PJSC Gazprom’s Management Committee
are also available on PJSC Gazprom’s website
www.gazprom.com
4747
PJSC Gazprom Annual Report 2019
The Company’s History
Over the 25 years since it was founded in 1993, the Company
has grown into one of the global energy market leaders.
Gazprom has successfully diversified its core business.
In addition to its gas business, the Group has been suc-
cessfully operating in the oil and power markets, ranking
among Russia’s top oil companies and number one in Russia
by installed heat generation capacity.
Gazprom has significantly expanded the geography
of its operations: it entered the high-potential Asia Pacific
market, launched operations in the Central Asia, Africa, and
Latin America, and is a player in the global LNG trade.
Gazprom pioneered the development of the Russian Arctic
shelf, launched a fundamentally new gas production hub in
the Yamal Peninsula, and is building large-scale gas infra-
structure in eastern Russia. Gazprom was the first in Russia
to introduce underwater production technology enabling gas
extraction without above-water structures, and teamed up
with its foreign partners to launch Russia’s first large-scale
LNG plant.
This success is underpinned by the Company’s long-term
strategy, tight vertical integration, and sound governance
providing a firm foundation for Gazprom’s continued success
in competing on equal footing against global majors, imple-
menting ambitious projects, and achieving impressive results.
Milestones
1990s
1993–1998
According to the Russian Government’s
Resolution dated 17 February 1993, and
pursuant to the Presidential Decree,
Gazprom State Gas Concern was
reorganised into Gazprom Russian Joint
Stock Company (RAO Gazprom).
Privatisation of the Company started
in April 1994, with the First annual General
Shareholders Meeting held on 31 May 1995.
On 26 June 1998, pursuant to the
resolution of the General Shareholders
Meeting, RAO Gazprom was reorganised
into Gazprom Open Joint Stock Company.
1999
November
Gas supply started via the Yamal — Europe
gas pipeline, running across four countries:
Russia, Belarus, Poland and Germany.
2000s
2001
2006
30 May
Alexey Miller was elected Chairman
of the Company’s Management Committee.
18 August
Gazprom’s first LNG shipment to an Asian
market, purchased by Japan.
31 October
Gas production started at the Zapolyarnoye
field, one of the largest in the world.
2007
25 April
The Board of Directors approved
JSC Gazprom’s Power Generation Strategy,
the implementation of which transformed
the Company into one of Russia’s largest
electricity producers.
18 December
The Yuzhno-Russkoye field came on
stream, Russia’s first international gas
production project based on asset swap.
2009
18 February
Russia’s first large-scale LNG plant was put
into operation in Sakhalin.
2003
20 February
Commercial gas supplies started via Blue
Stream, Russia’s first gas offshore pipeline
and one of the world’s deepest undersea
pipelines.
2005
2 September
Gazprom’s first LNG shipment; the gas
tanker arrived at a US LNG regasification
terminal.
21 October
Gazprom Group took control of 75.679%
of OAO Sibneft, which provided a platform
for further development of Gazprom’s oil
business.
December
The law prohibited the State from holding
less than 50% plus one share in the
Company. Restrictions were lifted on the
acquisition of shares in the Company by
foreign investors.
48
PJSC Gazprom Annual Report 2019 n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
2013
2018
5 September
Work started to install the deep-water
section of the Nord Stream 2 gas pipeline.
5 December
The third and final gas production site was
commissioned at the core Bovanenkovskoye
field. Gazprom commenced the construction
of the Ukhta — Torzhok 2 trunk gas pipeline
within the Northern Gas Transmission
Corridor of Russia’s UGSS to supply
additional gas to northwestern Russia,
expand the gas infrastructure to domestic
consumers, and support export supplies
via Nord Stream 2.
2019
8 January
A commissioning ceremony was held
in the Kaliningrad Region for an offshore
gas receiving terminal and a floating storage
and regasification unit, Marshal Vasilevskiy.
The alternative, independent offshore route
for gas supplies brought the region’s energy
security to a fundamentally new level.
20 March
The Group commenced the full-scale
development of the Kharasaveyskoye field,
Gazprom’s second core asset in the Yamal
Peninsula.
29 March
Gazprom made a decision to participate
in the construction of a large integrated
complex for gas processing and liquefaction
near the seaport of Ust-Luga.
2 December
An official ceremony was held to celebrate
the start of the first-ever Russian pipeline
gas supplies to China via the Power of
Siberia gas pipeline.
23 October
Gazprom was the first in Russia to produce
gas by using an underwater production
system without recurring to above-water
structures on the Kirinskoye field in the Sea
of Okhotsk.
20 December
Oil production started at the Prirazlomnoye
field in the Pechora Sea. It is Russia’s first
ever Arctic shelf project.
2014
21 May
The Company and China’s CNPC signed
a contract for gas supplies — the 30-year
gas supply contract for over 1 tcm is the
largest of its kind in the entire history
of the Russian gas industry.
2015
14 October
The Company launched the construction
of the (laid the foundation stone) of the
Amur GPP, Russia’s largest gas processing
facility, which will be an essential part of the
process chain of natural gas supply to China
via the Power of Siberia gas pipeline.
2016
25 May
The Arctic Gate (“Vorota Arktiki”), a unique
oil loading terminal, was commissioned
enabling, for the first time ever, year-round
oil shipments from the Yamal Peninsula
by sea.
16 September
With Gazprom’s involvement, commercial
production was launched at the Incahuasi
field, one of the largest GCFs in Bolivia.
2017
18 January
Launch events were held for the
commissioning of the Bovanenkovo —
Ukhta 2 gas pipeline increasing the supplies
of gas from the Yamal Peninsula to Russia’s
UGSS.
The Company’s History
2010s
2010
12 February
Russia’s first coal bed methane project
was launched in the Kemerovo Region.
29 September
The Sobolevo — Petropavlovsk-Kamchatsky
trunk gas pipeline was put into operation,
bringing first natural gas supplies to the
capital of the Kamchatka Territory.
2011
6 June
The Dzhubga — Lazarevskoye — Sochi,
Russia’s first offshore gas pipeline, was
commissioned.
8 September
First section of the Sakhalin — Khabarovsk —
Vladivostok gas transmission system,
the Far East’s first interregional GTS, was
inaugurated.
8 November
Commercial gas supplies started via the
first string of the Nord Stream pipeline,
a fundamentally new Russian gas export
supply route to Europe through the Baltic
Sea.
25 November
The Company closed the deal to acquire
100% of OAO Beltransgaz, becoming the
owner of Belarus GTS.
2012
23 March
An 800 MW CCGT plant was launched
at the Kirishskaya GRES. It was the largest
heat generation plant commissioned i
n 30 years, and Russia’s most powerful
combined cycle gas turbine unit at the
time.
23 October
A new major gas production hub was
launched in Russia, in the Yamal Peninsula.
The Bovanenkovskoye field and the
Bovanenkovo — Ukhta trunk gas pipeline
came on stream. The transmission corridor
was expanded with the new Ukhta —
Torzhok gas pipeline.
4949
PJSC Gazprom Annual Report 2019
The Company’s History
2019 in the Company’s History
Gazprom launched
Russian pipeline
gas supplies to China
Gazprom launched
a new, reliable route
for Russian pipeline
gas supplies
across the Black Sea
Gazprom continued
developing the Yamal
gas production hub
In December 2019, an official ceremony was held to celebrate the start of the first-ever
Russian pipeline gas supplies to China via the eastern route — the Power of Siberia trunk
gas pipeline, one of the largest investment projects in the global gas industry. As part of
the project, a gas production hub was established in Yakutia, about 2,200 km of gas
pipeline were laid, and a cross-border section with a two-line underwater crossing of the
Amur River was built jointly with CNPC. Overall project completion for the Amur Gas
Processing Plant (GPP) stood at 55.2% at end-2019. The plant is an essential part of the
process chain of gas supplies via the Power of Siberia pipeline, and in the reporting year,
Gazprom raised an unprecedented EUR 11.4 bn in project financing for the plant
construction.
In 2019, the Group completed the construction of the TurkStream trunk gas pipeline’s
offshore section linking Russia and Turkey via the Black Sea, and the onshore transit
section of the TurkStream pipeline running across Turkey to its border with Bulgaria.
Pipeline gas supplies via the new route commenced in January 2020, contributing to the
energy and environmental security of Turkey and European countries.
In March 2019, the Group commenced the full-scale development of the Kharasaveyskoye
GCF, Gazprom’s second core asset in the Yamal Peninsula, with explored gas reserves
totalling 1.9 tcm (C1+C2 categories). The Group’s extensive track-record and expertise
enable it to implement this complex project within a short timeframe — production start-up
is scheduled for 2023.
The resource base of the Yamal gas production hub has also grown. In the reporting
year, significant discoveries were made on the Kara Sea continental shelf — the Dinkov and
Nyarmeyskoye fields. In addition, significant growth in gas reserves was achieved through
exploration at the Kruzenshternskoye gas condensate field (GCF), located on the Kara Sea
continental shelf and in adjacent onshore areas.
Gazprom completed
a large-scale investment
programme in Russia’s
power generation
In accordance with capacity supply agreements, the final facility under the CSA programme,
Unit 2 at the Grozny TPP, came on stream in 2019 with a capacity of 184 MW. On the whole,
since Gazprom entered the power generation business in 2007 as a result of the CSA
programme, the Group has put 9 GW of advanced generating capacities into operation
in Russia.
A new record high
was achieved
for potential deliverability
across UGSFs in Russia
By November 2019, the potential maximum daily deliverability at Gazprom’s UGSFs had
been increased to 843.3 mmcm of gas — a record level for the Russian gas industry.
50
PJSC Gazprom Annual Report 2019 The Company’s History
2019 in the Company’s History
n
o
i
t
a
m
r
o
f
n
I
y
n
a
p
m
o
C
An alternative,
independent gas supply
route was launched
for the Kaliningrad Region
A commissioning ceremony was held in the Kaliningrad Region in January 2019 for an
offshore gas receiving terminal and a floating storage and regasification unit, Marshal
Vasilevskiy. The option of receiving LNG seaborne shipments helps improve the energy
security of the region.
The construction
of Nord Stream 2
and the expansion
of the Northern Gas
Transmission Corridor
were continued
The implementation
of the project for
construction
of a large complex
for gas processing
and liquefaction near
the seaport of Ust-Luga
was launched
Gazprom commenced
the construction
of a cutting-edge
civil satellite
manufacturer
In the Baltic Sea, the installation of the Nord Stream 2 gas pipeline sections was completed
on schedule in the territorial waters of Finland, Sweden and Russia. As at 31 December
2019, over 2,300 km of pipe were laid under the Baltic Sea across all sections (94% of the
route’s total length). The construction of onshore sections in Germany and Russia is nearing
completion.
As part of the UGSS expansion project in the North-West region, welding of the 880 km
linear section of the pipeline between Gryazovets and Slavyanskaya CS was completed, the
starting point of the Nord Stream 2 gas pipeline.
In March 2019, PJSC Gazprom and AO RusGazDobycha finalised the configuration of their
joint project — an integrated complex for gas processing and liquefaction near the seaport
of Ust-Luga (Leningrad Region). The complex will have an annual capacity to process
45.0 bcm of ethane-containing natural gas from Gazprom fields in the Nadym-Pur-Taz region,
which will be delivered via dedicated gas pipelines. LNG production is expected to total
approximately 13 mm tonnes per year. Marketable products will include dry stripped
gas, LPG, ethane and pentane-hexane fractions. The complex will be operated by
OOO RusKhimAlyans, a joint venture established on a parity basis between a PJSC Gazprom
subsidiary and AO RusGazDobycha. Phase 1 of the complex is scheduled to be commis-
sioned in late 2023, Phase 2 — in late 2024.
In November 2019, Gazprom teamed up with State Space Corporation ROSCOSMOS to
launch the construction of the first fully integrated enterprise in the history of modern Russia
for spacecraft assembly and testing. To meet the needs of Gazprom Group and other
customers, the facility launched in Shchelkovo (Moscow Region) will be able to
manufacture up to four large and mid-sized communications and remote sensing devices
or 100 small batch-produced satellites per year. The facility is scheduled to be
commissioned as early as in 2022.
5151
PJSC Gazprom Annual Report 2019
Strategy
52
52
PJSC Gazprom Annual Report 2019
PJSC Gazprom Annual Report 2019 Trends and Developments
in Global Energy Markets 54
Strategic Priorities 62
Gas Business 62
Oil Business 68
Power Generation Business 71
Capex Programmes 73
Long-Term Development Programme
and Key Indicators 76
y
g
e
t
a
r
t
S
53
53
PJSC Gazprom Annual Report 2019 Trends and Developments
in Global Energy Markets
The projected increase in demand for gas and its growing
competitive advantage compared to other fuels create
the conditions for strengthening Gazprom’s leadership as
the largest gas exporter in the global energy market.
Long-Term Outlook for the Global Energy Market
The multi-dimensionality and heterogeneity of modern global
energy markets’ development make any mid- and long-term
outlooks an increasingly difficult task. A global consensus
forecast suggests a steady growth of demand for energy
around the world and a pivotal role for gas in the global
energy mix.
Long-term fuel and energy sector development trends to 2040
— Growing population in some economies, primarily in Asia Pacific
— Shifting energy consumption from developed to developing
countries
— Growing attention to environmental matters and climate change
— Development of energy saving technologies
— Development of long-distance transportation and storage of energy
Global economy growth stimulates energy consumption.
already produced
Global primary energy consumption is estimated to have
grown by 2.5% to over 14.5 bn toe in 2019. According to base
case forecasts, global energy consumption is expected to
grow steadily and may increase by 20% by 2040 from 2019.
Two thirds of this growth will come from Asia.
The biggest driver of long-term global energy consump-
tion growth will be the rise of developing Asian economies
and the resulting steady energy demand increase. However,
this growth could be held back by energy efficiency mea-
sures adopted mostly by developed countries in Europe and
North America.
This strong energy demand will make Asia the world’s
largest energy importer: by 2040 the region’s import of oil
could increase by a third, coal — by more than 50%, natural
gas — by 2.5 times from 2019.
By 2040, Asia will be the world’s biggest natural gas
consumer
— Gradual depletion of conventional oil and gas fields, transition
to development of hard-to-recover resources in unconventional
collectors and deepwater
— Further development of renewable energy technologies
Factors of uncertainty in global economy development
— Economic growth rates of some countries (especially developing
ones)
— Growing energy efficiency of the world economy
— The amount of subsidies for developing power generation
technologies (in particular, based on renewable energy sources
and hydrogen)
— Political decisions to restrict or ban energy exports from particular
countries
— The policies of some countries with regard to nuclear and coal-fired
generation
— Restrictions being introduced on and permit prices for greenhouse
gas emissions
— The levels of capex to develop new fields
— Development of new technologies in energy production,
transportation and consumption that could be disruptive for the
global energy industry
54
PJSC Gazprom Annual Report 2019 Trends and Developments
in Global Energy Markets
A defining trend in the world’s energy industry in recent
years has been the growing role of natural gas in the global
energy mix. Natural gas is the cleanest of fossil fuels. As
a clean burning, cost-efficient fuel, natural gas is increasing
its presence in the global market as a solid competitor to
other fossil fuels — oil and coal.
An important factor that shapes the global energy mix is
the growing importance of environmental matters. Natural
gas and renewables consumption will experience the fastest
growth to 2040, accounting for over 80% of the world’s total
energy consumption growth.
25 %
Expected share of natural gas in the global energy mix
by 2040
y
g
e
t
a
r
t
S
Key drivers of gas consumption growth
Whereas in 2019 oil accounted for almost a third of global
— Global population growth, leading to higher gas consumption
energy consumption, with gas being number three (with
approximately 23%), by 2040 the share of gas in the global
energy mix is expected to increase to 25% and it will become
a number two energy carrier, overtaking coal.
Until 2040, gas will account for the largest share of the
incremental global energy consumption in absolute terms.
Global consumption is forecast to exceed 5.5 tcm by 2040.
in the industry, utilities and power generation sectors
— The relative environmental benefits of natural gas compared to other
fossil fuels
— Natural gas-fired power plants are dispatchable and can flexibly
adjust their load to efficiently balance the grid, especially with the
growing share of intermittent renewables in power generation
— Greater focus on transport decarbonisation and incentives to use
natural gas as motor fuel
Energy consumption growth forecast to 2040, mm toe
19
18
17
16
15
14
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Consensus forecast
Range of forecasts
Source: data from leading international and Russian research organisations and institutes
Global natural gas consumption forecast to 2040, bcm
6 000
5 500
5 000
4 500
4 000
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Consensus forecast
Range of forecasts
Source: data from leading international and Russian research organisations and institutes
55
PJSC Gazprom Annual Report 2019
Trends and Developments
in Global Energy Markets
China’s natural gas consumption is expected to grow steadily
throughout the projection horizon to 2040. An important gas
demand growth driver for China will be the government policy
towards a cleaner environment. Most of the growth is expected
to come from the more developed and denser populated
provinces.
China’s domestic gas production growth will not be
sufficient to satisfy the growing demand for gas. It is therefore
expected that China will increase gas imports in the long-term,
both by pipeline and as LNG.
Europe is expected to demonstrate milder growth of gas
consumption. However, the programmes by a number of
European countries to decommission coal-fired and nuclear
power plants, and the need to meet emissions reduction
targets for the period to 2040 will support the interest to using
natural gas in various industries. Despite the weak demand
growth, Europe is expected to remain one of the key natural
gas import regions due to own production decline. There will
be a gradual increase in LNG in the import mix, but pipeline
gas will continue to dominate in the European market.
China’s natural gas consumption growth outlook to 2040, bcm
800
700
600
500
400
300
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Consensus forecast
Range of forecasts
Source: data from leading international and Russian research organisations and institutes
Europe’s natural gas consumption outlook to 2040, bcm
700
650
600
550
500
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Consensus forecast
Range of forecasts
Source: data from leading international and Russian research organisations and instit
Global Economy and Gas Market Development in 2019
Economic Slowdown and Energy Price Decline
Global economic growth (real GDP on a PPP basis) deceler-
ated to 2.9% in 2019 according to OECD (compared to 3.5%
in 2018). The growth was negatively affected by the US–China
trade disputes, uncertainty around Brexit and general geo-
political tensions. The biggest contribution to global growth in
2019 came from China and India with 6.1% and 4.9% growth
rates respectively.
56
Inflation slowed down and stabilised at low levels in developed
countries in 2019. Central banks took measures to support
economies by lowering interest rates and resuming quantita-
tive easing programmes.
On the back of the economic slowdown, the average
Brent price was down by more than 10% year-on-year to
average USD 64.2 per barrel, which had a negative impact on
Gazprom Group’s revenue and profit. Coal price declined
significantly, by 20.9% year-on-year to average USD 67.1 per
tonne for 2019.
PJSC Gazprom Annual Report 2019
Trends and Developments
in Global Energy Markets
The spread of the coronavirus from late 2019 and other
geopolitical and economic tensions created significant risks
in the energy market.
Brent crude oil price in 2019 to early 2020,
USD per barrel
70
60
50
40
30
20
01
02
03
04
05
06
07
08
09
10
11
12
01
02
03
2019
2020
Source: Bloomberg
Natural Gas Production Decline and Growing Imports
in Europe
Gas consumption, domestic production and imports
in European far abroad countries, 2015–2019, bcm
600
500
400
300
200
506.6
258.9
264.1
541.7
568.7
548.9
560.0
287.7
260.4
311.5
264.1
325.9
360.7
252.7
236.5
2015
2016
2017
2018
2019
Consumption
Production
Imports
Note. Calculated based on statistical data, with natural gas volumes converted to Russian
standards (calorific value of 8,850 kcal/cu m at 20°C). Figures for 2018 and previous years
may differ from the data in Annual Report 2018 since international statistics may have been
subsequently updated.
Sources: Eurostat, national statistical offices, IHS Markit and other sources
The natural gas production decline in Europe continued in 2019.
Natural gas consumption in European far abroad coun-
tries increased by 11.1 bcm, or 2.0% year-on-year, to 560.0 bcm
in 2019. Weather had a significant negative impact on con-
sumption, with the European weather index (cooling and
heating degree days) lower than normal and lower than the
previous year (92.6% compared to 97.1% in Q1–Q4 2018) due
to warm weather in February–March and October–December
2019.
Gas consumption in power generation went up by 6.7 bcm,
or 4.0%, with higher consumption in the industrial sector
(+1.3 bcm, or +0.9%) and the household sector (+1.9 bcm,
or +0.9%). The main contribution to increased natural gas
consumption was from reduced nuclear, coal-fired and
hydro power generation. The share of power generation in
the gas consumption structure increased by 0.6 p. p. from
30.6% in 2018 to 31.2% in 2019.
The economics of gas-fired generation was influenced
by high carbon permit prices and low gas hub prices, sup-
porting its competitiveness compared to the coal-fired
generation in 2019.
y
g
e
t
a
r
t
S
Carbon permit prices in Europe remain high
After a sharp increase in 2018, the EU ETS carbon permit prices stabilised
at the level of EUR 22–26 per tonne of CO2 equivalent in 2019.
The carbon permit price stabilisation at this level is an important
factor reinforcing gas competitiveness in the European power sector.
Higher permit prices make coal-fired generation less attractive, which,
in turn, leads to increased utilisation of gas-fired capacity.
Carbon permit prices in Europe, 2015–2019, EUR per tonne
of CO2 equivalent
25
20
15
10
5
2015
2016
2017
2018
2019
Lower economic activity in Europe did not have a negative
impact on the demand for gas, offset by a favourable price
environment.
An important supply and demand balancing factor was
growing gas imports (+34.8 bcm, or +10.7%), primarily as
LNG imports (+47.3 bcm, or +69.6%), while pipeline supply
was down (–12.5 bcm, or –4.8%). Own production in Europe
was down by 16.2 bcm, or 6.4%, with over 45% of the decline
coming from Norway and almost 30% from the Netherlands.
PJSC Gazprom’s gas sales under OOO Gazprom export’s
contracts to European far abroad countries were 191.4 bcm
in 2019. In addition, the Company had commodity (gas) repo
agreements* for 7.6 bcm of gas put in European underground
storage facilities (UGSFs). Thus, total supplies to European
far abroad countries under OOO Gazprom export’s contracts
were 199.0 bcm in 2019.
The largest European producers cut down their supplies.
With the low spot price environment, Norway undertook
lengthy repairs and cut its 2019 supplies by 6.9 bcm, or 5.3%
year-on-year.
* The transactions are disclosed in PJSC Gazprom’s accounting (financial) statements as borrowings secured by inventories.
57
PJSC Gazprom Annual Report 2019
Trends and Developments
in Global Energy Markets
Great Britain and the Netherlands also continued their
production cuts. Due to more frequent earthquakes, the Dutch
government repeatedly capped production at the Groningen
field. According to recent reports, continuous production
there will be halted by as early as mid-2022. The field will be
kept operational until 2026 in order to meet high demand for
gas in exceptionally cold winter period. This decision will
have a significant effect on the European gas balance, with
declining production to be substituted by imports.
Pipeline and LNG gas supplies from Algeria demonstrated
two opposing trends: while there was an overall reduction
by 9.6 bcm, or 19.8%, LNG supplies to Europe increased
(+3.2 bcm, or +24.6%). Qatar also ramped up LNG supplies
to Europe (+8.8 bcm, or +37.8%) while cutting supplies to
other regions (–7.4 bcm, or –8.8%).
LNG imports to Europe increased by 47.3 bcm, or 69.6%,
primarily through additional US volumes (+14.6 bcm), new
volumes from Russian projects (+13.9 bcm), Qatar (+8.8 bcm)
and other sources (+10.0 bcm).
Gas volumes in European far abroad countries’ UGSFs
were higher than in 2018 (+21.1 bcm) and higher than the 2013–
2018 average (+23.7 bcm).
European UGSF stock level, bcm
120
100
80
60
40
20
01
02
03
04
05
06
07
08
09
10
11
12
2018
2019
Average UGSF stock level, 2013–2018
UGSF stock level range, 2013–2018
Source: IHS Markit
Breakdown of gas supplies to European far abroad countries by suppliers, 2015–2019, bcm
2015
2016
2017
2018
2019
Supplies by major gas exporters
PJSC Gazprom
Algeria (incl. LNG)
Qatar
Other Russian producers (LNG supplies from Russian projects)
United States
Nigeria
Iran
Supplies by major European producers
Norway (incl. LNG)
United Kingdom
Netherlands
Other supplies (excluding re-export)
Total
* Including commodity (gas) repo agreements.
2015
2016
2017
2018
2019
159.4
179.3
194.4
201.9
*
199.0
38.1
28.6
–
–
8.0
8.1
124.5
44.6
48.9
46.4
51.2
23.7
–
0.5
9.8
8.0
124.1
44.9
45.5
54.7
49.4
24.1
0.1
2.6
12.6
9.6
48.5
23.3
6.8
3.7
13.0
8.1
38.9
32.1
20.7
18.3
16.0
8.0
134.7
130.9
124.0
45.0
39.5
56.7
43.6
35.0
34.1
43.3
30.3
29.4
506.6
541.7
568.7
548.9
560.0
Note. Calculated based on statistical data, with natural gas volumes converted to Russian standards (calorific value of 8,850 kcal/cu m at 20°C). Figures for 2018 and previous years may differ
from the data in Annual Report 2018 since international statistics may have been subsequently updated.
Sources: Eurostat, national statistical offices, IHS Markit and other sources
58
PJSC Gazprom Annual Report 2019
Trends and Developments
in Global Energy Markets
Breakdown of gas supplies to European far abroad countries
by distribution method in 2019
Month-ahead gas prices on TTF and NCG, 2017–2019,
USD per mcm
Pipeline supplies
LNG supplies
Pipeline supplies
PJSC Gazprom
Norway (incl. LNG)
United Kingdom
the Netherlands
Algeria
Iran
Other import pipeline supplies
LNG supplies
Qatar
Other Russian producers
(LNG supplies from Russian projects)
United States
Algeria
Nigeria
Other LNG supplies
For more details on Gazprom Group’s gas sales to European far abroad countries
in 2019 see the Marketing section
The decrease in prices for competing energy sources was
echoed by lower prices at Europe’s trading hubs. The average
TTF month-ahead contract price was down from USD 269.7
per mcm in 2018 to USD 168.1 per mcm in 2019 (–37.7%). The
average NCG month-ahead contract price was down from
USD 271.9 per mcm in 2018 to USD 172.8 per mcm in 2019
(–36.4%). One of the main reasons of this decline was excess
non-contracted LNG supply on the spot market. The downward
trend at the main trading hubs continued in January 2020.
59
350
300
250
200
150
y
g
e
t
a
r
t
S
2017
2018
2019
TTF month ahead
NCG month ahead
Source: Bloomberg
Global LNG Trade Growth
Global net LNG imports continued to rise in 2019, reaching
359 mm tonnes, up 41 mm tonnes, or 12.9% year-on-year.
European countries accounted for approximately 90% of the
growth, with the UK, France, Spain, the Netherlands and Italy
leading the growth.
Europe’s share in global LNG imports increased year-
on-year from 16% to 24%, while the share of Asia Pacific
shrank from 76% to 69%. A significant share of incremental
European LNG imports was met by Yamal LNG and US
supplies.
Global LNG trade volume, 2015–2019, mm tonnes
2015
2016
2017
2018
2019
248
262
292
318
359
Note. Data for actual LNG deliveries (including boil-off gas), less any re-exports.
Source: IHS Markit
LNG supplies to Europe had an explosive growth from Q4
2018 as a result of large-scale liquefaction facility launches
in the US, Australia and Russia, the return of Japan and
South Korea to nuclear power generation, and China’s
economic slowdown in recent years.
The Asia Pacific and Atlantic regions witnessed a decline
in spot LNG prices on the back of new liquefaction facilities
being brought on stream and the ramp-up to design capacity
of previously commissioned projects such as Yamal LNG
Trains 2 and 3. An additional negative impact on 2019 LNG
imports in Japan, China, South Korea and Taiwan came from
the relatively warm weather conditions in the region.
PJSC Gazprom Annual Report 2019
Trends and Developments
in Global Energy Markets
On the back of lower growth in Asia Pacific and new
liquefaction facility additions, LNG spot prices in the region
were down year-on-year by 44.2% to USD 5.46 per mm BTU,
while in North-West Europe they were down by 41.4% to USD
4.67 per mm BTU. The “Asian premium” (difference between
spot prices in Asia and Europe) was only USD 0.7 per mm
BTU in 2019 compared to USD 2.1 per mm BTU the year
before, which was negative for the attractiveness of Asia
Pacific as a premium LNG destination.
According to IHS Markit, active liquefaction capacity
additions were 36.0 mm tonnes of LNG per year, of which
14.3 mm tonnes of LNG per year came from expansion of
existing facilities and 21.7 mm tonnes of LNG per year — from
new plants. This is comparable with the liquefaction capacity
additions seen in 2018. Further commissioning of facilities
for a total of 22.8 mm tonnes of LNG per year is expected in
2020.
Growing Gas Consumption and Imports in China
Lower Gas Consumption in Russia
and Domestic Market Development Initiatives
Russia’s 2019 total gas consumption was 481.0 bcm, down
2.5% year-on-year.
Natural gas share in Russia’s energy mix was approxi-
mately 54% in 2019, remaining virtually flat over the past few
years.
Russia’s domestic gas consumption, 2015–2019, bcm
2015
2016
2017
2018
2019
444.3
456.7
468.0
493.2
481.0
China is one of the world’s fastest growing gas markets.
Responding to growing gas consumption, Chinese companies
both actively ramp-up own production and increase gas
imports.
The largest consumers of natural gas in Russia include
electricity and heat generation companies (35%), household
consumers (11%), the oil industry (9%), the housing and
utilities sector (8%) and the metals industry (6%).
According to China’s official data, the country’s gas
consumption was 307 bcm in 2019, up 9.4% (almost 27 bcm)
year-on-year. The significant increase in 2019 gas consump-
tion was attributable to higher demand from the industry,
power generation and utilities, as well as to the national gov-
ernment’s continued policy of growing the share of natural
gas in the country’s energy mix.
Over133 bcm
Natural gas imports to China in 2019
Imports play an important role in meeting China’s gas
demand. According to preliminary estimates, China imported
over 133 bcm in 2019, up 8 bcm year-on-year. LNG is an
important part of China’s gas imports. It is expected, however,
that as Russian gas exports through the Power of Siberia
pipeline ramp up after it started supplying gas at the end of
2019, the share of pipeline imports in China’s market will grow.
In Russia, gas is sold and purchased using two different
pricing approaches for suppliers, which results in the exis-
tence of two gas sales sectors, one with prices fixed by the
Government, the other with unregulated prices.
Gas produced by PJSC Gazprom’s subsidiaries is sold
mostly at prices fixed by the Government. In accordance with
applicable Russian laws, wholesale prices of gas produced
by PJSC Gazprom and its affiliates are subject to regulation.
These prices are differentiated between consumer groups
(households vs industrial consumers), as well as by price
zone, based on the relative distance from the gas production
region to the consumer.
As per the Forecast of Russia’s Socio-Economic Develop-
ment drafted by the Russian Ministry of Economic Development
and approved by the Government in September 2019, a 3%
annual increase in regulated domestic wholesale gas prices
is expected in 2020–2024 for all consumer categories, with
prices indexed annually on 1 July.
PJSC Gazprom is actively involved in the Russian gas
market development, focusing on the areas approved by its
Board of Directors in 2017.
Gazprom’s contribution to covering domestic gas consumption in Russia, 2015–2019, bcm
Domestic gas consumption in Russia
Supplies to Russian consumers via Gazprom’s GTS*
2015
2016
2017
2018
2019
444.3
456.7
468.0
493.2
481.0
339.4
348.8
351.3
361.7
353.9
incl. Gazprom Group via the GTS (with purchases from independents)
222.0
226.9
231.3
244.1
240.0
Supplies to Russian consumers via Gazprom’s GTS from Gazprom Groups’s production
211.2
210.2
216.3
224.9
221.2
* Excluding GTS process needs
60
PJSC Gazprom Annual Report 2019 Trends and Developments
in Global Energy Markets
To promote market-driven pricing principles, PJSC Gazprom
participates in exchange-based gas trade at Saint Peters-
burg International Mercantile Exchange (AO SPIMEX).
PJSC Gazprom’s gas volumes sold through the exchange
totalled 10.5 bcm in 2019. The key destination areas for
PJSC Gazprom’s gas supplies are those with predominantly
industrial consumers and those located near gas producing
regions. The natural gas purchased through exchange-based
trading channel was supplied to 36 Russian regions in 2019.
Factoring in the costs of purchasing exchange-traded natural
gas and the gas transportation costs, the average ratio of
exchange-traded gas price to the regulated regional whole-
sale price remained flat at 99.3% in 2019.
PJSC Gazprom continues to be actively involved in promoting
exchange trade in the Russian market, including improvements
to trading arrangements for month-ahead and day-ahead
gas contracts.
63 %
The share of gas produced by Gazprom Group
in total gas supplies to Russian consumers
via Gazprom’s GTS
y
g
e
t
a
r
t
S
PJSC Gazprom’s role in the Russian gas market development in 2019
Area of development
Initiatives
Improvement of the gas
transportation services system
Proposals submitted to the federal authorities on the trunk pipeline gas transportation service tariff calculation
methodology, with fixed “entry area — exit area” tariffs
Developing market-based gas
pricing approaches
PJSC Gazprom submitted a memorandum to the Russian Government presenting its views on the procedure and
timing of abandoning domestic market gas price regulation
Proposals submitted to the Russian Federal Anti-Monopoly Service on improving the principles of setting gas
distribution entity tariffs and distribution fees to address the existing imbalance and prepare to operating in
a competitive market environment
PJSC Gazprom provided active expert input to Resolution of the Government of the Russian Federation No. 1063
dated 17 August 2019 which authorised Gazprom to sell up to 25 bcm of gas through exchange-based trading
channel and cancelled the requirement of parity between Gazprom and independent companies in exchange-
based gas trading
Developing a common gas market
of the Eurasian Economic Union
(EAEU)
An initiative is ongoing, jointly with the Russian Ministry of Energy, to study the possibility of applying a two-sector
tariff model in the common EAEU market, with separate tariffs for gas transportation to the domestic market and to
the common EAEU market, to be reflected in the Common EAEU Gas Market Treaty being developed under
coordination of the Russian Ministry of Energy
61
PJSC Gazprom Annual Report 2019 Strategic Priorities
Gas Business
The strategic goal of Gazprom Group in the gas business is to
maintain its leadership among global oil and gas companies
by diversifying natural gas and refined products sales markets
and forms of distribution, ensuring reliable gas supplies to
consumers, driving efficiency and scale of operations, and
developing the Company’s potential in R&D, technology and
human resources.
No significant adjustments were made to PJSC Gazprom’s
strategy in the reporting year. The time of commissioning of
some fields and the timelines of major projects were adjusted
to reflect current market environment outlook. PJSC Gazprom
and AO RusGazDobycha made a decision to undertake
a joint project — an integrated complex for gas processing
and liquefaction near the seaport of Ust Luga.
Gas Exploration and Production
Risks affecting the achievement of PJSC Gazprom’s strategic goals
— Risks related to the global economy slowdown
— Political risk
— Risks related to changes in government regulation of the gas
industry
— Unconventional gas development risks
— Risks related to the development of renewable energy sources
— Market risks
Information on promising projects of Gazprom Group is presented in the Gazprom
in Figures 2015–2019 Factbook
Strategic Priorities
Activities to support the strategic priorities in 2019
— Building gas production hubs in eastern Russia
— Bringing into development the Yamal Peninsula’s unique and large
fields
— Bringing into development new fields in the Nadym-Pur-Taz region
— Further exploration of the deposits in deep-lying Achimov and
Jurassic sediments and above the Cenomanian sediments in the
fields under development in the Yamal-Nenets Autonomous Area
— Bringing into development continental shelf fields in Russian
northern seas
Field Development
Commercial development started at the Chayandinskoye field
Full-scale development commenced at the Kharasaveyskoye field
Development of the Cenomanian-Aptian deposits continued at the
Bovanenkovskoye field
Construction of production wells to the cap of the production
interval continued at the Yuzhno-Kirinskoye field
Field construction to develop Blocks 1, 2, 4 and 5 of the Achimov
deposits at the Urengoyskoye field continued
Preparations continued to move the Kovyktinskoye gas and
condensate field from pilot development to commercial production
phase
Revamps and retrofits of gas production facilities carried out at the
Yamburgskoye, Urengoyskoye, Medvezhye, Bovanenkovskoye,
Yubileynoye, Yamsoveiskoye, Zapadno-Tarkosalinskoye,
Komsomolskoye, Vyngayakhinskoye, Orenburgskoye and
Astrakhanskoye fields.
Resource base development
Exploration-based gas reserve growth achieved at the levels
exceeding production volumes
Further exploration of the Achimov and Jurassic sediments
performed at the Urengoyskoye, Yamburgskoye and other fields in
the Yamal-Nenets Autonomous Area
Feasibility studies of developing deposits above the Cenomanian
sediments carried out at the Yuzhno-Russkoye, Medvezhye,
Yamburgskoye, Zapolyarnoye, Vyngapurovskoye and other fields
in the Yamal-Nenets Autonomous Area
62
PJSC Gazprom Annual Report 2019 Strategic Priorities
Gas Business
2020 and mid-term objectives in the context of strategic priorities
Project
2020
2021
2022
2023
2024
Cenomanian-Aptian
deposits of the
Bovanenkovskoye field
Cenomanian-Aptian
deposits of the
Kharasaveyskoye field
Chayandinskoye field
Kovyktinskoye field
Expansion of booster
compressor capacity
and well
commissioning
Expansion of booster
compressor capacity
and well
commissioning
BCS and well
commissioning
Well commissioning
Well commissioning
y
g
e
t
a
r
t
S
Start of commercial
development
Well commissioning
CGTU expansion,
PGTU and well
commissioning
Well commissioning
Booster compressor
capacity and well
commissioning
PGTU and well
commissioning
Ramp-up
to design capacity
Start of commercial
development
CGTU 3, BCS at
CGTU 2, and well
commissioning
CGTU 1 and well
commissioning
Achimov deposits of the
Urengoyskoye field
(Block 1)
Achimov deposits of the
Urengoyskoye field
(Block 2)
Ramp-up
to full capacity
CGTU and well
commissioning
Achimov deposits of the
Urengoyskoye field
(Blocks 4 and 5)
Yuzhno-Kirinskoye field
Start of commercial
development
Kirinskoye field
Well commissioning
Well commissioning
Well commissioning
Well commissioning,
ramp-up to full
capacity
Well commissioning
Well commissioning
Well commissioning
Well commissioning
Well commissioning
Start of commercial
development
Well commissioning
Completion of field
infrastructure
expansion to achieve
design gas
production capacity,
commissioning of the
onshore processing
facility Phase 1
revamped unit
Ensuring increased reserves replacement rates
Further building of new gas production hubs in Russia
Revamps and retrofits of existing gas production facilities to maintain target gas production levels
Note. Data as at 31 December 2019. Timelines for commissioning and ramp-up may be adjusted subject to the energy market environment.
63
PJSC Gazprom Annual Report 2019
Strategic Priorities
Gas Business
Expansion of Gas Transportation Capacity
Strategic Priorities
Activities to support the strategic priorities in 2019
— Comprehensive expansion of gas production, transportation and
storage capacity, aligned with export projects and new consumer
readiness to receive the gas
— Diversification of gas export routes
— Construction of new gas transportation capacity
— Revamps and retrofits of existing gas transportation facilities
The Power of Siberia gas pipeline commissioned from the
Chayandinskoye field to the Chinese border in the Amur region
The TurkStream gas pipeline commissioned
GASTRANS d.o.o. Novi Sad, Russian–Serbian joint venture,
continued to expand Serbia’s gas transmission capacity to transport
TurkStream’s gas
Construction of the Ukhta–Torzhok 2 and the Bovanenkovo–
Ukhta 2 gas pipelines continued
Work continued on the Nord Stream 2 project and Russian GTS
expansion to ensure supply into Nord Stream 2, including the
North-West region’s GTS transportation capacity expansion at the
Gryazovets–Slavyanskaya CS section
Revamps of gas transportation infrastructure carried out
Decommissioning of excess gas transportation capacity continued,
74 km of trunk gas pipeline and four compressor plants with a total
capacity of 367.5 MW dismantled
2020 and mid-term objectives in the context of strategic priorities
Project
2020
2021
2022
2023
2024
Start of phased
commissioning
Power of Siberia
gas pipeline
(Kovyktinskoye field–
Chayandinskoye field
section
Sakhalin–Khabarovsk–
Vladivostok
gas pipeline
Nord Stream 2
gas pipeline
Ukhta–Torzhok 2
gas pipeline
Bovanenkovo–Ukhta 2
gas pipeline
Bovanenkovo–Ukhta 3,
Ukhta–Torzhok 3
gas pipelines
Commissioning*
Ramp-up
to full capacity
Looping of the linear
section
Ramp-up
to full capacity
Start of phased
commissioning
Construction of gas transportation capacity to ensure diversification of gas export routes (including continued phased commissioning of the Power
of Siberia trunk gas pipeline)
Construction of new gas transportation capacity in Russia to ensure gas supplies to the domestic market and meet obligations under export
contracts, including gas transportation capacity intended to carry gas from the Yamal fields to the Nord Stream 2 gas pipeline (including GTS
expansion at the Gryazovets–Slavyanskaya CS section)
Implementation of comprehensive programmes for revamping and retrofitting existing gas transportation facilities
Decommissioning of excess capacity of the Central Gas Transmission Corridor
* Data as at 31 December 2019. Various alternative options are being explored to complete the construction of the pipeline and put it into operation.
Note. Data as at 31 December 2019. Timelines for commissioning and ramp-up may be adjusted subject to the energy market environment.
64
PJSC Gazprom Annual Report 2019
Strategic Priorities
Gas Business
Gas Underground Storage
Strategic Priorities
Activities to support the strategic priorities in 2019
— Maintaining UGSF capacity through revamps and replacement of
worn-out and obsolete fixed assets, as well as debottlenecking of
UGSFs and the GTS
—
Improving the flexibility of Russia’s UGSF system by constructing
small peak-shaving gas storage facilities in salt caverns to maintain
deliverability rates during increased gas withdrawal periods through
to 1 February
—
Increasing daily deliverability and operating gas reserves of active
UGSFs to satisfy current and projected gas demand
Carried out facility revamps at the Peschano-Umetskoye, Elshano-
Kurdyumskoye, Stepnovskoye, Sovkhoznoye, Kasimovskoye,
Shchelkovskoye, Severo-Stavropolskoye and Pungiskoye UGSFs,
and Kanchurinsko-Musinsky UGS complex
Performed washing out of underground reservoirs and construction
of facilities to expand the Kaliningradskoye UGSF compressor
station, washing out and initial filling of the Volgogradskoye UGSF
y
g
e
t
a
r
t
S
Increased maximum daily capacity by 30.8 mmcm through facility
construction and well switching at the Punginskoye UGSF,
construction of 13 wells at the Sovkhoznoye, Kaliningradskoye and
Severo-Stavropolskoye UGSFs and connection of 6 wells at the
Sovkhoznoye UGSF, construction of interconnecting jumpers at the
compressor plant of the Kanchurinsko-Musinsky UGS complex,
and revamping of 42 producing wells at UGSFs in Russia
— Expansion of Gazprom Group’s UGSF capacity outside Russia
Accumulated approximately 8.5 bcm of deliverable gas in
OOO Gazprom export’s own UGSFs in Europe by the start of
autumn and winter 2019/2020.
2020 and mid-term objectives in the context of strategic priorities
Project
2020
2021
2022
2023
2024
Volgogradskoye
UGSF
Kaliningradskoye
UGSF
Udmurtia Reserving
Complex
Shatrovskoye
UGSF
Capacity
commissioning,
working gas capacity
expansion
Capacity
commissioning,
working gas capacity
expansion
Capacity
commissioning,
working gas capacity
expansion
Capacity
commissioning,
working gas capacity
expansion
Capacity
commissioning,
working gas capacity
expansion
Capacity
commissioning,
working gas capacity
expansion
Capacity
commissioning,
working gas capacity
expansion
Capacity
commissioning,
working gas capacity
expansion
Start of phased
commissioning
Capacity
commissioning,
working gas capacity
expansion
Capacity
commissioning
Start of phased
commissioning
Capacity
commissioning,
working gas capacity
expansion
Capacity
commissioning,
working gas capacity
expansion
Revamps and replacement of worn-out and obsolete fixed assets at existing UGSFs
Construction and expansion of the peak-shaving Kaliningradskoye, Volgogradskoye and Shatrovskoye UGSFs, as well as the Udmurtia Reserving
Complex
Providing UGSF capacity to regions where such capacity is in short supply. The prospective areas for the construction of new UGSFs are Russia’s
Northwestern, Siberian and Far Eastern Federal Districts
Improving the flexibility of Russia’s UGSF system by constructing small peak-shaving gas storage facilities in salt caverns to maintain deliverability
rates during increased gas withdrawal periods through to 1 February.
Note. Data as at 31 December 2019. Timelines for commissioning and ramp-up may be adjusted subject to the energy market environment.
65
PJSC Gazprom Annual Report 2019
Strategic Priorities
Gas Business
Expansion of Gas and Condensate Processing, and Gas Chemical Production
Strategic Priorities
Activities to support the strategic priorities in 2019
— Construction of new gas processing facilities to support
hydrocarbon developments in Eastern Siberia and the Far East
Construction of the Amur GPP continued
Projects continued to enable liquid hydrocarbon transportation from
— Processing and transportation of projected volumes of liquid
the Nadym-Pur-Taz region
hydrocarbons produced at fields in Western Siberia, the Yamal
Peninsula and the adjacent continental shelf of the Kara Sea
— Processing of ethane-containing gas from fields in Western Siberia
Started working on a Pre-investment Feasibility Ftudy for Field
Construction to Develop Neocomian-Jurassic Deposits of the
Kharasaveyskoye and Bovanenkovskoye fields, Transportation and
Processing of Liquid Hydrocarbons Produced at Fields in the Yamal
Peninsula and the Adjacent Continental Shelf of the Kara Sea
PJSC Gazprom and AO RusGazDobycha finalised the configuration
of their joint project — an integrated complex for gas processing
and liquefaction near the seaport of Ust Luga. Funding of the project
began
2020 and mid-term objectives in the context of strategic priorities
Project
2020
2021
2022
2023
2024
Commissioning
Projects to enable
liquid hydrocarbon
transportation from
the Nadym-Pur-Taz
region
Amur GPP
Integrated complex
for gas processing
and liquefaction near
the seaport
of Ust Luga*
Commissioning
of the first start-up
complex
Commissioning of
the second start-up
complex
Commissioning
of the third start-up
complex
Commissioning
of the fourth start-up
complex
Commissioning
of Phase 1
Commissioning
of Phase 2
Construction of new gas processing facilities to support hydrocarbon developments in Eastern Siberia and the Far East as well as processing of the
projected volumes of liquid hydrocarbons produced at fields in Western Siberia
Revamps of existing facilities
* A project with PJSC Gazprom’s participation.
Note. Data as at 31 December 2019. Timelines for commissioning and ramp-up may be adjusted subject to the energy market environment.
66
PJSC Gazprom Annual Report 2019
Strategic Priorities
Gas Business
Expansion of LNG Production and Trading
Strategic Priorities
Activities to support the strategic priorities in 2019
— Expansion of LNG production capacity
PJSC Gazprom and AO RusGazDobycha finalised the configuration
of their joint project — an integrated complex for gas processing
and liquefaction near the seaport of Ust Luga. Funding of the project
began
Further construction of an LNG production, storage and shipping
complex continued near the Portovaya compressor station in the
Leningrad Region
Continued working on a Pre-investment Feasibility Study for an LNG
Plant near Vladivostok with an annual capacity of 1.5 mm tonnes of
LNG
y
g
e
t
a
r
t
S
2020 and mid-term objectives in the context of strategic priorities
Project
2020
2021
2022
2023
2024
Commissioning
LNG production,
storage and shipping
complex near the
Portovaya compressor
station
Integrated complex for
gas processing and
liquefaction near the
seaport of Ust Luga*
Implementation of LNG projects in Russia
* A project with PJSC Gazprom’s participation.
Commissioning
of Phase 1
Commissioning
of Phase 2
Note. Data as at 31 December 2019. Timelines for commissioning and ramp-up may be adjusted subject to the energy market environment
67
PJSC Gazprom Annual Report 2019
Strategic Priorities
Oil Business
The strategic goal of Gazprom Group in the gas business is
to maintain its status as one of the largest international global
oil and gas companies by effective asset portfolio manage-
ment throughout the value chain and using cutting edge
technology, a company that aims to maximise its financial
performance while staying committed to high social and
environmental responsibility standards.
According to its Development Strategy 2030,
PAO Gazprom Neft’s key objective is to evolve into a next-
generation business and set a benchmark for other global
industry players in efficiency, technology and safety.
PAO Gazprom Neft’s strategic goals to 2030:
— Maintain liquid hydrocarbon production growth at least
in line with the market
— Maximise value creation for each barrel through the
effective management of the entire value chain
— Demonstrate leadership in returns on capital employed
through effective management of project/asset portfolio
with a focus on profit maximisation
— Demonstrate leadership in efficiency, technology and
safety setting a benchmark for other global industry
players.
Oil Exploration and Production
Strategic Priorities
Activities to support the strategic priorities in 2019
— Efficient development of mature assets
— Developing the resource base of the Yamal Peninsula
— Bringing into development and monetising the uniquely vast liquid
hydrocarbon reserves in the Nadym-Pur-Taz region
Total Gazprom Neft’s hydrocarbon production was 96.1 mm toe*
Development of the Prirazlomnoye oil field and the Novoportovskoye
OGCF continued. Implemented year-round oil shipment and
transportation from the Novoportovskoye field
— Building a hydrocarbon production hub on the continental shelf of
Surface facilities construction started at the Tazovskoye and
the Sea of Okhotsk
— Developing technology for cost-effective development of the
Bazhenov formation, Domanic and Paleozoic deposits
Severo-Samburgskoye fields
Development of new oil and gas areas on the Sea of Okhotsk
continental shelf continued
— Bringing into development the remaining recoverable reserves that
are currently economically unrecoverable, through deployment
of new technologies
Work to bring into development oil rims, Achimov and Neocomian-
Jurassic deposits of Gazprom Group fields continued under long-
term risk-based operatorship agreements
— Building up the resource base to support production beyond 2025
Continued developing technology for cost-effective development of
hard-to-recover hydrocarbon reserves
As part of the national project to create technology for the Bazhenov
formation development, the effectiveness of the multistage
fracturing technology in horizontal wells was confirmed, and study
of Domanic deposits in the Orenburg region, development of
technology to trace hydrocarbons in pre-Jurassic intervals, and
study of the Achimov formations continued
* Including share in the production volumes of entities in which Gazprom has
investments classified as joint operations, as well as associates and joint ventures,
and in international projects.
68
PJSC Gazprom Annual Report 2019 Strategic Priorities
Oil Business
2020 and mid-term objectives in the context of strategic priorities
Project
2020
2021
2022
2023
2024
Ramp-up
to design capacity
Ramp-up
to design capacity
Start of commercial
development
Ramp-up
to design capacity
Start of commercial
development
Start of commercial
development
Novoportovskoye
field
Vostochno-
Messoyakhskoye
field
Oil rims in the
Nadym-Pur-Taz
region’s fields
(Yen-Yakhinskoye,
Zapadno-
Tarkosalinskoye,
Pestsovoye)
Tazovskoye field
Alexander Zhagrin
field
The Chonsky cluster
(Tympuchikansky,
Ignyalinsky and
Vakunaysky licence
areas)
y
g
e
t
a
r
t
S
Start of commercial
development
Driving mature asset performance and implementing enhanced oil recovery programme
Further exploration of blocks on the Sea of Okhotsk continental shelf
Bringing into development previously untapped reserves within oil-rim deposits, and Achimov and Neocomian-Jurassic deposits at Gazprom Group
fields
Developing technology for cost-effective development of hard-to-recover hydrocarbon reserves
Note. Data as at 31 December 2019. Timelines for commissioning and ramp-up may be adjusted subject to the energy market environment.
69
PJSC Gazprom Annual Report 2019
Strategic Priorities
Oil Business
Logistics, Refining and Marketing
Strategic Priorities
Activities to support the strategic priorities in 2019
Increasing refining depth and light product yields
—
— Enhancing the efficiency of processing/refining and marketing
—
Improving conventional business sustainability through developing
petrochemical businesses
Russian and international refinery upgrade programme continued:
— Main equipment installation for the catalytic reformer unit and
a gas purification unit for catalytic cracking regeneration gases
at Omsk Refinery completed
— Maintaining leadership and growing market shares in existing and
— An automated fuel loading system at Moscow Refinery
new markets for Gazprom’s products
commissioned, with preparations under way for the Euro+
combined refining unit commissioning
— Construction of a new delayed coking unit at Pančevo Refinery
in Serbia continued
— Upgrade programme continued at PAO Slavneft-YANOS (with
Gazprom Neft’s involvement)
Product mix was expanded and marketing infrastructure is being
further built up
Ownership interest in Poliom Omsk Polypropylene Plant was increased
to 50% as part of the petrochemical sector development
Construction of a high-tech catalyst plant is under way
2020 and mid-term objectives in the context of strategic priorities
Project
2020
2021
2022
2023
2024
Operational
availability
Start-up and testing
completion
Start-up and testing
completion
Operational
availability
Operational
availability
Operational
availability
New units
at Moscow Refinery
(Euro+ combined
refining unit)
New units
at Moscow Refinery
(advanced oil refining
facility)
New delayed coking
unit at Pančevo
refinery in Serbia
New units
at Omsk Refinery
(primary refining unit)
New units
at Omsk Refinery
(advanced oil refining
facility)
New units
at Omsk Refinery
(delayed coking unit)
Catalyst production
business in Omsk
LNG bunkering vessel
Commissioning
Commissioning
Continued refinery upgrade programmes and capacity development
Further expansion of the product mix and marketing infrastructure development
Catalyst plant construction
Note. Data as at 31 December 2019. Timelines for commissioning and ramp-up may be adjusted subject to the energy market environment.
70
PJSC Gazprom Annual Report 2019
Strategic Priorities
Power Generation Business
y
g
e
t
a
r
t
S
The strategic goal of Gazprom Group in the power generation
business is to maintain its leadership in electrical and heat
capacity installed in Russia by remaining a reliable supplier of
heat and electricity for consumers and delivering sustainable
profit growth, while staying committed to high social and
environmental responsibility standards.
According to its Power Generation Strategy 2018–2027,
Gazprom energoholding is to become:
— Russia’s largest power generation holding company,
present in related and global markets
— a customer-oriented company ensuring reliable power
supply to consumers
— a financially stable company demonstrating steady profit
growth and debt reduction
— a company supporting the priority of the import
substitution policy and the use of Russian equipment.
Strategic Priorities
Activities to support the strategic priorities in 2019
— Optimising the generation capacity mix
— Driving operational excellence and cost optimisation
— Constructing new and upgrading existing generating capacity,
and decommissioning low-performing facilities
— Driving technological advances
— Diversifying the power business by entering promising markets
in Russia and abroad
Commissioned Unit 2 at the Grozny TPP
Continued construction of the Svobodnenskaya TPP for power
supply of the Amur GPP, as well as a CHPP in Pančevo, Serbia for
heat supply of an oil refinery operated by NIS (part of Gazprom
Neft Group) and electricity sales in the open market
Participated in tenders for upgrading generating facilities at thermal
power plants, with capacity supplies to commence in 2022–2025.
The selected projects included facilities of Gazprom Group with
a capacity of 1.92 GW, or 14% of the first price zone quota
Implemented measures to improve operational efficiency and
optimise costs
Decommissioned low-performing generating capacity, 0.03 GW
in total
Optimised generating equipment operation modes
Acquired AO REP Holding to tap into the power engineering market
as part of business diversification
71
PJSC Gazprom Annual Report 2019
Strategic Priorities
Power Generation Business
2020 and mid-term objectives in the context of strategic priorities
Project
2020
2021
2022
2023
2024
Svobodnenskaya TPP
for power supply of the
Amur GPP
CHP plant in Pančevo,
Serbia
Projects
PAO TGC-1
(Verkhne-Tulomskaya
HPP-12 upgrade)
Projects
PAO TGC-1
(Avtovskaya CHPP-15
revamp)
Projects
PAO TGC-1
(Centralnaya CHPP’s
Power Plant No. 2
revamp)
PAO OGK-2 projects
(Kirishskaya GRES
upgrade)
PAO Mosenergo
projects
(CHPP-22 revamp)
PAO Mosenergo
projects
(CHPP-23 revamp)
OOO Novo-
Salavatskaya CHPP
projects
(Novo-Salavatskaya
CHPP upgrade)
Commissioning
Commissioning
Hydroelectric unit
commissioning
Hydroelectric unit
commissioning
Hydroelectric unit
commissioning
Hydroelectric unit
commissioning
Turbine unit
commissioning*
Turbine unit
commissioning*
Water boiler plant
commissioning
Steam turbine
commissioning*
Equipment
commissioning
Steam turbine
commissioning*
Equipment
commissioning*
Turbine unit
commissioning*
Turbine unit
commissioning*
Turbine unit
commissioning*
Turbine unit
commissioning*
Generating fleet upgrades: 15 facilities of PAO TGC-1, PAO OGK-2, PAO Mosenergo and OOO Novo-Salavatskaya CHPP are scheduled for
upgrades during the period until 2025, including 9 facilities — until 2024
Decommissioning of over 2.2 GW of low-performing capacity by 2024
Implementation of operational efficiency and cost optimisation initiatives
*The facility has been selected through tenders for upgrading generating facilities at thermal power plants.
Note. Data as at 31 December 2019. Timelines for commissioning may be adjusted subject to the energy market environment.
Strategic cooperation with foreign partners
PJSC Gazprom’s strategic cooperation with foreign partners takes the
form of joint steering committees that focus on priority goals. As at
31 December 2019, there were 17 such committees, including with partners
from Germany, the Netherlands, Japan, China, the Republic of Korea,
Uzbekistan and other countries.
Joint steering committees’ agenda includes review of key cooperation
areas, ensuring agreement on objectives and jointly exploring optimal
solutions, discussion of topical issues of partner companies’ development
in the current gas, oil and power market environment, developing plans
for the future and monitoring implementation. This form of cooperation
offers a comprehensive view of various joint effort areas, maximising
opportunities for synergy and flexibility in tackling a shared agenda.
72
PJSC Gazprom Annual Report 2019
Capex Programmes
y
g
e
t
a
r
t
S
Gazprom Group channels significant funds to investment
programmes to develop and maintain its production
assets.
Gazprom Group’s capital expenditures, RUB bn
Production drilling for gas in Russia, thousand m
2017
2018
2019
2020*
1,504.6
1,795.9
1,818.7
1,610.0
2017
2018
2019
Change 2019/2018
240.8
304.4
400.8
31.7%
2,559.5
2,202.6
2,811.7
27.7%
Production drilling for oil in Russia, thousand m
2017
2018
2019
Change 2019/2018
In gas transportation:
— The North-West region’s UGSS transportation capacity
expansion at the Gryazovets–Slavyanskaya CS section
— Construction of the Power of Siberia, Nord Stream 2 and
TurkStream trunk gas pipelines
— Construction of loopings at the Gryazovets–Vyborg gas
pipeline to connect the second string at the Gryazovets–
Volkhov section.
* Total actual expenditure under the Group’s 2020 capex programme (covering gas, oil,
electricity, heat generating and other assets) and similar plans of the Group.
Gazprom Group’s 2019 capital expenditures were directed
mostly towards a number of projects across our business
segments, as detailed below.
In gas production:
— Field construction to develop Chayandinskoye field
— Production drilling and field construction to develop the
Cenomanian-Aptian deposits at the Bovanenkovskoye
field
— Field construction to develop the second pilot block of
the Achimov deposits at the Urengoyskoye field
In oil and gas condensate production:
— Field construction to develop the oil rim in the Botuobinsky
—
horizon of the Chayandinskoye field
Implementation of Gazprom Neft’s projects, including
field construction and production drilling at the Novopor-
tovskoye and the Prirazlomnoye fields, participation in
auctions for subsoil licences, as well as capex projects
for conventional assets
73
PJSC Gazprom Annual Report 2019 Capex Programmes
Progress on the Nord Stream 2 gas pipeline project
UGS complex
In gas storage:
— Expansion and revamp of the Kanchurinsko–Musinsky
Installation of gas pipeline sections was completed on schedule in the
territorial waters of Finland, Sweden and Russia, including three above-
water tie-ins. On 30 October 2019, approval was obtained for the Nord
Stream 2 gas pipeline route to run in Denmark’s exclusive economic zone
south-east of the island of Bornholm. As at 31 December 2019, over
2,300 km of pipe was laid under the Baltic Sea across all sections (94%
of the route’s total length). The construction of onshore sections in
Germany and Russia is nearing completion.
Following the signing of the National Defense Authorization Act for
Fiscal Year 2020 by U.S. President Donald Trump on 20 December 2019,
Allseas vessels left the pipe-laying area on the same day, as the bill
contains sanctions against companies involved in the implementation of
the Nord Stream 2 and TurkStream projects and laying pipeline at depths
of over 100 feet. The offshore pipe-laying operations for the gas pipeline
have been suspended, and various alternative options are being explored
to complete the construction of the pipeline and put it into operation.
In hydrocarbon processing/refining:
— Construction of the Amur GPP
—
Implementation of projects to enable liquid hydrocarbon
transportation from the Nadym-Pur-Taz region
— Revamp of the Astrakhan GPP
— Construction and upgrade of Gazprom neftekhim Salavat’s
refining and petrochemical facilities (construction of
a catalytic cracking complex, a technical sulphur
production unit and a hydrogen production unit)
— Construction and upgrades of production facilities at
Moscow Refinery (construction of a Euro+ combined
refining unit and an elemental sulphur production unit)
— Construction and upgrades of production facilities at
Omsk Refinery (construction of a primary refining unit,
advanced oil refining facility, delayed coking unit, diesel
fuel hydrotreating/dewaxing unit and biological waste-
water treatment facilities)
— Construction of a delayed coking unit and revamp of
a catalytic cracking unit at Pančevo Refinery in Serbia
— Construction of a catalyst plant in Omsk
Gazprom Group’s capex breakdown, RUB bn
2017
2018
2019
74
Gas transportation
Gas production
Oil and gas condensate production
Processing/refining
Electricity and heat generation and sales
Gas distribution
Gas storage
Other business segments
Total
— Revamps of existing and construction of new facilities at
the Kaliningradskoye UGSF
— Expansion of the Punginskoye UGSF
— Revamps of UGSF operating wells in Russia
55.2 %
Overall project completion of the Amur GPP
construction by the end of 2019
In gas sales:
— Construction of a 1.5 mm tonnes per year LNG production,
storage and shipping complex continued near the
Portovaya compressor station in the Leningrad Region
— Expansion of gas infrastructure in Russian regions
In electricity and heat generation and sales:
— Completed construction of Unit 2 at the Grozny TPP
— Construction of the Svobodnenskaya TPP and Pančevo
CHPP (Serbia)
— Retrofitting and revamping of generating facilities, main-
taining operational reliability and efficiency of equipment,
ensuring safety of generating facilities and replacement
of worn-out power generating equipment
2017
498.6
225.2
216.5
330.4
58.1
51.7
37.7
86.4
2018
640.1
309.4
308.0
257.9
72.9
39.1
19.4
149.1
2019
Change 2019/2018
464.2
437.8
360.2
316.0
79.0
25.8
14.3
121.4
−27.5%
41.5%
16.9%
22.5%
8.4%
−34.0%
−26.3%
−18.6%
1.3%
1,504.6
1,795.9
1,818.7
PJSC Gazprom Annual Report 2019 Capex Programmes
Capacity commissioned by Gazprom Group in 2019
Segment
Gas production
Facilities commissioned
A 12.5 bcm per year CGTU at the Chayandinskoye OGCF
Three BCS at the Chayandinskoye and Bovanenkovskoye fields, and at Pestsovaya structure of the Urengoyskoye
field, with a combined capacity of 244 MW
1.8 bcm per year capacity added to the CGTU at the second block of the Achimov deposits at the Urengoyskoye OGCF
y
g
e
t
a
r
t
S
151 new gas production wells in Russia
Oil and gas condensate production
Phase 2 facilities of the TL-4 compressor station at the Orenburgskoye OGCF’s Eastern block
A BCS and a gas pipeline at the Urmanskoye field
A 131 thousand tonnes per year oil treatment unit, installed as part of the investment project for the field
construction to develop the oil rim in the Botuobinsky horizon of the Chayandinskoye OGCF
640 new oil production wells in Russia
Gas transportation
One 128 MW compressor station at the Power of Siberia trunk gas pipeline
2,279.3 km of new trunk gas pipelines and connections in Russia, including 2,250.9 km of the Power of Siberia
trunk gas pipeline
1,876 km of the two strings of the TurkStream trunk gas pipeline’s offshore section and a receiving terminal for the
pipeline’s offshore section in Turkey
2 revamped gas pumping units with a combined capacity of 32 MW in Russia
Gas storage
6 new operating wells at the Sovkhoznoye UGSF
42 operating wells, following revamps at the Stepnovskoye, Kasimovskoye, Shchelkovskoye, Peschano-
Umetskoye and Elshano-Kurdyumskoye UGSFs in Russia
Hydrocarbon processing/refining
A propane fraction methanol removal unit with a marketable product drying module at the Surgut Condensate
Stabilisation Plant (designed to remove methanol from the propane fraction feedstock)
A gas purification unit for catalytic cracking regeneration gases at Omsk Refinery
A revamped diesel fuel hydrotreating unit at Omsk Refinery
An automated fuel loading system at Moscow Refinery
Unit 2 at the Grozny TPP with an installed capacity of 184 MW
Electricity and heat
generation and sales
—
—
—
In hydrocarbon processing/refining — the Amur GPP construction,
implementation of projects to enable liquid hydrocarbon
transportation from the Nadym-Pur-Taz region (the Urengoy oil
pumping station, the Urengoy–Purpe oil and condensate pipeline),
Astrakhan GPP revamp, construction of a catalytic cracking complex
and a technical sulphur production unit at Gazprom neftekhim
Salavat, and projects to boost refining depth at Omsk and Moscow
refineries.
In gas sales — gas infrastructure expansion in Russia and
construction of an LNG production, storage and shipping complex
near the Portovaya compressor station
In electricity and heat generation and sales — completing
construction of Svobodnenskaya TPP and Pančevo CHPP (Serbia),
upgrade of the existing generating equipment, and implementation
of a series of projects to ensure the reliability and safety of
generating facilities and maintain the heat network infrastructure
Investment priorities for 2020
—
—
—
—
In gas production — production drilling and field construction at the
Chayandinskoye and Kovyktinskoye fields, production drilling and
field construction at the Kharasaveyskoye field, plus construction of
a connection to the gas transport system, production drilling and
field construction at the second pilot block of the Achimov deposits
at the Urengoyskoye fields, field infrastructure expansion the
Kirinskoye field, production drilling at the Yuzhno-Kirinskoye fields,
and construction of an ice-resistant fixed platform at the
Kamennomysskoye-Sea gas field
In oil and gas condensate production — development of the
Novoportovskoye and Prirazlomnoye fields
In gas transportation — continued construction of the Power of
Siberia trunk gas pipeline, UGSS transportation capacity expansion
at the Gryazovets–Slavyanskaya CS section, construction of the
Sakhalin–Khabarovsk–Vladivostok, Ukhta–Torzhok 2 and
Bovanenkovo–Ukhta 2 trunk gas pipelines
In gas storage — expansion of the Kanchurinsko-Musinsky UGS
complex, revamp of gas production assets at the Elshano-
Kurdyumskoye, Peschano-Umetskoye and Stepnovskoye UGSFs,
revamp of existing and construction of new facilities at the
Kaliningradskoye UGSF
For more details on Gazprom Group’s key projects see Gazprom in Figures 2015–2019
Factbook
75
PJSC Gazprom Annual Report 2019 Long-Term Development Programme
and Key Indicators
Interfaces between SPT-based long-, mid- and short-term planning frameworks
Material changes in PJSC Gazprom’s
internal and external operating environment
Strategic (long-term)
planning
Tier-1 SPTs
Tier-2 SPTs
Mid-term
planning
Short-term
planning
PJSC Gazprom’s Long-Term Development Programme for 10 years
Feedback
List
of priority projects
Programme
indicators
Monitoring and control
3-Year
Investment Programme
1-Year
Investment Programme
Corporate KPIs
3-Year
Budget
1-Year
Budget
Actual data
Strategic Performance Targets
PJSC Gazprom’s long-term strategic planning is based on
a framework of strategic performance targets (SPTs) that are
well-balanced across all lines of business and quantify the
targets aimed at achieving PJSC Gazprom’s strategic goals.
Strategic planning identifies growth areas and management
decisions, which are detailed at the mid-term and short-term
planning levels. Results of the planning process are used
as inputs for PJSC Gazprom’s budgeting and Investment
Programme for the coming year and a three-year period.
Tier-1 SPTs (SPTs1) are set by the Company’s Board of
Directors for the end of a ten-year planning period and
provide a basis for developing PJSC Gazprom’s Long-Term
Development Programme.
Tier-2 SPTs (SPTs2) flesh out SPTs1 for specific lines of
business, providing more details on the targets in production,
marketing, economic performance, internal corporate
processes, innovation and HR management.
PJSC Gazprom’s revised Investment Programme for 2019 was approved by its Board
of Directors, Resolution No. 3331 dated 22 October 2019 (Minutes of the Board of
Directors’ meeting No. 1277 dated 22 October 2019). For more details on the goals
and main projects, key areas and timelines see the Strategic Priorities and
Capex Programmes sections
76
PJSC Gazprom Annual Report 2019
Long-Term Development Programme
and Key Indicators
SPTs1 values for the end of a ten-year period
(approved by Resolution of PJSC Gazprom’s Board of Directors
No. 1528 dated 29 December 2009)
Metrics
Economic profit growth
Return on capital
(return on capital employed)
Debt/equity ratio
(ratio between debt and equity)
Gas production and sales volumes
Gross production of natural gas
Sales of natural gas
Total gas reserves
Reserves replacement ratio
Target value
Positive
At least 6%
Not more than
40%
Not less than
550 bcm
Not less than
490 bcm
Not less than
29 tcm of natural
gas
Not less than
100%
Long-Term Development Programme
PJSC Gazprom’s Long-Term Development Programme is
a key tool for the Company’s longer-term planning.
Its purpose is to provide a comprehensive integrated
plan ensuring the Company’s balanced and successful
growth, achievement of SPTs, and maximisation of systemic
economic benefits based on risk and opportunity analysis.
The key objectives of the Long-Term Development
Programme of PJSC Gazprom include:
—
identifying priority growth areas for the Company based
on insights into trends in the global and Russian energy
markets and competition analysis
— defining development options and prioritising projects for
PJSC Gazprom
— financial and economic evaluation of the Company’s
development options
— qualitative and quantitative assessment of PJSC Gazprom’s
strategic risks
— preparing recommendations and developing action plans
to achieve the Company’s SPTs and support its sustainable
growth.
The Long-Term Development Programme is developed
annually in accordance with the Company’s Planning Proce-
dures Based on the Strategic Performance Targets (SPTs)
approved by a resolution of the Company’s Management
Committee in June 2006, and incorporating the Guidelines on
Long-Term Development Programmes for Strategic Open
Joint Stock Companies and Federal State Unitary Enterprises,
and Open Joint Stock Companies in which the Aggregate
Share of the Russian Federation Exceeds 50% (Instruction of
the Government of the Russian Federation No. ISh-P13-2583
dated 15 April 2014). Once pre-approved by PJSC Gazprom’s
Management Committee, the Programme is submitted for
approval to the Company’s Board of Directors.
77
y
g
e
t
a
r
t
S
PJSC Gazprom’s Long-Term Development Programme
(2020–2029) was approved by its Board of Directors,
Resolution No. 3317 dated 24 September 2019 (Minutes of the
Board of Directors’ meeting No. 1272 dated 24 September
2019).
Changes in PJSC Gazprom’s Long-Term
Development Programme in 2019
In 2019, PJSC Gazprom’s Long-Term Development Programme was
developed with the use of actual performance metrics for 2018, updated
forecast of operating, economic and financial performance targets for
the Company, and projections made by the Russian Ministry of Economic
Development about the country’s long-term socio-economic
development.
Within the efforts to create a mechanism for rolling out the SPT-
based long-term planning framework across international operations, and
the oil and power generation businesses, PJSC Gazprom’s Long-Term
Development Programme (2020–2029) was supplemented with Gazprom
Group’s Oil Business Development and Gazprom Group’s Power
Generation Business Development sections.
Russian Government Directives No. 4955p-P13 dated 17 July
2014 provide for audits covering the progress on the Long-
Term Development Programme.
In 2019, a progress audit of PJSC Gazprom’s Long-Term
Development Programme (for 2018–2027, covering the gas
business) for 2018 was conducted by OOO FBK. The audit was
performed in accordance with the Standard for Conducting
a Progress Audit of PJSC Gazprom’s Long-Term Development
Programme and the Terms of Reference for Conducting
a Progress Audit of PJSC Gazprom’s Long-Term Development
Programme (approved by Resolution of the Board of Directors
of PJSC Gazprom No. 3196 dated 25 December 2018). Based
on the results of the audit procedures and the audit evidence
obtained, the auditor produced a report on the progress
audit of PJSC Gazprom’s Long-Term Development Programme
(for 2018–2027, covering the gas business) for 2018 (No. 4200
dated 27 December 2019) confirming that the actual values
achieved against the targets set out in the Programme were
fair and that the targets set in PJSC Gazprom’s Long-Term
Development Programme (for 2018–2027, covering the gas
business) were on the whole achieved in 2018.
In line with the Standard for Conducting a Progress Audit
of PJSC Gazprom’s Long-Term Development Programme,
proposals for implementing the auditor’s recommendations
are submitted for approval to PJSC Gazprom’s Board of
Directors. Information on the implementation of the auditor’s
recommendations is included in the Programme as part of its
annual update. Proposals for implementing the auditor’s
recommendations produced following the progress audit of
PJSC Gazprom’s Long-Term Development Programme for
2018 were approved by Resolution of PJSC Gazprom’s Board
of Directors No. 3409 dated 29 April 2020.
For more details on the 2019 activities aimed at implementing the Long-Term
Development Programme and their timelines see the Strategic Priorities
and Capex Programmes section
PJSC Gazprom Annual Report 2019 Long-Term Development Programme
and Key Indicators
Key Performance Indicators
The medium and short term investment, financial and opera-
tional planning at PJSC Gazprom is consolidated within the
budget planning framework.
KPI targets for 2019 were set by resolutions of the Board of
Directors based on PJSC Gazprom’s 2019 budget (financial
plan) and Investment Programme, with some of the KPIs
subsequently adjusted as per the new version of the 2019
budget (financial plan) and Investment Programme.
Targets for corporate key performance indicators (KPIs)
The adjustments were mainly driven by consolidation
of PJSC Gazprom’s refining assets, cost reallocation in
Production, lower forecast on gas supply to European
countries, higher forecast on gas supply to FSU countries
and Russian consumers, and lower revenue forecast.
are calculated based on PJSC Gazprom’s annual budget
(financial plan) and Investment Programme. The KPIs incorpo-
rate the Company’s most important short-term efficiency and
effectiveness metrics and are subject to approval by the
Board of Directors.
The Company’s KPI framework was approved by Resolu-
tion of the Board of Directors of JSC Gazprom No. 2435 dated
21 October 2014 (Minutes of the Board of Directors’ meeting
No. 972 dated 21 October 2014) as part of the Regulations on
JSC Gazprom’s Key Performance Indicators. Subsequently,
the KPI framework was amended by PJSC Gazprom’s Board
of Directors to incorporate the instructions issued by govern-
ment authorities.
Target and actual values of corporate KPIs for 2019
Target value
KPI metric
Initial*
Adjusted**
Actual value***
,
KPI achievement
% of the target
Explanation of variance between
the target and actual KPI values
Financial and economic KPIs
Per unit costs in Production,
RUB/t c. e.
Per unit costs in Transportation,
RUB per unit of transportation
(mcm/100 km)
Reduction of operating costs
(expenses), %
Total shareholder return
Return on equity, %
Labour productivity, RUB thousand/
man-hour
Industry-specific KPIs
Gas sales by volume, bcm
Commissioning of priority
production facilities
Integrated innovation key
performance indicator, %
926.5
869.27
873.24
99.5%
Lower gas production actual
vs plan by 0.2%
Lower actual costs of gas
transportation subsidiaries
Lower controllable operating costs
101%
139%
69.32
68.12
67.43
2
0.10
6
No
adjustments
No
adjustments
No
adjustments
2.78
8.78
81.42
73.16
75.66
0.783
783%
PJSC Gazprom’s market
capitalisation growth
146%
103%
Higher FX gains included in finance
income
Gas purchase expenses lower
by 8.3%
453.288
450.031
453.361
101%
Increased demand for gas and,
consequently, higher supplies
to the far abroad and FSU countries
(except the Baltic states) and
Russian consumers compared
to the target
Weather and lead times of
components required for works
at gas transportation facilities
7
70%
111.45
117%
Systematic work on implementation
of PJSC Gazprom’s Innovative
Development Programme and
well-organised innovation
10
(list of
production
facilities
adjusted)
No
adjustments
10
95
* Resolution of PJSC Gazprom’s Board of Directors No. 3249 dated 16 April 2019.
** Resolution of PJSC Gazprom’s Board of Directors No. 3369 dated 26 December 2019.
*** To be submitted for review by PJSC Gazprom’s Board of Directors in Q2 2020.
78
PJSC Gazprom Annual Report 2019
y
g
e
t
a
r
t
S
Long-Term Development Programme
and Key Indicators
Target corporate KPIs for 2020
KPI metric
Target value*
Financial and economic KPIs
Per unit costs in Production, RUB/t c. e.
924.31
Per unit costs in Transportation, RUB per unit
of transportation (mcm/100 km)
Reduction of operating costs (expenses), %
Total shareholder return
Return on equity, %
Labour productivity, RUB thousand/man-hour
Industry-specific KPIs
Gas sales by volume, bcm
Commissioning of priority production facilities
Integrated innovation key performance indicator, %
71.62
2
0.10
6
75.19
460.321
5
95
* To be submitted for review by PJSC Gazprom’s Board of Directors in Q2 2020. KPI
values were calculated in accordance with PJSC Gazprom’s annual budget (financial
plan) and Investment Programme for 2020 approved by the Board of Directors, and
may be adjusted following the established procedures if the Board of Directors
resolves to approve new versions of these documents.
Description of the KPIs is provided in the Remuneration of Members of Governing
and Supervisory Bodies section
79
PJSC Gazprom Annual Report 2019
Performance
Results
80
PJSC Gazprom Annual Report 2019
PJSC Gazprom Annual Report 2019 Operations and Marketing 82
Exploration and Production 82
Gas Transportation and Storage 92
Gas Distribution, Gas Infrastructure Expansion,
and NGV Fuel Markets 98
Hydrocarbon Processing and Petrochemicals 102
Power Generation 108
Marketing 112
Innovations and Import Substitution 122
Innovations 122
Import Substitution 127
Financial Performance 130
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
81
PJSC Gazprom Annual Report 2019
Operations and Marketing
Exploration and Production
Gazprom has the world’s largest reserves of natural
gas and is the world’s leading gas producer. The Group
successfully implements production projects in Russia
and beyond. In 2019, Gazprom significantly increased
the resource base of the Yamal gas production hub,
driven by new discoveries, and started developing
the Kharasaveyskoye field, another large field on this
peninsula. In eastern Russia, Yakutia gas production
hub commenced production from its Chayandinskoye
anchor field.
PJSC Gazprom maintains its leadership in gas reserves and
production among Russian and global public companies
of the fuel and energy sector.
In order to replenish its mineral resource base and
maintain production of hydrocarbons to match consumer
demand, Gazprom Group conducts successful geological
and geophysical (G&G) surveys of fields and prospects
in Russia and beyond. Over the last 15 years, the reserves
replacement ratio has been maintained above 100%.
According to DeGolyer and MacNaughton, Gazprom
Group’s proved and probable PRMS reserves as at 31 Decem-
ber 2019 were 24,395.5 bcm of natural gas, 1,063.2 mm tonnes
of gas condensate and 1,374.8 mm tonnes of oil, including
share in the reserves of entities in which Gazprom has invest-
ments classified as joint operations (21.2 bcm of natural gas
and 153.9 mm tonnes of oil).
Proved and probable PRMS hydrocarbon reserves of Gazprom
Group (including share in the reserves of entities in which Gazprom
has investments classified as joint operations)
As at
31 December 2018
As at
31 December 2019
Natural gas, bcm
including proved reserves
Gas condensate, mm tonnes
including proved reserves
Oil, mm tonnes
including proved reserves
Total, bn boe*
including proved reserves
24,255.1
17,890.4
1,090.2
759.7
1,335.4
712.3
176.1
127.5
24,395.5
17,715.1
1,063.2
730.2
1,374.8
707.5
177.1
126.1
* For management accounting purposes, Gazprom Group measures hydrocarbon
reserves and production in metric units. In this Annual Report, gas reserves
are converted from metric units to barrels of oil equivalent at a ratio of 1,000 cu m
to 6.49 boe.
The relevant conversion ratios are provided in the Glossary section
82
PJSC Gazprom Annual Report 2019 Operations and Marketing
Exploration and Production
71%
Gazprom Group’s share of total Russian explored
reserves of natural gas
Subsoil licence portfolio as at 31 December 2019
Gazprom Group
302
573.2 thousand
square km
licences for geological surveying, exploration and
production of hydrocarbons
total area of licence blocks
Entities in which Gazprom has investments classified as joint operations
37
licences for geological surveying, exploration and
production of hydrocarbons
23.9 thousand
square km
total area of licence blocks
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
For more details on Gazprom Group’s licences for major hydrocarbon fields and
licensing activities see Gazprom in Figures 2015–2019 Factbook
Most of Gazprom Group’s projects have been audited, total-
ling 92.8% of gas reserves, 95.0% of condensate reserves
and 95.7% of oil reserves in A+B1+C1 reserve categories.
In addition to the annual production from the fields
operated by Gazprom, the key factors behind the changes
in reserve estimates under international standards included:
bringing more reserves into the audit scope (Kazanskoye,
Severo-Vasyuganskoye, Ostaninskoye, Tas-Yuryakhskoye,
Malo-Yamalskoye and Blizhnenovoportovskoye fields);
reclassification of Turonian deposit at the Yuzhno-Russkoye
field to higher-level reserve categories based on actual
information from production; and changes in economic factors
the Yuzhno-Russkoye field; adjustments of development plan
parameters for the Kharasaveyskoye field; further accelera-
tion of the Tazovskoye field development and successful
exploration at the Alexander Zhagrin field.
Operations in Russia
Mineral Resource Base
As at 31 December 2019, Gazprom Group’s A+B1+C1 hydrocar-
bon reserves in Russia were 34,899.00 bcm of natural gas,
1,569.66 mm tonnes of gas condensate and 2,005.67 mm
tonnes of oil, including the share in the reserves of entities in
which Gazprom Group has investments classified as joint
operations — 23.07 bcm of gas, 2.73 mm tonnes of gas
condensate and 192.42 mm tonnes of oil. Gazprom Group’s
A+B1+C1 hydrocarbon reserves total 254.04 bboe.
Factors behind the changes in A+B1+C1 natural gas reserves in 2019, bcm
Natural gas reserves as at 31 December 2018
Exploration-based additions to reserves
Re-estimation
Acquisition of assets
Production (including losses)*
Other factors
Natural gas reserves as at 31 December 2019
* Excluding dissolved gas.
Factors behind the changes in A+B1+C1 gas condensate reserves in 2019, mm tonnes
Gas condensate reserves as at 31 December 2018
Exploration-based additions to reserves
Re-estimation
Acquisition of assets
Production (including losses)*
Other factors
Gas condensate reserves as at 31 December 2019
* Any production-driven changes in gas condensate reserves are recognised following conversion into stable gas condensate (C5+). In 2019, Gazprom Group produced 16.71 mm tonnes
of unstable gas condensate.
83
35,195.27
+556.69
−455.40
+100.60
−499.66
+1.50
34,899.00
1,604.41
+11.72
−39.41
+6.32
−13.35
−0.03
1,569.66
PJSC Gazprom Annual Report 2019
Operations and Marketing
Exploration and Production
Factors behind the changes in A+B1+C1 oil reserves in 2019, mm tonnes
Oil reserves as at 31 December 2018
Exploration-based additions to reserves
Production (including losses)
Other factors
Oil reserves as at 31 December 2019
Gazprom Group’s fields in Russia with the largest reserves of natural gas and oil
2,015.71
+28.98
−47.50
+8.48
2,005.67
The largest fields by natural gas reserves
The largest fields by oil reserves
1
2
3
4
5
6
7
8
9
10
11
Urengoyskoye
Shtokman
Bovanenkovskoye
Astrakhanskoye
Yamburgskoye
Zapolyarnoye
Tambeyskoye
Kovyktinskoye
Kruzenshternskoye
Kharasaveyskoye
Chayandinskoye
1
2
3
4
5
6
7
8
9
10
11
Priobskoye
Novoportovskoye
Eastern block of the Orenburgskoye OGCF
Vyngapurovskoye
Sutorminskoye
Orenburgskoye
Vyngayakhinskoye
Prirazlomnoye
Ety-Purovskoye
Novogodneye
Yamburgskoye
Note. The map shows Gazprom Group’s hydrocarbon fields (excluding entities in which Gazprom has investments classified as joint operations) with combined A+B1+C1 reserves accounting
for over 70% of natural gas and over 55% of oil reserves as at 31 December 2019.
84
PJSC Gazprom Annual Report 2019
Operations and Marketing
Exploration and Production
A distinguishing feature of Gazprom Group’s mineral resource
base is a high concentration of reserves: about 60% of
reserves are located in Western Siberia. The region will remain
the leading petroleum province until 2025 and beyond.
The Group’s share in A+B1+C1 hydrocarbon reserves of
associates and joint ventures (including share in the reserves
of OOO RusGazAlyans, a joint venture between OOO Gazprom
dobycha Yamburg and AO RusGazDobycha) as at 31 Decem-
ber 2019 was 1,063.97 bcm of gas, 111.09 mm tonnes of
gas condensate and 588.64 mm tonnes of oil, which totals
12.13 bboe.
In 2019, the Company completed seismic surveys in Russia:
2D — 15.0 thousand km, 3D — 7.9 thousand square km.
Exploration drilling totalled 201.7 thousand m of solid rock,
and 41 oil and gas wells were completed, with 39 wells
producing flow when tested.
During the year, the Company also used sidetrack
drilling for further exploration. Drilling meterage totalled
12.5 thousand m, with two production wells completed.
The Company allocated RUB 116.9 bn for its exploration
programmes (inclusive of VAT).
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
Most of PJSC Gazprom’s annual reserve additions
in Russia come from exploration
In addition, for entities in which Gazprom has investments
classified as joint operations, exploration drilling stood at
74.7 thousand m, with 18 exploration wells completed
(14 flowing), and 3D seismic was acquired on 0.9 thousand
square km. Further exploration using sidetrack drilling totalled
5.7 thousand m, with two production wells completed.
Total meterage of exploration drilling for gas and oil
across Gazprom Group increased by 28% in 2019
Gazprom made four new field discoveries during 2019: the
Dinkov gas condensate field and the Nyarmeyskoye gas
field on the Kara Sea continental shelf, the Yagodnoye and
Roshchinskoye oil fields in the Orenburg Region, and 25 new
deposits within previously discovered fields in the Yamal-
Nenets Autonomous Area, Khanty-Mansi Autonomous Area —
Yugra, on the Kara Sea continental shelf, in the Tomsk and
Orenburg Regions, and the Republic of Sakha (Yakutia). In
addition, entities in which Gazprom has investments classified
as joint operations discovered the Chikishev field in the Tomsk
Region and two deposits in the Khanty-Mansi Autonomous
Area — Yugra.
According to Westwood Global Energy
consultancy, the Dinkov and Nyarmeyskoye fields
are the largest discoveries of the first half of 2019
globally
In 2019, exploration-driven additions to A+B1+C1 hydrocarbon
reserves in Russia totalled 556.69 bcm of natural gas, 11.72 mm
tonnes of gas condensate and 28.98 mm tonnes of oil.
Including additions to the reserves of companies in which
Gazprom has investments classified as joint operations —
1.95 mm tonnes of oil.
Breakdown of Gazprom Group’s explored gas reserves, %
Reserves in offshore fields
Reserves in remote fields with poor
infrastructure
Reserves in the fields securing stable
production rates in areas covered
by the existing UGSS
Reserves in the fields with declining
production rates
Reserves in deep-lying complex
deposits
Reserves in the Astrakhanskoye field
(with environmental restrictions on gas
production depth)
25.6
24.1
18.3
13.1
10.7
8.2
Exploration
In the reporting year, Gazprom Group conducted exploration
activities in almost all oil and gas regions of the Russian
Federation to ensure commercial reserves replacement for
hydrocarbons and prepare the reserve base. Gas exploration
was carried out in the UGSS area to maintain production
levels at existing fields, on the continental shelf of the Kara
and Barents Seas, and the Sea of Okhotsk to ensure reserves
growth and formation of strategic reserves, and in Eastern
Siberia and the Far East to maintain the existing and create
new gas production hubs. Oil exploration activities were
mostly concentrated on the Yamal Peninsula, in Eastern and
Western Siberia, and the Orenburg Region.
Exploration drilling for gas and oil across Gazprom Group,
thousand m
85.9
157.6
201.7
28%
2017
2018
2019
Change 2019/2018
85
PJSC Gazprom Annual Report 2019
Operations and Marketing
Exploration and Production
Unique track record of exploration on the Russian continental shelf
Gazprom Group has firmly established itself as the exploration leader
on the Russian continental shelf, including the Arctic seas. The Group
has gained unique experience in 3D seismic surveys on the continental
shelf in various climatic zones. By leveraging advanced technologies
and equipment, the Group has reduced exploration risks and can now
complete the construction of prospecting, appraisal and exploration wells
within one summer navigation season, reducing the time to prepare
commercial C1 reserves by half.
Exploration on the Russian continental shelf was the key driver of
the high reserves replacement levels shown by Gazprom Group in 2018
and 2019.
Results of exploration on the Russian continental shelf
Exploration drilling for gas and oil across Gazprom Group,
thousand m
2017
2018
2019
2017
2018
2019
2017
2018
2019
3D seismic, thousand square km
7.8
7.5
7.1
13.3
3.5
2.4
Exploration-based additions to A+B1+C1 natural gas reserves, bcm
48.9
768.3
408.4
*
* Excluding the onshore part of the Kruzenshternskoye GCF.
Significant growth in gas reserves was achieved at the
Kruzenshternskoye field, located on the Kara Sea continental
shelf and in adjacent onshore areas (+262.9 bcm), the Dinkov
and Nyarmeyskoye fields on the Kara Sea continental shelf
(+135.9 bcm and +67.9 bcm, respectively), and the Ludlovskoye
field on the Barents Sea continental shelf (+48.9 bcm).
The exploration success rate in 2019 was 19.4 thousand boe
per metre drilled (excluding entities in which Gazprom has
investments classified as joint operations).
1.11
Gazprom Group’s gas reserves replacement ratio
Re-estimation
Gazprom Group continued revising gas recovery factors
(GRFs) under the Russian Classification of Reserves and
Resources of Oil and Flammable Gases. Recoverable gas
reserves decreased by 516.33 bcm as a result of gas recovery
factor (GRF) revision in 2019, with the largest drop in the
Yuzhno-Kirinskoye, Zapadno-Tarkosalinskoye, Kharasaveys-
koye, Severo-Kamennomysskoye and Rusanovskoye fields.
As at 31 December 2019, Gazprom completed the GRF
estimation for the fields containing 29% of Gazprom Group’s
total A+B1+C1 reserves. Revision of GRFs for Gazprom
Group’s other fields in the coming years will continue have
a significant impact on the size of its recoverable gas
reserves.
Acquisition of Assets
Upon the completion of AO Arcticgas’ reorganisation,
PAO Gazprom Neft remained the only participant in
OOO NOVATEK-Yarsaleneftegaz (which in February 2020
was renamed to OOO Gazpromneft-Yarsale), which holds
a subsoil licence for the Malo-Yamalsky licence area, while
PAO NOVATEK became the only participant in OOO North-
Chaselskoye and OOO Yevo-Yakhinskoye, which hold subsoil
licences for the North-Chaselskiy licence area and the
Yevo-Yakhinskiy licence area, respectively. Following the
reorganisation, PAO Gazprom Neft and PAO NOVATEK
continued to jointly control AO Arcticgas. Deal-driven A+B1+C1
hydrocarbon reserves growth for Gazprom Group totalled
100.60 bcm of natural gas and 6.32 mm tonnes of gas
condensate.
Field Developments
Gazprom Group has unique capabilities to accomplish priority
tasks as required for further increase in gas production
and fulfilment of its obligations to supply gas to consumers in
Russia and abroad.
86
PJSC Gazprom Annual Report 2019 Operations and Marketing
Exploration and Production
Gazprom Group’s fields in Russia with the largest production of natural gas and oil
3
2
2
4
1
5
3
7
6
8
4
6
1
7
5
8
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
The largest fields by natural gas production
The largest fields by oil production
1
2
3
4
5
6
7
8
Zapolyarnoye
Bovanenkovskoye
Urengoyskoye
Yamburgskoye
Yuzhno-Russkoye
Yamsoveiskoye
Astrakhanskoye
Orenburgskoye
1
2
3
4
5
6
7
8
Priobskoye
Novoportovskoye
Prirazlomnoye
Vyngapurovskoye
Eastern block of the Orenburgskoye OGCF
Sutorminskoye
Zapadno-Chatylkinskoye
Vyngayakhinskoye
Note. The map shows Gazprom Group’s hydrocarbon fields (excluding entities in which Gazprom has investments classified as joint operations) with combined production accounting for 70%
or more of total natural gas and oil production in 2019.
Gazprom Group’s hydrocarbon production assets in Russia
as at 31 December 2019
Gazprom Group
144
7,438
7,752
fields in commercial development
gas producing wells
active oil production wells
Entities in which Gazprom has investments classified as joint operations
39
fields in commercial development
In 2019, Gazprom Group produced 501.22 bcm of natural
and associated gas. Maximum daily production of gas in the
autumn and winter of 2018/2019 reached 1,538.6 mmcm.
Maximum daily gas production in the autumn and winter seasons,
mmcm
2016/2017
1,535.6
2017/2018
1,512.6
2018/2019
1,538.6
87
PJSC Gazprom Annual Report 2019
Operations and Marketing
Exploration and Production
Gazprom Group’s natural and associated gas production
in the Russian Federation, bcm
Gazprom Group, including the share in production volumes
of entities in which Gazprom has investments classified
as joint operations
2017
2018
2019
The increase in associated gas production was driven by
Gazprom Neft (mostly from the Novoportovskoye OGCF and
the Eastern Block of the Orenburgskoye OGCF) following
the commissioning of facilities in 2019 and previous years
under the APG Efficient Utilisation Programme (providing for
investment projects to build gas infrastructure) as well as
organisational and technical improvements at sites with well-
developed gas infrastructure. 2019 saw the commissioning of
gas infrastructure facilities which increased APG utilisation
rate at the Urmanskoye and Shinginskoye fields in the
Tomsk Region to 95%, as well as Phase 2 of TL-4 compressor
station with a gas pipeline on the Eastern Block of the
Orenburgskoye field.
472.05
1.07
498.68
1.08
501.22
1.08
Total
Gazprom Group’s share in the production volumes of entities
in which Gazprom has investments classified as joint operations
Change 2019/2018
0.5%
Information about the commissioning of hydrocarbon production capacities
in the reporting year is presented in the Capex Programmes section
APG utilisation level across Gazprom Neft Group in Russia
(excluding entities in which the Group has investments classi-
fied as joint operations) increased to 89.0% (2018: 78.4%).
PJSC Gazprom’s major gas production subsidiaries
achieved APG utilisation rates of almost 100%
In 2019, APG utilisation across Gazprom Group’s assets in
Russia (including share in the production volumes of entities
in which the Group has investments classified as joint opera-
tions) reached 90.1% (2018: 81.8%).
Revamps and retrofits of gas production facilities
carried out under comprehensive programmes ensure reliable,
safe and cost-efficient operation of Gazprom Group’s gas
production assets to maintain target gas production levels,
including fields in the declining production phase. Activities
under such programmes in 2019 covered the Yamburgskoye,
Urengoyskoye, Medvezhye, Bovanenkovskoye, Yubileynoye,
Yamsoveiskoye, Zapadno-Tarkosalinskoye, Komsomolskoye
and Orenburgskoye OGCFs, as well as the Astrakhanskoye
GCF and Vyngayakhinskoye gas field. The Group allocated
over RUB 13.0 bn (inclusive of VAT) to fund these programmes.
Gazprom Group produced 47.96 mm tonnes of oil,
including 46.29 mm tonnes produced by Gazprom Neft Group
in 2019.
Production volumes were reduced for a number of
Gazprom Neft’s fields to meet quotas defined by the Ministry
of Energy of the Russian Federation for Gazprom Group
under the OPEC+ production cut deal.
Gazprom Group’s equity share of production from associates
and joint ventures
2017
2018
2019
Change 2019/2018
27.04
26.92
26.86
−0.2%
The growth in gas production was due to increased natural
gas production from the Bovanenkovskoye OGCF, which was
further ramped up in the reporting year, the start-up of natural
gas production at the Chayandinskoye OGCF to support
export supplies to China via the Power of Siberia gas pipeline
(natural gas production totalled 0.84 bcm), as well as an
increase in APG production.
Gas production from the Bovanenkovskoye OGCF, bcm
2017
2018
2019
Change 2019/2018
82.84
87.45
96.28
10.1%
APG production of Gazprom Group, including share in the
production volumes of entities in which the Group has investments
classified as joint operations, bcm
11.42
13.94
17.55
25.9%
2017
2018
2019
Change 2019/2018
88
PJSC Gazprom Annual Report 2019 Operations and Marketing
Exploration and Production
Bringing into development the previously untapped reserves
within the oil-rim deposits, and Valanginian, Achimov
and Neocomian-Jurassic deposits at Gazprom Group fields
Gazprom Neft Group gained access to the following nine fields covered
by subsoil licences granted to PJSC Gazprom and its gas production
subsidiaries under long-term risk-based operatorship contracts: the
Pestsovoye, Yen-Yakhinskoye, Zapadno-Tarkosalynskoye, Chayandinskoye,
Yamburgskoye, Orenburgskoye, Urengoyskoye, Kharasaveyskoye and
Bovanenkovskoye fields. Given Gazprom Neft’s extensive expertise, vast
experience, and availability of technologies to produce hard-to-recover
reserves, this decision will allow Gazprom Group to start targeted
development of oil rims and Achimov and Neocomian-Jurassic gas
condensate deposits and prepare the fields for full-scale production
start-up by the scheduled dates.
Under long-term risk-based operatorship contracts, Gazprom Neft
will invest own funds in the asset developments and accept all associated
risks, which will consolidate reserves, production and financial results
of the projects.
A total of 0.23 mm tonnes of oil was produced under long-term
risk-based operatorship contracts in 2019. Annual production of liquid
hydrocarbons can potentially reach 10 mm tonnes of oil equivalent.
For more details on Gazprom Group’s priority field developments in the Russian
Federation see the Strategy section and Gazprom in Figures 2015–2019 Factbook
Gazprom Group produced 16.71 mm tonnes of gas conden-
sate in the reporting year.
Gas condensate production by Gazprom Group in Russia,
mm tonnes
Gazprom Group, including the share in production volumes
of entities in which Gazprom has investments classified
as joint operations
2017
2018
2019
Total
Gazprom Group’s share in the production volumes of entities
in which Gazprom has investments classified as joint operations
15.94
–
15.93
–
16.71
–
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
Oil production by Gazprom Group in Russia, mm tonnes
Change 2019/2018
Gazprom Group, including the share in production volumes
of entities in which Gazprom has investments classified
as joint operations
Gazprom Group’s equity share of production from associates
and joint ventures
4.9%
4.96
4.87
4.74
−2.7%
2017
2018
2019
Change 2019/2018
Higher gas condensate production by Gazprom Group was
mainly due to an increase in production from Block 1 of the
Achimov deposits at the Urengoyskoye OGCF following the
signing of a framework agreement between PJSC Gazprom
and Wintershall Dea. In the reporting year, the production
drilling programme was completed at the Block. AO Achimgaz
(a joint venture between OOO Gazprom dobycha Urengoy
and Wintershall Dea) has operatorship of the project, while
OOO Gazprom dobycha Urengoy is the subsoil user.
The Group continued to ramp up liquid hydrocarbon
production from the Novoportovskoye OGCF under the field
development project. Logistical arrangements were completed
in 2019 to enable year-round oil shipments from the field. The
final stage of the project included the deployment of Andrey
Vilkitsky icebreaker in the Gulf of Ob for icebreaking support
and the launch of Kapitan, the world’s first digital Arctic
logistics management system.
2017
2018
2019
48.63
7.65
48.28
7.37
47.96
7.18
Total
Gazprom Group’s share in the production volumes of entities
in which Gazprom has investments classified as joint operations
Change 2019/2018
Gazprom Group’s equity share of production from associates
and joint ventures
2017
2018
2019
Change 2019/2018
−0.7%
10.91
11.22
11.77
4.9%
The increase in the oil production volumes of associates
and joint ventures was driven by higher production from the
Vostochno-Messoyakhskoye field, operated by AO Mes-
soyakhaneftegaz (a joint venture between PAO Gazprom
Neft and PAO Rosneft), and from the fields operated by
AO Arcticgas (a joint venture between PAO Gazprom Neft
and PAO NOVATEK).
89
PJSC Gazprom Annual Report 2019
Operations and Marketing
Exploration and Production
Oil and gas condensate production from the Novoportovskoye OGCF,
mm tonnes
2017
2018
2019
Change 2019/2018
5.95
7.16
7.73
8.0%
For more details on the application of new development technologies see the
Innovations and Import Substitution section
Operations Outside Russia
Outside Russia, Gazprom Group carries out oil and gas
exploration and development activities, and provides oilfield
services related to well construction.
In 2019, Gazprom Group continued exploration activities
in Algeria (the El Assel project ), Bolivia (the Azero project)
and Vietnam (Block 112; Blocks 129–132), as well as in Serbia
and Romania (NIS projects).
Exploration campaigns conducted by Gazprom
Group on the Group-operated projects were mostly concen-
trated in Serbia and Romania. Exploration drilling totalled
18.6 thousand m, with seven exploration wells completed (all
of them flowing), and 3D seismic was acquired on 0.7 thousand
square km. As a result of Gazprom Group’s exploration
campaigns, two new deposits were discovered in Serbia.
Under the Agreement of Strategic Cooperation between
PJSC Gazprom and AO Uzbekneftegaz, exploration activities
were continued on six investment blocks in the Republic of
Uzbekistan.
Gazprom Group spent RUB 5.4 bn in 2019 on exploration
projects outside Russia (inclusive of VAT).
Gazprom Group also has stakes in a number of oil and
gas projects at the production stage. In terms of natural gas
and gas condensate production, the largest of them include
the projects to develop the Moc Tinh and Hai Thach fields
in the South China Sea offshore Vietnam (Gazprom Group
interest 49%), and the Incahuasi field within the Ipati and
Aquio blocks in Bolivia (Gazprom Group interest 20%). The
Badra field development project in Iraq (Gazprom Group
interest 30%) and the Sarqala field located within the Garmian
block in Iraq (Kurdistan) are the largest by production of
oil and APG. In the reporting year, the projects to develop the
Incahuasi and Sarqala fields were at the ramp-up stage.
Natural gas production from the Incahuasi field in Bolivia, bcm
2017
2018
2019
Change 2019/2018
2.52
2.58
2.61
1.2%
Note. Total production figures are given for the project, without separating the share
attributable to Gazprom Group.
Natural gas production from the Moc Tinh and Hai Thach fields
in Vietnam, bcm
2017
2018
2019
Change 2019/2018
2.10
2.35
2.19
−6.8%
Note. Total production figures are given for the project, without separating the share
attributable to Gazprom Group.
Oil production from the Badra field in Iraq, mm tonnes
2017
2018
2019
Change 2019/2018
3.79
3.98
2.90
−27.1%
Note. Total production figures are given for the project, without separating the share
attributable to Gazprom Group.
Oil production from the Sarqala field in Iraq (Kurdistan), mm tonnes
2017
2018
2019
Change 2019/2018
0.37
0.93
1.45
55.9%
Note. Total production figures are given for the project, without separating the share
attributable to Gazprom Group.
90
PJSC Gazprom Annual Report 2019 Operations and Marketing
Exploration and Production
The construction of production facilities (production platform,
gas pipeline and production well) was completed at the
cross-border Sillimanite field in the British and Dutch sectors
of the North Sea (Gazprom Group direct interest 19.9%) in
2019, enabling the field commissioning in 2020. Under a PSA
for the Djel gas condensate field signed in 2018, a subsoil
licence with applicable permits for the area covered by the
PSA was obtained in 2019, and Djel Field Development Plan
was approved in accordance with the PSA provisions.
NIS, a Serbian subsidiary of Gazprom Neft, produced
0.89 mm tonnes of oil and gas condensate and 0.46 bcm of
natural and associated gas in 2019 (2018: 0.92 mm tonnes of oil
and gas condensate and 0.49 bcm of natural and associated
gas). Production was mostly concentrated in Serbia, as well
as in Angola, Bosnia and Herzegovina and Romania.
In the British, Danish and Dutch sectors of the North
Sea, Wintershall Noordzee B.V. joint venture (Gazprom
Group interest 50%) produced 0.535 bcm of natural gas and
0.06 mm tonnes of oil and gas condensate (2018: 0.712 bcm of
natural gas and 0.06 mm tonnes of oil and gas condensate).
The Group’s associate Wintershall AG (Gazprom Group
interest 49%) still faces challenges due to the ongoing political
crisis in Libya, which resulted in limited oil production
and exports. In the reporting year, 2.39 mm tonnes of oil
and 0.42 bcm of associated gas were produced (2018:
2.15 mm tonnes of oil and 0.31 bcm of associated gas).
For more details on Gazprom Group’s prospecting and exploration projects and on
performance of associates and joint ventures outside Russia see Gazprom in Figures
2015–2019 Factbook
In 2019, the Group continued to focus on exploring opportuni-
ties for participation in new oil and gas projects.
Under the Agreement of Strategic Cooperation with
YPFB, PJSC Gazprom is focusing on possible participation
in the development of the Vitiacua block in Bolivia. Acquiring
interests in Argentina’s oil and gas projects is also being
considered.
In oil business, Gazprom’s targeted regions include the
Balkan Peninsula (Serbia, Romania, Bosnia and Herzegovina)
and the Middle East. Detailed feasibility studies were
completed for several assets in the MENA (Middle East and
North Africa) region in 2019.
91
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
PJSC Gazprom Annual Report 2019
Operations and Marketing
Gas Transportation and Storage
Gazprom relies on the globally unique Unified Gas Supply
System (UGSS) of Russia and the Power of Siberia gas
pipeline in transporting gas for export and to supply
the needs of Russian consumers. To secure reliable gas
supplies Gazprom Group is focused on the continuous
development of the GTS — building new, hi-tech gas
pipelines and renovating, upgrading and retrofitting the
existing pipeline capacity, as well as implementing
a programme to decommission excess gas transportation
capacity. The highlights of 2019 and early 2020 include the
launches of the Power of Siberia and TurkStream gas
pipelines.
Gas Transportation in Russia
The UGSS of Russia is a centrally operated system of natural
gas production, processing, treatment, transportation and
storage. The UGSS incorporates the world’s longest network
of high-pressure trunk pipelines covering European Russia
and Western Siberia. In addition, the Group owns trunk gas
pipelines in the Russian Far East: the Power of Siberia,
Sakhalin–Khabarovsk–Vladivostok and Sobolevo–Petropav-
lovsk-Kamchatsky pipelines. Gazprom’s GTS, which is unique
in its size and quality parameters, ensures highly reliable and
flexible gas supplies for consumers in Russia and abroad.
During 2019, a total 678.96 bcm of gas were supplied into
Gazprom’s GTS in Russia. The decrease from the previous
year was driven by the natural gas demand dynamics in
Russia and globally.
The combined length of trunk gas pipelines and connections
operated by the Group’s gas transportation subsidiaries in Russia
as at 31 December, thousand km
2017
2018
2019
Change 2019/2018
172.1
172.6
175.2
1.5%
In December 2019, Gazprom started Russian pipeline gas
supplies to China via the Power of Siberia trunk gas pipeline.
The pipeline is operated by OOO Gazprom transgaz Tomsk,
a subsidiary of PJSC Gazprom. A total of 0.33 bcm of natural
gas was supplied via the pipeline in 2019.
The Power of Siberia is a strong enabler for gas
infrastructure expansion and economic development
in Eastern Siberia and the Far East of Russia
92
PJSC Gazprom Annual Report 2019 Operations and Marketing
Gas Transportation and Storage
Gas supplies into the Gazprom’s GTS in Russia, bcm
2017
2018
2019
Change 2019/2018
Gas consumption for own operational needs of the GTS, bcm
2017
2018
2019
Change 2019/2018
672.09
693.07
678.96
−2.0%
37.48
40.14
37.99
−5.4%
As the owner of the Russian section of the GTS, PJSC Gazprom
leases out free gas pipeline capacity (subject to its availability)
to independent companies provided they have documents
confirming their ownership of gas supplies or the existence of
contractual obligations to buy (sell) gas, and a proof of the
customer’s readiness to accept the stated gas supplies
within the gas delivery period. Independent companies using
PJSC Gazprom’s GTS are also required to ensure treatment
of gas to the applicable standards and technical regulations
prior to its transportation, and accounting for gas supplies
at custody transfer stations.
The reduced access to the GTS capacity was due to
the overall declines in gas production by companies outside
Gazprom Group, as well as lower gas supplies to Russian
consumers in general.
Gas transportation services to non-Group companies via Gazprom’s GTS in Russia
Gas transported, bcm
including Russian gas
Companies serviced
2017
137.91
130.37
24
2018
136.42
128.27
25
2019
132.12
124.33
22
Activities ensuring the reliability and safety of linear sections
of trunk gas pipelines (overhauls and scheduled maintenance)
are planned and carried out depending on the technical
condition and operating risks of the respective facilities.
Inline inspections to diagnose the GTS in Russia, thousand km
GTS overhauls in Russia, km
2017
2018
2019
Change 2019/2018
2017
2018
2019
Change 2019/2018
22.1
25.1
28.9
15.1%
Accident rates for linear sections of trunk gas pipelines have
decreased by more than half over the last 10 years.
The GTS Operability and Integrity Management System
is in place at PJSC Gazprom to ensure the reliable and safe
operation of GTS facilities.
For more details on the diagnostics and overhauls of trunk gas pipelines in Russia
and on the number of GTS accidents and technical faults see Gazprom in Figures
2015–2019 Factbook
Automation of GTS operability and integrity management processes
Gazprom’s Gas and Gas Condensate Transportation Management and
Information System (Phase 2) went live in 2019. The project included the
automation of collection, processing, storage, and provision of data
required for managing the operability and integrity of PJSC Gazprom’s
gas transportation system facilities.
A plan for the overhaul of linear sections of trunk gas pipelines for
2020 and a Programme for the Overhaul of Linear Sections of Trunk Gas
Pipelines of PJSC Gazprom for 2020–2022 were produced using the
nameplate, operating and geospatial data loaded into the system.
93
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
Change
2019/2018
−3.2%
−3.1%
−12.0%
810.1
771.3
782.1
1.4%
PJSC Gazprom Annual Report 2019
Operations and Marketing
Gas Transportation and Storage
Gas Transportation Outside Russia
Gazprom Group companies own the gas transportation
systems in Belarus (OAO Gazprom transgaz Belarus), Armenia
(ZAO Gazprom Armenia) and Kyrgyzstan (OsOO Gazprom
Kyrgyzstan), ensuring supplies of natural gas to consumers in
these countries.
The trunk gas pipelines owned and operated by
OAO Gazprom transgaz Belarus, the Group’s core gas trans-
portation asset outside Russia, also carry transit supplies
of Russian natural gas to European countries and Russia’s
Kaliningrad Region. Daily requests by PJSC Gazprom to
transport Russian natural gas through Belarus were satisfied
in full during 2019.
Gas injected into Belarus’ GTS, bcm
2017
2018
2019
Total
Including gas in transit
Change 2019/2018
61.2
42.2
62.6
42.3
60.8
40.5
−2.9%
To ensure the reliability and safety of gas transportation,
foreign gas transportation subsidiaries of the Group run inline
inspections, corrosion diagnostics and overhauls.
Nord Stream (operated by joint venture Nord Stream AG)
and Blue Stream (operated by Blue Stream Pipeline Com-
pany B.V., which is included in the list of entities in which
Gazprom has investments classified as joint operations),
offshore cross-border pipeline systems constructed with
Gazprom’s involvement, secure gas supplies to consumers
in Northwest and Central Europe, as well as in Turkey.
For details on key gas export routes of PJSC Gazprom see the Company Information
section
Gas transported through the Nord Stream gas pipeline, bcm
Gas transported through the Blue Stream gas pipeline, bcm
2017
2018
2019
Change 2019/2018
15.9
13.3
11.1
−16.5%
Note. Gas injection into the pipeline at the Beregovaya compressor station.
The key drivers of gas pipeline capacity utilisation include
demand from European consumers and regulatory restrictions
by supervisory authorities on access to pipeline capacity for
transit supplies.
EU Gas Directive extension to cross-border offshore gas pipelines
to and from third countries
The Directive includes provisions for ownership unbundling, third-party
access, and application of tariffs to gas pipelines to and from third
countries.
On 23 May 2019, amendments to the EU Gas Directive took effect,
in particular, extending the Directive requirements to cover gas pipelines
to and from third countries in the territorial seas of the EU member states.
The member state where the first interconnection point with the
Member States’ gas network is located is responsible for the application
of the EU Gas Directive to offshore pipelines from third countries. In
particular, such EU member state may now grant derogations from certain
provisions of the EU Gas Directive for a period of up to 20 years (with
possible extension).
As regards the Nord Stream and Nord Stream 2 gas pipelines, the
amendments apply to their sections with length of about 50 km and 54 km
respectively in Germany’s territorial sea and onshore sections in the areas
of responsibility of Nord Stream AG and Nord Stream 2 AG. The EU Gas
Directive amendments are effectively applicable to the pipeline operation
as from 12 December 2019 when relevant amendments were made to the
national laws of Germany.
As permitted by the applicable laws of Germany, Nord Stream AG
and Nord Stream 2 AG filed applications, in due time, for the pipeline
derogation from the key provisions of the EU Gas Directive for a period of
up to 20 years.
As at 31 December 2019, both strings of the TurkStream trunk
gas pipeline’s offshore section were filled with gas and ready
to start supplies. South Stream Transport B.V., a Gazprom
Group subsidiary, is the owner and operator of the trunk gas
pipeline’s offshore section, as well as the owner of the
offshore section’s receiving terminal in Turkey.
2017
2018
2019
Change 2019/2018
Note. Gas injection into the pipeline at the Portovaya compressor station.
51.0
58.7
58.5
−0.3%
For more details on profiles of Gazprom Group’s gas transportation infrastructure
outside Russia see Gazprom in Figures 2015–2019 Factbook
Under the relevant agreements, gas transportation companies
of neighbouring countries provide gas transportation services
to PJSC Gazprom.
94
PJSC Gazprom Annual Report 2019 Operations and Marketing
Gas Transportation and Storage
Gas transportation services provided to PJSC Gazprom in neighbouring countries, bcm
Sweden
Poland
. .
.
Finland*
. .
.
Estonia
. .
.
Latvia
. .
.
.
Russia
Lithuania
.
.
Belarus
Slovakia
Hungary
. .
.
Moldova
Ukraine
Romania
Bulgaria
2017
2018
2019
* Through Imatra gas metering station (for supply to Finland).
95
Russia
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
. .
.
Kazakhstan
PJSC Gazprom Annual Report 2019
Operations and Marketing
Gas Transportation and Storage
By the start of the 2019/2020 withdrawal season,
the potential maximum daily deliverability of Russian
UGSFs grew by the amount comparable to wintertime
daily gas consumption of the Nizhny Novgorod
or Rostov Region
As at 31 December 2019, the Group’s UGSFs in Russia had an
aggregate total gas storage capacity of 75.01 bcm. By the
start of the withdrawal season, the potential maximum daily
deliverability was increased by 30.8 mmcm from 2018 and
totalled 843.3 mmcm of gas. The improved performance was
due to the commissioning of the Volgogradskoye UGSF,
and the expansion and revamps of the existing gas storage
facilities — the Kasimovskoye UGSF and the Punginskoye
UGSF.
Potential maximum daily deliverability of Russian UGSFs
at the start of the withdrawal season, mmcm
2017/2018
2018/2019
2019/2020
Change
805.3
812.5
843.3
3.8%
As at the start of the 2019/2020 withdrawal season, operating
gas reserves in Russian UGSFs amounted to 72.232 bcm.
Gas withdrawn from UGSFs in Russia, bcm
2017
2018
2019
Change 2019/2018
Gas injected into UGSFs in Russia, bcm
2017
2018
2019
Change 2019/2018
* Including 0.03 bcm of cushion gas injected in the Volgogradskoye UGSF.
45.48
51.99
40.54
−22.0%
44.18
49.49
*
45.04
−9.0%
In the reporting year, documents and agreements were
signed to provide for continued gas transit through Ukraine
beyond 31 December 2019.
Agreements and documents signed to continue Russian gas transit
through Ukraine beyond 31 December 2019
— On 28 December 2019, Gazprom and Ukraine signed an irrevocable
amicable agreement to cancel all of Ukraine’s ongoing and potential
future claims against PJSC Gazprom arising from the 22 January
2016 resolution of the Antimonopoly Committee of Ukraine to impose
a fine on PJSC Gazprom
— On 30 December 2019, the following documents were signed:
—
Irrevocable agreement between PJSC Gazprom and NAK
Naftogaz Ukraine on the settlement of current gas disputes
and key terms and conditions for future natural gas
transportation. The document stipulates that all outstanding
arbitration and judicial claims between the parties be dropped
and that in the future the parties renounce any and all possible
claims under the supply and transit contracts dated 19 January
2009. Pursuant to the agreement, seizures and injunctions
approved in England and Wales, Luxembourg, the Netherlands
and Switzerland for PJSC Gazprom assets as requested of
NAK Naftogaz of Ukraine, have been lifted. The court
proceedings under the claims of NAK Naftogaz of Ukraine
seeking recognition and enforcement of the Stockholm
Arbitration Court arbitration award dated 28 February 2018 in the
gas transit contract dispute have been terminated in England
and Wales, Latvia, Luxembourg and the Netherlands.
— An agreement between PJSC Gazprom and NAK Naftogaz
Ukraine on services to arrange for natural gas transportation
through Ukrainian territory. Pursuant to the agreement, NAK
Naftogaz Ukraine will act as the transit organiser and assume
the associated risks. The transit organiser has the obligation
to book gas transportation capacities in Ukraine for a five-year
period to transmit a total of 225 bcm of gas, including 65 bcm
in 2020 and 40 bcm per year in 2021–2024.
— Agreement between PJSC Gazprom and OOO Gas Transmission
System Operator of Ukraine on physical connection points
between the gas transportation systems of Ukraine and the
Russian Federation.
Underground Gas Storage in Russia
The network of underground gas storage facilities (UGSFs) is
an integral part of Russia’s UGSS. Gas storage facilities level
off seasonal, weekly and daily fluctuations in gas demand,
accounting for 20% to 40% of Gazprom’s total gas supplies
during the heating season. Peak and base load gas storage
facilities improve the reliability of the UGSS infrastructure and
optimise technical parameters and capital intensity of gas
transportation systems. Gazprom Group’s UGSFs are used to
manage seasonal fluctuations in gas consumption, support
extra gas supplies in the event of cold snaps or technical
faults within the UGSS, and ensure reliability of gas exports
and long-term reservation.
In Russia, Gazprom Group operates 23 UGSFs in 27 geo-
logical structures: 17 in depleted gas reservoirs, 8 in aquifers,
and 2 in salt caverns.
96
PJSC Gazprom Annual Report 2019 Operations and Marketing
Gas Transportation and Storage
In 2019, a total of 8.2 bcm of PJSC Gazprom’s gas were
injected into UGSFs in far abroad European countries under
OOO Gazprom export contracts (2018: 6.6 bcm). Gas with-
drawal totalled 2.2 bcm (2018: 7.2 bcm). This has allowed
PJSC Gazprom to meet its obligations to counterparties during
repairs at the GTS and avoid penalties for short supplies,
as well as earn extra revenue from gas sales. The decrease
in gas withdrawal in 2019 as compared to 2018 was due to
weather conditions. At the same time, PJSC Gazprom executed
transactions to monetise natural gas reserves kept in under-
ground storage at UGSFs in European far abroad countries —
the total amount of gas sold under repo agreements was
approximately 7.6 bcm.
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
Gas consumption for own operational needs of UGSFs bcm
2017
2018
2019
Change 2019/2018
0.50
0.56
0.54
−3.6%
Underground Gas Storage outside Russia
Given the export transit risks, the Group’s gas storage facilities
are indispensable for building strategic reserves of natural gas.
To ensure reliable gas supplies, Gazprom makes extensive
use of gas storage facilities located in FSU and far abroad
countries.
In the FSU countries, Gazprom operates UGSFs in Belarus
(Pribugskoye, Osipovichskoye and Mozyrskoye), in Armenia
(the Abovyanskaya underground gas storage station), and
employs capacities of the Inčukalns UGSF in Latvia during
repairs and emergencies.
By the start of the 2019/2020 withdrawal season, the
operating gas reserves in FSU-based UGSFs totalled 1.18 bcm.
No operating gas reserves were built at the Inčukalns UGSF
for the 2019/2020 withdrawal season. A range of measures
are being implemented in Belarus to expand the Mozyrskoye
UGSF, which will increase the volume of operating gas reserves
at the facility from 0.50 bcm at start of the 2019/2020 withdrawal
season to 0.65 bcm.
Gazprom Group’s operating gas reserves in FSU-based UGSFs
at the start of the withdrawal season, bcm
2017/2018
2018/2019
2019/2020
Change
3.0
1.57
1.18
−24.8%
In 2019, Gazprom Group injected 0.96 bcm of gas into FSU-
based UGSFs, and withdrew a total of 1.09 bcm.
Gazprom makes extensive use of gas storage facilities
located in European far abroad countries: in Austria (Haidach),
Germany (Jemgum, Rehden, Katharina and Etzel), Serbia
(Banatski Dvor) and the Czech Republic (Dambořice).
By the start of the 2019/2020 withdrawal season, Gazprom’s
storage capacity contracted by OOO Gazprom export in far
abroad European countries totalled approximately 8.5 bcm of
working gas. The additional commercial gas storage contracts
valid until 31 March 2021 secured another 3.01 bcm of gas
storage capacity at UGSFs in Austria, Hungary and Slovakia.
As at 31 December 2019, the total volume of operating gas
reserves at European UGSFs was 11.7 bcm.
97
PJSC Gazprom Annual Report 2019
Operations and Marketing
Gas Distribution, Gas Infrastructure Expansion
and NGV Fuel Markets
Gazprom’s ambitious efforts to expand gas infrastructure
in Russian regions contributes to their social and
economic development and improves living standards.
The average natural gas penetration rate in Russia
increased 1.3 times to 70.1% from 2005, with the
penetration rate in rural areas growing 1.8 times to 61.8%.
Use of natural gas in the transport sector (road, rail
and waterborne) is a very promising area.
Gazprom Group operates its network in a safe and reliable
way while providing corporate control over compliance with
industrial safety requirements for the operation of gas
distribution systems in Russia.
The Group’s gas distribution networks are operated
by AO Gazprom gazoraspredelenie, its subsidiaries and
associates, and OOO Gazprom transgaz Kazan.
In 2019, consolidation of gas distribution assets on the
books of AO Gazprom gazoraspredelenie continued in
Russia through acquiring economically viable gas distribution
facilities in strict compliance with the applicable laws. The
Group’s activities ensure reliable and safe operation of Russia’s
gas distribution systems and maintain their operability to
ensure safe, incident-free and uninterrupted gas supply to
consumers.
As at 31 December 2019, the Group’s gas distribution
subsidiaries and associates owned and operated a total of
802.8 thousand km of gas distribution networks in Russia.
~82%
of all gas distribution networks in Russian regions
are owned and maintained by the Group gas
distribution subsidiaries and associates
In 2019, Gazprom Group’s gas distribution subsidiaries and
associates transported 232.6 bcm of natural gas via their gas
distribution networks. Natural gas was supplied to:
— 28.0 million apartments and private households
— 32.8 thousand industrial facilities
— 9.1 thousand agricultural facilities
— 344.0 thousand utility facilities
Additionally, the Group’s subsidiaries and entities provide
gas distribution services in Armenia (ZAO Gazprom Armenia)
and Kyrgyzstan (OsOO Gazprom Kyrgyzstan). In 2019, the
Group exited from WIROM GAS S.A., a subsidiary focused on
gas distribution in Romania.
For more details on Gazprom Group’s gas distribution business see Gazprom
in Figures 2015–2019 Factbook
98
PJSC Gazprom Annual Report 2019 Operations and Marketing
Gas Distribution, Gas Infrastructure Expansion
and NGV Fuel Markets
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
Expansion of Gas Infrastructure in Russian Regions
Gazprom Group implements an important national objective
of expanding gas infrastructure across Russia: every year
tens of thousands of consumers are connected to the gas
network.
70.1%
Overall gas penetration rate in Russia in 2019
The Programme for Expansion of Gas Infrastructure in Russian
Regions approved for 2019 covered 66 Russian regions,
with RUB 34.30 bn allocated to finance capex under the
programme.
Funds channelled by PJSC Gazprom into expanding gas
infrastructure across Russian regions (inclusive of VAT), RUB bn
2017
2018
2019
Change 2019/2018
29.45
36.70
34.30
−6.5%
Note. In accordance with gas infrastructure expansion programmes for each year.
In 2019, the Group completed the construction of 124 gas
supply facilities with a total length of 1,880 km. The Company
extended gas infrastructure to connect 68.31 thousand
households and apartments and 179 boiler houses across
305 locations.
Procedure for PJSC Gazprom’s involvement in gas infrastructure expansion programmes in Russian regions
Gas supply expansion agreement
Provides a framework for interactions between PJSC Gazprom and the region’s government
bodies during the implementation of a gas infrastructure expansion programme in the region
Master plans
Determine key focus areas in gas supply expansion, including use of local resources and
an energy saving programme
Proposals from regional administrations
Define the potential coverage of residential gas supply services and identify investment projects
in need of gas supply
5-year gas supply expansion programmes
Define the gas infrastructure expansion parameters agreed with regional administrations
(timeframe, pipeline lengths, number of consumer connections), investments to be made and
financing procedure
Annual synchronisation schedules
Synchronise PJSC Gazprom’s construction with consumer preparations to receive gas
Annual gas infrastructure expansion
programmes
Specify annual financing requirements which are subject to consumers meeting their gas
connection preparation obligations and dynamics in the outstanding debt for delivered natural gas
In 2019, the gas penetration rate grew by 1.5 p.p. year-on-year
and, as at 31 December 2019, reached 70.1% in Russia, 73.0%
in urban and 61.8% in rural areas.
Capex projects in off-mains solutions employing natural
gas liquefaction technology continued in the Tomsk Region in
2019. Since 2016, the Company has designed six facilities:
Kargala, a small-scale LNG production facility (7 tonnes of
LNG per hour), and five receiving, storage and regasification
stations.
The Programme for Expansion of Gas Infrastructure in
Russian Regions for 2020 covers 66 regions, with investments
to be made by PJSC Gazprom totalling RUB 39.26 bn.
In 2019, the Group commenced the development of gas
supply and infrastructure expansion programmes for Russian
regions for 2021–2025.
Forward-looking plans for gas infrastructure expansion
in Russian regions in 2021–2025
— Preparation and implementation of balanced gas supply and
infrastructure expansion programmes, aligned as much as possible
with the regional capabilities for consumer connections preparation
— Bringing gas penetration rates to the maximum socially and
economically feasible level (full penetration) in 23 regions of the
Russian Federation located in the Central (9 regions), Northwestern
(1 region), Southern (6 regions), North Caucasian (3 regions), and
Volga (4 regions) Federal Districts
— Providing gas connections under social security programmes,
—
primarily in the Far East and North-West regions
Improving gas infrastructure expansion efficiency through better
utilisation of the existing and new gas supply capacity
— Using comprehensive approaches to gas infrastructure expansion,
i.e. construction of both pipeline and LNG infrastructure
99
PJSC Gazprom Annual Report 2019
Operations and Marketing
Gas Distribution, Gas Infrastructure Expansion
and NGV Fuel Markets
CNG sales through CNG filling stations of the Group
and OOO Gazprom gazomotornoe toplivo in Russia, mmcm
2017
2018
2019
Change 2019/2018
525.9
598.2
779.2
30.3%
CNG sales growth was driven by successful marketing
programmes promoting natural gas as motor fuel, incentive
programmes to convert vehicles to natural gas, comprehensive
efforts to encourage Russian manufacturers to produce
NGVs and expand NGV product ranges, as well as NGV
infrastructure expansion.
In 2019, the Group promoted the use of NGV fuel with
a focus on following key areas: development of gas-filling
infrastructure, interaction with Russian automakers and carri-
ers, interaction with state authorities of the Russian Federation.
NGV Infrastructure Expansion
In 2019, Gazprom Group completed the construction of
28 new NGV infrastructure facilities, including one cryogenic
filling station (LNG filling and CNG filling points), three areas
for refilling mobile NGV-refuelling stations and 23 CNG filling
stations (including 11 CNG filling stations built under a pilot
project in the Belgorod Region). A total of 17 new CNG filling
stations have been commissioned. Another two CNG filling
stations were acquired from outside Gazprom Group.
Also in 2019, the Group purchased 1,218 NGVs and
10 vehicles for mobile NGV refuelling.
As a federal NGV retail infrastructure is built out, customers
will be able to save on fuel while enjoying the same level of
comfort as with conventional filling stations. Convenient
locations and adequate capacity of filling stations will further
stimulate growth of NGV fleet.
In cooperation with the Federal Road Agency (Rosavto-
dor), the Group developed the Master Plan for Developing
NGV Infrastructure along the Federal Roads providing
for constructing a core network of 181 facilities and setting up
so-called transit NGV corridors by 2030 at the existing and
projected key highways of Russia.
In 2019, Gazpromneft Marine Bunker continued Russia’s
first project to procure an LNG bunkering vessel which will
supply gas from the LNG production, storage and shipping
complex near the Portovaya compressor station (CS). The
vessel commissioning is scheduled for 2021.
Use of small-scale LNG to supply consumers located far from
trunk gas pipelines is seen as a key focus area in improving
gas infrastructure expansion efficiency. Under this approach,
LNG is delivered from an LNG plant to a shared storage
and regasification system with subsequent gas supply to
consumers through local gas distribution networks. Small-
scale LNG based gas supply can be a feasible alternative to
pipeline network supply where annual gas consumption is
under 100 mmcm and the distances between consumers and
sources of gas supply are not greater than 400 km.
Small-scale LNG plans for 2020–2025 target primarily
the following regions: the Sakhalin, Tomsk, Sverdlovsk,
Arkhangelsk, and Amur Regions, Kamchatka Territory,
Primorye Territory, and the Republic of Tatarstan. LNG will
be primarily used to supply gas to residential consumers and
as motor fuel for road, rail and waterborne transport.
Large-scale LNG can also be used to supply gas to
regions of the Russian Federation, and the Group is exploring
this option to supply gas to Murmansk heat generating facilities
through large-scale LNG shipments.
Gas supply and infrastructure expansion programmes for
Russian regions for 2021–2025 are expected to be approved
with the regions by end-2020.
NGV Fuel Markets
Development of the NGV Fuel Market in Russia
Promoting the use of natural gas as motor fuel in Russia is
one of Gazprom Group’s priorities.
The Group is promoting the NGV fuel market (including
sales of gas as motor fuel) through OOO Gazprom gazo-
motornoe toplivo, owned on a parity basis by a subsidiary of
PJSC Gazprom and a company of Gazprombank Group.
As at 31 December 2019, there were a total 447 NGV
facilities across 67 regions of the Russian Federation. Gazprom
Group subsidiaries and OOO Gazprom gazomotornoe toplivo
own 299 operating (i.e. commercial gas sales) CNG filling
stations with a total capacity of over 2.2 bcm per year, including
239 stations operated by OOO Gazprom gazomotornoe
toplivo and 60 by PJSC Gazprom subsidiaries engaged in the
Group’s core activities.
Operating CNG filling stations on the books of Gazprom Group and
OOO Gazprom gazomotornoe toplivo in Russia as at 31 December,
units
2017
2018
2019
Change 2019/2018
271
293
*
299
2.0%
* CNG filling stations classified as operating as at 31 December 2018 included 13 stations
selling natural gas at the start-up or pilot operation stages (commissioned in 2019).
100
PJSC Gazprom Annual Report 2019 Operations and Marketing
Gas Distribution, Gas Infrastructure Expansion
and NGV Fuel Markets
In the former Soviet Union (FSU) countries, Gazprom Group
subsidiaries own 39 CNG filling stations, which are operated
by OsOO Gazprom Kyrgyzstan (4 stations), ZAO Gazprom
Armenia (7 stations), and OAO Gazprom transgaz Belarus
(28 stations). CNG sales totalled 55.4 mmcm in 2019.
In 2019, the Group continued cooperation with foreign
partners from Hungary, Vietnam, Germany, Kazakhstan,
China, and South Korea on NGV fuel market development
across the following focus areas:
—
—
— promotion of natural gas as motor fuel
— sharing with partners best practices in NGV fuel use in
regulatory framework development and harmonisation
joint projects outside Russia
particular modes of transport, as well as NGV infrastruc-
ture development and operation.
2019 saw continued implementation of projects to
establish NGV infrastructure in Vietnam. The Group also
worked with CNPC to harmonise the Russian regulatory
framework for NGV fuel market development with foreign
laws to create favourable conditions for fuelling infrastructure
development on the international transport route between
Europe and China.
More than 20 cars, trucks and buses powered by natural
gas took part in the Blue Corridor — Gas into Engines 2019
Rally organised jointly with Uniper. Various events were held
along the rally’s route to promote natural gas as motor fuel,
including 10 round tables attended by more than 600 political
and business leaders, and members of the media.
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
Cooperation with Russian Automotive Manufacturers
and Carriers
PJSC Gazprom cooperates with automotive manufacturers
and shipbuilders under agreements and memorandums on
the use of natural gas as motor fuel and expansion of product
ranges of vehicles and craft of various categories using
natural gas as motor fuel.
In 2019, PJSC Gazprom signed cooperation agreements
with UMG, Hyundai Motor Manufacturing Rus, and Alexeev
Central Hydrofoil Design Bureau.
Government Relations
To promote the use of natural gas as motor fuel and synchro-
nise NGV infrastructure development on federal highways,
PJSC Gazprom maintains interactions with the Executive
Office of the Government of the Russian Federation and
federal authorities of the Russian Federation. Proposals were
drafted on improving the laws to encourage the use of NGV
fuels.
In 2019, joint efforts of Gazprom Group and the Russian
Ministry of Energy lead to the allocation of RUB 3.5 bn
from the Reserve Fund of the Government of the Russian
Federation to subsidise NGV infrastructure development in
17 regions.
Pilot projects for NGV fuel market development in the
Belgorod and Rostov Regions and Saint Petersburg have
emerged as a key focus area with the main goal to drive
accelerated building of NGV fuel infrastructure.
Presence in the International NGV Fuel Market
Gazprom Group is also active in the European NGV fuel mar-
ket, operating through its wholly-owned subsidiary Gazprom
NGV Europe, which, as at 31 December 2019, owned NGV fuel
infrastructure in Germany and the Czech Republic (64 CNG
filling stations) and Poland (1 CNG filling station). CNG is also
sold by NIS, a Gazprom Neft Group company, on the Serbian
market through its own three CNG filling stations (as at
31 December 2019).
In 2019, Gazprom Group sold 13.8 mmcm of NGV fuel
through its own filling stations in Germany, the Czech Republic,
Serbia and Poland. Gazprom NGV Europe stopped selling
CNG in Poland as from 1 January 2020 due to the divestment
of its NGV infrastructure facilities in the country.
NGV fuel sales by Gazprom Group through own filling stations
in far abroad countries, mmcm
2017
2018
2019
Change 2019/2018
101
12.3
12.9
13.8
7.0%
PJSC Gazprom Annual Report 2019
Operations and Marketing
Hydrocarbon Processing and Petrochemicals
Gazprom has significant reserves of multicomponent gas.
Its production and subsequent processing enable the
Group to expand its product portfolio. Two gas processing
megaprojects are currently in progress — the construction
of the Amur GPP in eastern Russia and an integrated
complex in the seaport of Ust-Luga in the western part of
the country. These projects are the examples of the
practical implementation of Gazprom’s economic model
for comprehensive monetisation of hydrocarbon reserves
to diversify revenue sources.
In 2019, Gazprom Group processed 31.47 bcm of natural and
associated gas, excluding tolling arrangements, up 1.3%
year-on-year. The increase was due to higher natural gas
processing volumes at the Astrakhan GPP owned by
OOO Gazprom pererabotka.
Gazprom Group’s processing of liquid hydrocarbon
feedstocks (crude oil, gas condensate and fuel oil) was
almost flat year-on-year at 67.13 mm tonnes. The decrease
in oil and stable gas condensate processing volumes at
Gazprom Neft refineries due to scheduled repairs was offset
by increased processing volumes of unstable gas condensate
at the Urengoy Condensate Pre-Transportation Preparation
Plant and of oil and gas condensate mixture at the Surgut
Condensate Stabilisation Plant (CSP) owned by OOO Gazprom
pererabotka.
The Group produced 3.66 mm tonnes of liquefied petroleum
gas (LPG) and 4.73 mmcm of helium in 2019. A decline in total
oil product output by Gazprom Group to 50.85 mm tonnes,
combined with an increase in production of fuel oil and some
other oil products was caused by maintenance at Gazprom
Neft refineries and market conditions.
The monomer and polymer production decrease was
due to a turnaround at Gazprom neftekhim Salavat’s Monomer
plant in accordance with its two-year turnaround cycle. Butyl
acrylate production increased primarily because of higher
demand from the construction industry.
102
PJSC Gazprom Annual Report 2019 Operations and Marketing
Hydrocarbon Processing and Petrochemicals
Gazprom Group’s natural and associated gas processing, bcm
Gazprom Group’s liquid hydrocarbon processing, mm tonnes
2017
2018
2019
Change 2019/2018
Note. Excluding tolling arrangements.
Gazprom Group’s output of oil products, mm tonnes
30.82
31.06
31.47
1.3%
2017
2018
2019
Total
Including Russia
Change 2019/2018
Note. Excluding tolling arrangements.
2017
2018
2019
Diesel fuel
Motor gasolines
Fuel oil
Aviation fuel
Bitumens
Marine fuel
Lubricants
Other oil products
Total
2017
14.32
11.71
6.59
3.15
2.66
3.37
0.48
6.62
48.90
2018
15.66
12.05
6.88
3.55
3.12
2.95
0.49
6.70
51.40
2019
15.51
11.70
7.17
3.43
2.96
2.80
0.54
6.74
50.85
Gazprom Group’s monomer and polymer production, thousand tonnes
Butyl acrylate production, thousand tonnes
2017
2018
2019
419.2
521.4
464.9
2017
2018
2019
Change 2019/2018
−10.8%
Change 2019/2018
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
64.06
60.64
67.40
63.85
67.13
63.99
−0.4%
Change
2019/2018
−1.0%
−2.9%
4.2%
−3.4%
−5.1%
−5.1%
10.2%
0.6%
−1.1%
68.7
73.5
83.4
13.5%
Gazprom Group’s production of mineral fertilisers
and relevant feedstocks, thousand tonnes
For more details on Gazprom Group’s hydrocarbon processing/refining capacities and
output of key products see Gazprom in Figures 2015–2019 Factbook
913.2
836.4
799.7
−4.4%
2017
2018
2019
Change 2019/2018
103
PJSC Gazprom Annual Report 2019
Operations and Marketing
Hydrocarbon Processing and Petrochemicals
Gazprom Group’s hydrocarbon processing, and gas chemical and petrochemical capacity as at 31 December 2019
6
4
5
6
2
5
3
4
3
2
1
1
Gas processing plants (GPPs) with installed throughput capacity
Refineries with installed throughput capacity
1
2
3
4
5
6
Astrakhan
Astrakhan GPP
Sosnogorsk
Sosnogorsk GPP
Orenburg
Orenburg GPP
Orenburg Helium Plant
Khanty-Mansiysk
Yuzhno-Priobskiy GPP*
Surgut
Novy Urengoy
Condensate stabilisation
plant**
Condensate pre-transportation
preparation plant
12.0
7.3
2.5
3.0
2.5
37.5
6.3
15.0
0.5
4.0
13.7
1
Serbia
Novi Sad Refinery***
Belarus
Moscow
Pančevo Refinery
Mozyr Refinery****
Moscow Refinery
Yaroslavl
Slavneft-YANOS*
Salavat
Omsk
Refinery
Omsk Refinery
2
3
4
5
6
4.6
14.0
12.8
7.5
10.0
22.2
Installed natural and associated gas processing capacity, bcm
Installed oil refining capacity, mm tonnes
Installed unstable gas condensate processing capacity, mm tonnes
Installed oil and stable gas condensate processing capacity, mm tonnes
*
**
***
****
Gazprom Group has access to 50% of capacity.
The plant’s deethanised gas condensate production capacity is 12.05 mm tonnes.
Suspended as at 31 December 2019.
Up to 50% of oil supplied by the Group to the refinery. The actual processing volume at the refinery depends on cost-efficiency. In 2019, the Group did not run refining operations under
tolling arrangements at the Mozyr Refinery.
104
PJSC Gazprom Annual Report 2019 Operations and Marketing
Hydrocarbon Processing and Petrochemicals
Gas and Condensate Processing by Gazprom’s Gas
Processing and Gas Production Subsidiaries
In 2019, PJSC Gazprom’s gas processing and gas production
subsidiaries processed 30.60 bcm of natural and associated
gas and refined 18.82 mm tonnes of unstable gas condensate
and crude oil, excluding tolling arrangements.
A joint project was launched to build a large gas processing
and liquefaction complex in Russia
In March 2019, PJSC Gazprom and AO RusGazDobycha finalised the
configuration of their joint project to build a large complex for ethane-rich
gas processing and LNG production near the seaport of Ust-Luga
(Leningrad Region).
The project will process 45 bcm of gas to produce 13 mm tonnes
LNG per year. Ethane-rich natural gas produced by Gazprom from the
Achimov and Valanginian deposits in the Nadym-Pur-Taz region will
be used as feedstock. Marketable products will include dry stripped gas,
LPG, ethane and pentane-hexane fractions. Dry stripped gas (about
20 bcm) will be transported by PJSC Gazprom’s GTS. Phase 1 of the
complex is scheduled to be commissioned in late 2023; Phase 2, in late
2024. The complex will be operated by OOO RusKhimAlyans, a joint
venture established on a parity basis between a PJSC Gazprom
subsidiary and AO RusGazDobycha.
Natural and associated gas processing by gas processing
and gas production subsidiaries, bcm
2017
2018
2019
Change 2019/2018
Note. Excluding tolling arrangements.
29.94
30.14
30.60
1.5%
Gas processing increased due to more efficient utilisation of
the Astrakhan GPP (Gas Processing Plant) capacity driven by
longer turnaround intervals.
Separated gas processing volumes
at the Astrakhan GPP in 2019 were the highest
since 2013
In 2019, the Orenburg GPP processed 9.11 bcm of gas from
the Karachaganakskoye field (Kazakhstan) under tolling
arrangements (2018: 9.49 bcm).
Unstable gas condensate processing and crude oil refining
by Gazprom’s gas processing and gas production subsidiaries,
mm tonnes
2017
2018
2019
Change 2019/2018
Note. Excluding tolling arrangements.
17.47
17.75
18.82
6.0%
Stable gas condensate processing (crude oil refining)
by Gazprom’s gas processing and gas production subsidiaries,
mm tonnes
2017
2018
2019
Change 2019/2018
Note. Excluding tolling arrangements.
6.49
6.21
6.65
7.1%
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
Liquid hydrocarbon processing increased
to all-time high in 2019 at the Urengoy Condensate
Pre-Transportation Preparation Plant and Surgut
Condensate Stabilisation Plant
A significant increase in unstable gas condensate processing
by the Urengoy Condensate Pre-Transportation Preparation
Plant and oil and gas condensate mixture by the Surgut
Condensate Stabilisation Plant (CSP) came on the back of
higher liquid hydrocarbon production from Block 1A of the
Achimov deposits at the Urengoyskoye oil and gas condensate
field (OGCF).
For more details on the project see the Exploration and Production section
The increase in the primary processing of stable condensate
and crude oil was due to shorter downtime in preventive
maintenance at the Astrakhan GPP facilities as the plant’s
diesel fuel hydrotreating unit was revamped in 2018.
105
PJSC Gazprom Annual Report 2019
Operations and Marketing
Hydrocarbon Processing and Petrochemicals
Oil Refining, Petrochemicals and Mineral Fertiliser
Production at Gazprom Neftekhim Salavat’s Facilities
In 2019, Gazprom neftekhim Salavat’s production facilities
refined 6.83 mm tonnes of liquid hydrocarbon feedstocks
(including 1.29 mm tonnes of crude oil, 5.41 mm tonnes of
stable gas condensate and 0.13 mm tonnes of fuel oil) and
processed 0.44 bcm of natural gas.
Stable gas condensate processing and crude oil refining
by Gazprom neftekhim Salavat’s facilities, mm tonnes
2017
2018
2019
Change 2019/2018
6.48
6.74
6.83
1.3%
In 2019, liquid hydrocarbon processing depth at primary
and advanced refining units stood at 89.6% (2018: 89.4%).
Refining depth growth was supported by increased process-
ing of gas condensate feedstock provided by Gazprom
Group and other suppliers. Fuel yield and losses in 2019
remained flat year-on-year with increased refining volumes.
A substantial increase in light product yield from liquid
hydrocarbon processing to 75.1% in 2019 (2018: 72.8%) was
due to higher share of gas condensate in the petroleum
feedstock and the feedstock mix optimisation.
Gazprom neftekhim Salavat exports its products
to more than 30 FSU and far abroad countries
Due to the optimised operating modes of gasoline stream
units along with a wide use of optimisation systems, commer-
cial motor gasoline yield has hit all-time high while use
of an expensive octane improver — methyl tert-butyl ether
(MTBE) — was reduced 2.5 times.
Recognition of superior product quality
— Butyl acrylate (acrylic acid butyl ester) produced by Gazprom
neftekhim Salavat’s Acrylic Acid Plant was awarded a gold quality
mark of the All-Russian Brand (3rd Millennium). Quality Label of the
21st Century competition. Butyl acrylate is used to produce acrylic
emulsions utilised as feedstock in the production of paints,
varnishes, inks, glues, synthetic latexes, as well as plastic and
lubricant additives
— A certificate of conformity and permission to use the Made in Russia
mark were granted to unleaded gasoline AI-92-K5 under the Made
in Russia voluntary certification system. The manufacturer was
included in the Register of Bona Fide Exporters
— Bitumen feedstock and viscous road oil bitumens were registered
under REACH
In 2019, Gazprom neftekhim Salavat refinery started producing
new products: BND 50/70 viscous road oil bitumen in accor-
dance with GOST 33133-2014 and heating oil with a sulphur
content of 0.50%, low ash content, and pour point of 25°C in
accordance with GOST 10585-2013.
In 2019, 11 sections of the Monomer plant and 12 process
units of the refinery were in turnaround which included diag-
nostics, inspections, and examination of process equipment
and pipelines. The project scope also included measures
to improve productivity and efficiency. In 2019, the Gas
Chemical Plant, which produces mineral fertilisers, was also
in scheduled turnaround which included completion of the
first stage of ammonia production facility revamp.
Activities of Gazprom neftekhim Salavat’s R&D Centre
Gazprom neftekhim Salavat has its own Research and Development
Centre comprising five specialised laboratories — oil refining,
petrochemistry, wastewater, polymer physics, and problem-solving
research labs — as well as pilot and test production shop and corrosion
inhibitor production shop.
The specialised laboratories are involved in a broad range of
activities: pilot runs at production facilities of Gazprom neftekhim Salavat;
selection and incoming inspection of analogues for materials; water
circulation system corrosion monitoring and corrosion protection;
inspection of process units in turnaround; recommendations on optimising
chemical and process protection and process modes.
The pilot production shop includes corrosion inhibitor, demulsifier
and other agent production facilities and a set of pilot units. The products
are used by Gazprom neftekhim Salavat as well as the Astrakhan GPP,
Orenburg GPP, and Orenburg Helium Plant.
106
PJSC Gazprom Annual Report 2019 Operations and Marketing
Hydrocarbon Processing and Petrochemicals
Oil Refining and Petrochemicals Production
at Gazprom Neft Group’s Facilities
In 2019, Gazprom Neft Group refined 41.48 mm tonnes of oil
and stable gas condensate (a 3.3% decrease year-on-year),
and 0.43 bcm of APG supplied to the Yuzhno-Priobskiy GPP
as Gazprom Neft Group’s equity share of production (2018:
0.43 bcm of APG).
Crude oil and stable gas condensate processing
by Gazprom Neft Group’s refineries, mm tonnes
2017
2018
2019
Change 2019/2018
40.11
42.91
41.48
−3.3%
Oil refining decreased in 2019 due to scheduled turnarounds
at all refineries fully or partially owned by Gazprom Neft. The
turnarounds will ensure trouble-free operation and improve
performance of the assets in the near future. Motor gasoline
and diesel fuel output decreased due to lower refining volumes
and existing demand and price levels. The turnarounds,
lower bitumen output, and existing pricing environment in the
domestic and international markets resulted in a higher fuel
oil output. Vacuum gasoil output was also increased during
the scheduled turnaround, which was a key driver behind the
growth in other oil product output.
Key focus areas of Gazprom Neft’s refineries
in improving product quality in 2019
— Development, production start-up and sale of new products with
improved quality and environmental performance
— Commercial product standardisation and certification to Russian
and international standards
— Quality control automation and implementation of new product
control methods and business processes. In 2019, process
monitoring system Smotr was deployed across all production
facilities of Omsk and Moscow Refineries to automatically monitor
deviations of 12.2 thousand process parameters and 5.8 thousand
quality parameters from their standard values
— Upgrade and development of laboratory facilities and maintaining
the reliability of testing equipment and measuring instruments
Slavneft-YANOS increased production of base oils. In 2019, it
started producing a new line of special-purpose low-viscosity
base oils for drilling fluids.
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
Larger stake in OOO Poliom
In order to consolidate Gazprom Neft’s position in petrochemical markets,
a deal increasing the interest of AO Sibgazpolymer (a joint venture
between PAO Gazprom Neft and PAO SIBUR Holding) in OOO Poliom
(Omsk) from 50% to 100% was closed in July 2019.
Poliom, a modern plant producing a broad range of polypropylenes,
was commissioned in 2013. The plant can produce and ship up to
218.4 thousand tonnes of polypropylene of up to 80 different grades.
The plant is integrated into the processes of AO Gazpromneft-ONPZ
production site.
Gazprom Neft’s refineries carried on the active implementation
of major investment projects as part of the second stage of
technological and environmental upgrade as well as initiatives
to improve product quality.
For more details on Gazprom Neft’s refinery upgrade programme see the Strategic
Priorities and Capex Programmes sections
New products launched by Gazprom Neft’s refineries in 2019
Plant
Moscow
Refinery
Omsk
Refinery
PAO Slavneft-
YANOS
Products
Light distillates of catalytic processes in accordance
with a STO standard developed by Gazprom Neft
Liquefied petroleum gases for use in the utilities sector
in accordance with GOST 20448-2018
Liquefied petroleum gases for use in road transport
in accordance with GOST 27578-2018
MTBE in accordance with a corporate standard
developed by Gazprom Neft
Low-viscosity marine fuel in accordance with TSU-80
(RMD-80) and TSU-180 (RME-180) (complying with the
new MARPOL 2020 requirements)
Liquefied petroleum gases of the following fuel grades:
PT commercial propane, PA autogas (propane), PBA
autogas (propane/butane), PBT commercial propane-
butane mixture in accordance with GOST R 52087-2018
Premium petroleum-derived paraffin wax for matches
in accordance with a corporate standard
For more details on the use of new hydrocarbon processing/refining technologies,
see the Innovations and Import Substitution section
107
PJSC Gazprom Annual Report 2019
Operations and Marketing
Power Generation
In 2019, the Group completed a large-scale power
generation programme. In 2007–2019, 9 GW of advanced
generating capacities were commissioned. Gazprom
is an established leader in electricity generation at heat
generation facilities and in heat generation in Russia.
Gazprom Group has established one of the largest vertically
integrated power generation holdings in Russia, which has
consolidated electricity and heat generating assets, heat
transmission and distribution assets, as well as assets in
related segments.
Gazprom Group’s generating assets are consolidated
within its 100% subsidiary, OOO Gazprom energoholding,
managing PAO TGC-1, PAO Mosenergo, PAO OGK-2 and
PAO MIPC.
Launch of thermal power plant upgrade programme
in the Russian electricity market
Resolution of the Government of the Russian Federation No. 43 dated
25 January 2019 On the Selection of Projects to Upgrade the Generating
Facilities of Thermal Power Plants set off a major upgrade programme.
The programme seeks to upgrade up to 41 GW of obsolete and
deteriorated heat generation capacity (about 25% of total). Upgrade
projects will be selected every year from 2019 to 2025. The benchmark
rate of return under the new upgrade programme will be 14%, with 16-year
supply periods under contracts concluded with winners.
The first competitive selection of projects to upgrade TPP
generating facilities took place in 2019. The selected projects included
facilities of Gazprom Group (15 facilities of PAO TGC-1, PAO OGK-2,
PAO Mosenergo and OOO Novo-Salavatskaya CHPP) with a capacity of
1.92 GW, or 14% of the first price zone quota, with capacity supplies to
commence in 2022–2025.
For more details on Gazprom Group’s projects in power generation see the Strategic
Priorities section
AO Gazprom energosbyt, a Gazprom Group company, is
a leader in the Russian electricity market, active in both
wholesale and retail segments and providing over 95% of
electricity needs of Gazprom Group’s subsidiaries.
Outside Russia, Gazprom Group owns Unit 5 at the
Hrazdan TPP through its subsidiary ZAO Gazprom Armenia.
16%
Gazprom Group’s share
in the installed electrical capacity of Russia’s
Unified Energy System (UES)
Gazprom Group’s generating capacity as at 31 December 2019
Gazprom energoholding
Other generating assets in Russia
Total in Russia
Generating assets abroad
Total in Russia and abroad
Installed electrical
,
capacity
GW
Installed heat
capacity
,
thousand Gcal/h
38.75
0.90
39.65
0.48
40.13
67.32
2.92
70.24
0.03
70.27
108
PJSC Gazprom Annual Report 2019 Operations and Marketing
Power Generation
The year-on-year change in the installed electrical and
heat capacity in 2019 was due to the retirement of obsolete and
underperforming generating assets and installed capacity
upgrades as well as the launch of Unit 2 at the Grozny TPP.
In December 2019, PAO OGK-2 and AO Yeniseiskaya TGC
(TGC-13) entered into an agreement for the sale of the
Krasnoyarskaya GRES-2. PAO OGK-2 will continue operating
the GRES during the transitional period.
Gazprom Group’s generating capacity as at 31 December 2019
6
7
5
8
9
10
4
1
2
3
12
13
11
1
2
3
4
5
6
Adler
Stavropol
Grozny
Novocherkassk
Pskov
Saint Petersburg,
Republic of Karelia,
the Leningrad
and Murmansk Regions
7
Kirishi
Adler TPP
PAO OGK-2
Stavropolskaya GRES
PAO OGK-2
Grozny TPP
PAO OGK-2
Novocherkasskaya GRES
PAO OGK-2
Pskovskaya GRES
PAO OGK-2
52 power stations
of PAO TGC-1
and its subsidiaries
Kirishskaya GRES
PAO OGK-2
Other generating assets in Russia
Installed electric capacity, MW
Installed heat capacity, Gcal/h
367
63
2,423
145
360
2,258
60
440
117
6,918
13,487
2,595
1,234
896
2,918
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
1,080
39
12,825
43,211
6,661
3,130
213
1,315
210
451
3,333
903
1,260
976
480
28
14
8
9
Cherepovets
Cherepovetskaya GRES
PAO OGK-2
Moscow
and the Moscow Region
15 power stations
of PAO Mosenergo
10
Ryazan
Troitsk
Serov
Surgut
11
12
13
14
PAO MIPC
and subsidiaries
Ryazanskaya GRES
PAO OGK-2
Troitskaya GRES
PAO OGK-2
Serovskaya GRES
PAO OGK-2
Surgutskaya GRES-1
PAO OGK-2
Krasnoyarsk
Krasnoyarskaya GRES-2*
PAO OGK-2
Generating assets abroad
* GRES is operated by PAO OGK-2 until the end of the transition period when it will be turned over for operation to AO Yeniseiskaya TGC (TGC-13).
For more details on capacity commissioned in the power generation segment in 2019
see the Capex Programmes section
109
PJSC Gazprom Annual Report 2019
Operations and Marketing
Power Generation
14 %
Gazprom’s share in electricity generation in Russia
For more details on Gazprom Group’s generating capacity and output of power
and heat see Gazprom in Figures 2015–2019 Factbook
Electricity and Heat Generation
According to the UES System Operator, power consumption
within the Unified Energy System (UES) of Russia totalled
1,059 billion kWh in 2019 while electricity generation was
1,081 billion kWh, an increase over 2018.
During 2019, the Group generated 148.0 billion kWh of
electricity and 122.38 mm Gcal of heat at its generating assets
in Russia. The decline in electricity production was due to the
equipment load assigned by AO System Operator of the United
Power System and the streamlining of the load for inefficient
generating capacities. Heat supply decreased due to higher
average temperatures during the heating season.
Outside Russia, Gazprom Group generated 1.02 billion kWh
of electricity. The year-on-year decrease at Unit 5 of the
Hrazdan TPP in 2019 reflected the actual operation modes
of Armenia’s national power grid.
Electricity generation by Gazprom Group, billion kWh
Gazprom energoholding
PAO Mosenergo
PAO MIPC and its subsidiaries
PAO OGK-2
PAO TGC-1 and its subsidiaries
Other generating assets in Russia
Total in Russia
Generating assets abroad
Total in Russia and abroad
Note. The table shows power generation, i.e. the amount of electricity generated by power stations.
Heat generation by Gazprom Group, mm Gcal
Gazprom energoholding
PAO Mosenergo
PAO MIPC and its subsidiaries
PAO OGK-2
PAO TGC-1 and its subsidiaries
Other generating assets in Russia
Total in Russia
Generating assets abroad
Total in Russia and abroad
2017
150.81
57.87
–
63.43
29.51
4.65
155.46
1.09
156.55
2017
120.77
79.45
9.85
6.76
24.71
6.57
127.34
–
127.34
2018
146.56
58.31
–
58.92
29.33
4.94
151.50
1.69
153.19
2018
124.36
82.29
10.17
7.01
24.89
6.89
131.25
–
131.25
2019
143.07
60.11
–
54.69
28.27
4.93
148.00
1.02
149.02
2019
115.26
75.37
9.07
6.65
24.17
7.12
122.38
–
122.38
Change
2019/2018
−2.4%
3.1%
–
−7.2%
−3.6%
−0.2%
−2.3%
−39.6%
−2.7%
Change
2019/2018
−7.3%
−8.4%
−10.8%
−5.1%
−2.9%
3.3%
−6.8%
–
−6.8%
* Heat generation figures include PAO MIPC’s subsidiaries OOO TSK Novaya Moskva (merged into PAO MIPC in 2019) and OOO TSK Mosenergo.
Note. The table shows heat supply from TPPs, i.e. the amount of heat supplied by a power station to consumers at the asset ownership/interface boundary points.
110
PJSC Gazprom Annual Report 2019 Operations and Marketing
Power Generation
Gazprom energoholding companies also provide power plant
resources (electricity, heat and water supply to consumers)
and infrastructure (unoccupied floor space and land, ware-
house facilities and equipment, including for laboratory water
tests) to drive SME growth. Projects in renewable energy are
also under consideration. International expansion opportunities
for the power generation business are also explored to boost
sales of the Group’s natural gas (in particular, pipeline gas,
LNG from Russian projects and from Gazprom Group’s trading
portfolio, as well as gas from Gazprom’s international projects).
Gazprom Group’s coal assets
Given a significant share of coal in Gazprom energoholding’s fuel mix,
Gazprom acquired Angrensor Group in 2016 to diversify the risk of fuel
supply shortfalls and optimise its pricing policy in the coal market.
The coal company is engaged in mining, processing and marketing of
coal from the Ekibastuzsky open pit in the Pavlodar Region of Kazakhstan.
Coal production in 2019 was 1.8 mm tonnes. Gazprom energoholding
accounts for approximately a third of total coal supplies by the group.
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
Natural gas dominates the fuel mix of Gazprom energoholding.
Lower fuel consumption in 2019 was mostly due to reduced
electricity and heat generation. Higher consumption of fuel oil
was due to a fuel oil replacement programme implemented
at CHPPs of PAO Mosenergo.
Volume-based fuel mix of Gazprom energoholding
Gas, bcm
2017
2018
2019
Total
Including Gazprom Group’s gas
Change 2019/2018
Coal, mm tonnes
2017
2018
2019
Change 2019/2018
Fuel oil and other fuels, mm tonnes
2017
2018
2019
Change 2019/2018
40.8
27.6
41.0
28.3
39.7
27.0
−3.2%
11.5
9.4
7.9
−16.0%
0.33
0.34
0.35
2.9%
Diversification of Power Generation Business
Gazprom energoholding is diversifying its power generation
business. Towards the end of 2019, it entered the power
engineering market by acquired AO REP Holding.
Acquisition of REP Holding
In December 2019, Gazprom energoholding acquired AO REP Holding.
As a result, Gazprom energoholding became a major player in the power
engineering market. The holding will develop production of equipment
for both GTSs, including those of PJSC Gazprom, and power generation
companies. Leveraging of Nevsky Zavod’s potential will enable localisation
of power generating equipment, including high-power gas turbines.
111
PJSC Gazprom Annual Report 2019
Operations and Marketing
Marketing
In 2019, PJSC Gazprom reaffirmed its status as the largest
gas supplier to global markets. In 2019, the Company
began pumping Russian gas to China, a market with huge
potential for gas consumption growth.
Far Abroad Gas Markets
Far abroad countries, including Europe, are Gazprom’s
traditional export market offering high profit margins for the
Group.
In 2019, Gazprom Group sold 232.4 bcm of natural gas to
far abroad countries. Net sales revenue (net of excise tax
and customs duties) was RUB 2,940.4 bn. The decrease in
sales revenue was mostly due to lower average rouble prices
(including excise tax and customs duties) and the declines
in volumes of gas sold.
The decrease in sales was due to weather conditions
and higher LNG supplies, as well as the economic situation in
certain countries (primarily Turkey).
Gazprom Group’s sales of natural gas to far abroad countries
Sales volumes, bcm
2017
2018
2019
Change 2019/2018
Average selling price
(including excise tax and customs duties), USD per mcm*
2017
2018
2019
Change 2019/2018
Average selling price
(including excise tax and customs duties), RUB per mcm
2017
2018
2019
Change 2019/2018
Net sales revenue
(net of excise tax and customs duties), RUB bn
2017
2018
2019
Change 2019/2018
* Calculated based on the year-average RUB/USD exchange rate.
242.0
243.3
232.4
−4.5%
200.2
246.4
210.6
−14.5%
11,670.5
15,499.5
13,613.0
−12.2%
2,221.2
2,951.2
2,490.4
−15.6%
112
PJSC Gazprom Annual Report 2019 Operations and Marketing
Marketing
Gazprom Group’s gas sales to far abroad countries, 2018–2019, bcm
59.0
5.5 4.2
Other countries
34.2
0.3 0.1
Ireland
65.7
21.4
16.3
1.7 1.7
Denmark
44.9
United Kingdom
Norway
Sweden
2.6
2.5
Finland
Estonia
the Netherlands
2.8
1.3
Belgium
Latvia
Russia
Russia
Lithuania
13.3 13.0
France
Germany
9.9
9.7
2.6 2.2
Poland
0.6 0.3
Switzerland
9.0 9.1
Czech
Republic
5.0
6.5
0.1 0.5
Spain
Russia
Mongolia
0.8 1.5*
China
Japan
India
Natural gas sales in 2018
Natural gas sales in 2019
22.6
22.0
Italy
Austria
0.5
0.3
Slovenia
2.8
2.8
Croatia
Slovakia
10.5
7.3
Hungary
0.2 0.2
Bosnia and
Herzegovina
Montenegro
Albania
2.2 2.2
Serbia
0.2
0.2
North
Macedonia
3.3
2.5
Greece
Moldova
1.5 1.1
Romania
3.2 2.4
Bulgaria
24.0
15.4
Turkey
* Including 0.3 bcm via the Power of Siberia trunk gas pipeline.
Note. Gazprom Group’s sales to other countries include LNG sales and sales of gas from international hydrocarbon exploration and production projects in which the Group has equity stakes.
113
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
Belarus
Ukraine
PJSC Gazprom Annual Report 2019
Operations and Marketing
Marketing
Large-scale LNG Sales
One of the priorities of Gazprom Group’s gas business is
staged implementation of its strategy for LNG production,
waterborne transportation and marketing. In 2019, the Group
supplied LNG mostly to Asia-Pacific (69% of total supplies). In
2019, China became the key destination for Gazprom Group’s
LNG supplies: this market accounted for 23% of total supplies
(1.16 bcm).
Sakhalin Energy, an associate in which the Group holds
50% plus one share, operates Sakhalin-2 project, producing
LNG on Sakhalin Island and selling it to Asia-Pacific. Gazprom
Group receives up to 1 mm tonnes of LNG per year from the
project under a contract with Sakhalin Energy effective until
2028. The supply portfolio is supplemented with LNG procured
from third parties including from the Yamal LNG project under
a sale and purchase agreement with Yamal Trade providing
for a supply of 2.9 mm tonnes of LNG per year for 20 years
and from the floating LNG (FLNG) platform of the Cameroon
LNG project under a sale and purchase agreement with
Perenco Cameroon whereby Gazprom Group receives all
LNG produced by the FLNG project (1.2 mm tonnes per year).
69%
Share of Asia Pacific markets in total LNG supplied
from Gazprom Group’s trading portfolio in 2019
Large-scale LNG sales from Gazprom Group’s trading portfolio
to foreign markets totalled 3.78 mm tonnes, or 5.04 bcm, in
2019.
For more details on LNG market trends see the Trends and Developments in Global
Energy Markets section
Large-scale LNG sales by Gazprom Group in foreign countries
tn BTU
including
LNG from
Sakhalin-2
mm tonnes
bcm
2017
159.2
72.9
3.34
4.46
2018
185.0
70.1
3.88
5.18
2019
180.1
60.1
3.78
5.04
Notes:
1. Calculated in accordance with the principles underlying management reporting. Metrics
calculated using these methods might be not comparable between each other due to
differences in the methodologies used for preparing consolidated financial statements
and for management reporting.
2. Calculated using a conversion ratio of 1 BTU = 0.028 mcm of LNG = 0.021 tonnes of LNG.
Gazprom Group is a key supplier of natural gas to European
far abroad countries. In the reporting year, the Group’s
gas exports were mostly sold to the UK, Germany, Italy,
the Netherlands and Turkey.
The bulk of the natural gas sold in far abroad countries
is exported from Russia via OOO Gazprom export. In response
to changes in the European market, OOO Gazprom export is
gradually expanding its business in the short-term gas market,
including in gas trading, as well as investing in joint ventures
active in European countries, including in end-user markets.
Proprietary electronic sales platform
In August 2018, OOO Gazprom export launched its Electronic Sales
Platform (ESP) to sell natural gas both on standard market terms and on
its own terms. Contracts for gas supply at any delivery point (both at
trading platforms or facilities with slow-moving inventories located close
to the borders) with delivery periods starting from one day can be offered
via the ESP. OOO Gazprom export holds daily trading sessions and
offers contracts for the supply of natural gas to various delivery points to
pre-qualified companies registered on the ESP.
In 2019, creation of own index, ESPGazEx, marked a new stage in
the ESP development.
As at 31 December 2019, 65 companies from Austria, Croatia, the
Czech Republic, Denmark, France, Germany, Hungary, Italy, North
Macedonia, Romania, Singapore, Slovakia, Slovenia, Switzerland, and
the UK were registered with the ESP. In 2019, sales through the ESP
reached 15.1 bcm, or 8% of total sales of OOO Gazprom export.
Plans are in place for the further development of the ESP in 2020
by introducing new trading instruments, a limit system, and new types of
reporting, developing trading mechanisms and the business processes
of trading sessions, integrating with third-party information systems, and
implementing electronic digital signatures.
ESPGazEx in 2019, euro/MWh
30
25
20
15
10
5
01
02
03
04
05
06
07
08
09
10
11
12
Note. Monthly ESPGazEx values are calculated as the weighted average price of all deals
with delivery in this month closed before the index publication date.
In 2019, Gazprom Group’s subsidiaries sold 22.9 bcm of gas
directly to end consumers in European far abroad countries.
Gazprom launched Russian pipeline gas supplies to
China in 2019.
For more details on gas sales volumes to end consumers in far abroad countries see
Gazprom in Figures 2015–2019 Factbook
114
PJSC Gazprom Annual Report 2019
Operations and Marketing
Marketing
Large-scale LNG sales in foreign markets in 2019, tn BTU
Gas sales by Gazprom Group in Russia
China
India
United Kingdom
South Korea
Japan
Spain
Taiwan (China)
FOB LNG supplies
Total
41.4
39.9
21.4
20.2
19.6
10.9
3.3
23.5
180.1
Notes:
1. Calculated in accordance with the principles underlying
management reporting. Metrics calculated using these methods
might be not comparable between each other due to differences
in the methodologies used for preparing consolidated financial
statements and for management reporting.
2. Due to rounding, some totals may not correspond with the sum of
the separate figures.
Sales volumes, bcm
2017
2018
2019
Change 2019/2018
Average selling price (net of VAT), RUB per mcm
2017
2018
2019
Change 2019/2018
Net sales revenue (net of VAT), RUB bn
2017
2018
2019
Change 2019/2018
229.9
239.7
235.8
−1.6%
3,808.3
3,981.3
4,118.2
3.4%
875.7
954.5
970.9
1.7%
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
For more details on Gazprom Group’s LNG sales to different countries see Gazprom
in Figures 2015–2019 Factbook
Russian Gas Market
For more details on Russian gas market trends see the Trends and Developments
in Global Energy Markets section
In accordance with applicable Russian laws, end consumers
buy gas at regulated prices which are differentiated between
consumer groups (households vs industrial consumers), as
well as by price zone, based on the relative distance from the
gas production region to the consumer.
Gazprom is the largest natural gas supplier on the Russian
market. In 2019, Gazprom Group sold 235.8 bcm of gas to
consumers in the Russian Federation. Net sales revenue (net
of VAT) was RUB 970.9 bn. The increase in net sales revenue
was mostly due to higher average rouble prices (excluding
VAT), which was partially offset by the declines in volumes of
gas sold.
The reduction in gas sales volume was a consequence
of warmer weather conditions in Q1 and Q4 2019 and was
mainly observed for those groups of consumers, whose gas
use is of a pronounced seasonal nature: generators, housing
and utilities, and households.
During 2019, Gazprom took steps to retain existing
consumers and win back lost major consumers by offering
them more attractive gas payment terms, as well as capitalise
on the opportunities to purchase gas through exchange-
based gas trades at Saint Petersburg International Mercantile
Exchange (AO SPIMEX) for resale to consumers.
115
PJSC Gazprom Annual Report 2019
Operations and Marketing
Marketing
Weighted average wholesale regulated prices (net of VAT)
of PJSC Gazprom’s gas for industrial and household consumers,
RUB per mcm
Weighted average annual price
for industrial and household consumers*
2017
2018
2019
Change 2019/2018
Weighted average annual price for industrial consumers**
2017
2018
2019
Change 2019/2018
Weighted average annual price
for subsequent resale to households**
2017
2018
2019
Change 2019/2018
3,988.5
4,117.2
4,224.8
2.6%
4,202.3
4,316.4
4,423.7
2.5%
3,512.9
3,640.0
3,734.4
2.6%
* Calculated as the combined weighted average prices for industrial and household
consumers for the year indicated. Weighting is based on actual volumes delivered
to each price zone for household and industrial consumers, respectively (exclusive of
gas volumes supplied pursuant to Resolution of the Government of the Russian
Federation No. 333 dated 28 May 2007 On Improvement of State Gas Price
Regulation).
** Weighting is based on actual volumes delivered to each price zone for each group
of consumers separately, household and industrial consumers, respectively
(exclusive of gas volumes supplied pursuant to Resolution of the Government of the
Russian Federation No. 333 dated 28 May 2007 On Improvement of State Gas Price
Regulation).
FSU Gas Markets
Gazprom Group covers a significant portion of natural gas
demand in FSU countries. In 2019, the Group sold 38.7 bcm
of natural gas to FSU countries, with net sales revenue (net of
customs duties) totalling RUB 356.1 bn. The increase in net
sales revenue was mostly due to higher volumes of gas sales.
In the reporting year, agreements were reached to deliver
additional commercial gas supplies to Kazakhstan in July–
December 2019. During the repair period at the Armenian
NPP, gas withdrawals increased in Armenia to replace the
corresponding generating capacity. In 2019, efforts to resume
Russian gas supply to Georgia resulted in a new natural gas
supply contract signed for 2019–2020 with AO Georgian Oil and
Gas Corporation, providing for a sale of up to 0.2 bcm of gas
per year.
Gazprom Group buys natural gas in Turkmenistan,
Kazakhstan and Uzbekistan under contracts with local counter-
parties. In 2019, the weighted average purchase price for
Central Asian gas increased marginally year-on-year.
Gazprom Group’s gas sales to FSU countries
Sales volumes, bcm
2017
2018
2019
Change 2019/2018
Average selling price
(including customs duties), USD per mcm
2017
2018
2019
Change 2019/2018
Average selling price
(including customs duties), RUB per mcm
2017
2018
2019
Change 2019/2018
Net sales revenue (net of customs duties), RUB bn
2017
2018
2019
Change 2019/2018
* Calculated based on the year-average RUB/USD exchange rate.
35.0
38.1
38.7
1.6%
158.4
162.6
157.4
−3.2%
9,237.0
10,225.9
10,175.9
−0.5%
292.8
348.6
356.1
2.2%
116
PJSC Gazprom Annual Report 2019 Operations and Marketing
Marketing
Gazprom Group’s gas sales in FSU countries, bcm
20.0 19.9
Lithuania
Belarus
Russia
2.7 2.8
Ukraine
3.0
2.9
Moldova
6.2 7.7
Kazakhstan
1.4 0.9
Lithuania
Russia
0.4 0.3
Estonia
1.3 1.7
Latvia
Russia
Belarus
0.3
0.3
Kyrgyzstan
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
0.0*
0.0*
0.0*
0.2
Georgia
South
Ossetia
1.8
2.0
Armenia
1.0
–
Azerbaijan
Uzbekistan
Turkmenistan
Tajikistan
Turkey
Natural gas sales in 2018
Natural gas sales in 2019
* Less than 0.05.
Gazprom Group’s purchases of gas in Central Asia, bcm
For subsequent supplies to far abroad countries
Turkmenistan
Uzbekistan
Kazakhstan
Weighted average purchase price on the border of supplying countries,
USD per mcm
For subsequent supplies to Southern Kazakhstan
Uzbekistan
For subsequent supplies to Kyrgyzstan
Uzbekistan
Kazakhstan
* Less than 0.05.
117
2017
–
5.5
13.8
121.6
1.7
0.0*
0.3
2018
–
3.8
12.3
133.1
2.9
0.0*
0.3
2019
4.0
4.9
11.3
136.3
Change
2019/2018
X
28.9%
−8.1%
2.4%
2.7
−6.9%
0.0*
0.3
–
–
PJSC Gazprom Annual Report 2019
Operations and Marketing
Marketing
Oil and Gas Condensate Sales
In 2019, Gazprom Group sold 27.27 mm tonnes of crude oil
and stable gas condensate. Net sales revenue (net of VAT
and customs duties) reached RUB 752.8 bn, an increase over
2018 driven mostly by higher crude oil sales volumes.
Sales were up year-on-year mostly due to Gazprom Neft
ramping up production and exports from the Novoportovskoye
and Vostochno-Messoyakhskoye fields, and lower refining
volumes at Gazprom Neft’s refineries.
Crude oil and gas condensate sales volumes, mm tonnes
Total
2017
2018
2019
Gazprom Group
Including Gazprom Neft Group
Net revenue from sales of crude oil and gas condensate
(net of VAT and customs duties), RUB bn
Change 2019/2018
Russia
539.9
734.9
752.8
2.4%
71.4
64.6
62.2
−3.7%
438.7
631.6
648.7
2.7%
29.8
38.7
41.9
8.3%
2017
2018
2019
Gazprom Group
Including Gazprom Neft Group
Change 2019/2018
Far abroad countries
2017
2018
2019
Gazprom Group
Including Gazprom Neft Group
Change 2019/2018
FSU countries
2017
2018
2019
Gazprom Group
Including Gazprom Neft Group
Change 2019/2018
Note. Excluding intra-group sales.
Total
2017
2018
2019
Change 2019/2018
Russia
2017
2018
2019
Change 2019/2018
Far abroad countries
2017
2018
2019
Change 2019/2018
FSU countries
2017
2018
2019
Change 2019/2018
118
27.59
23.72
25.55
21.10
27.27
23.21
6.7%
4.26
2.76
2.66
1.15
2.62
1.19
−1.5%
21.61
19.25
21.15
18.30
22.94
20.31
8.5%
1.71
1.71
1.74
1.65
1.71
1.71
−1.7%
PJSC Gazprom Annual Report 2019 Operations and Marketing
Marketing
Sales of Refined Products
In 2019, Gazprom Group’s sales of refined oil and gas
products increased to 70.18 mm tonnes due to increased
sales to far abroad countries. Net sales revenue amounted
to RUB 2,111.2 bn (net of excise tax, VAT, and customs duties).
The decrease in net sales revenue was mainly due to lower
average selling prices for refined products sold by Gazprom
Neft in far abroad countries, as well as lower sales in Russia
and FSU countries.
Sales volumes of refined oil and gas products, mm tonnes
Total
2017
2018
2019
Gazprom Group
Including Gazprom Neft Group
Net revenue from sales of refined products
(net of excise tax, VAT, and customs duties), RUB bn
Change 2019/2018
Russia
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
65.96
43.34
68.86
45.81
70.18
45.32
1.9%
40.83
27.82
43.18
29.57
43.12
28.51
−0.1%
20.85
12.39
21.31
13.22
23.51
13.93
10.3%
4.28
3.13
4.37
3.02
3.55
2.88
1,687.1
2,179.8
2,111.2
−3.1%
1,115.1
1,394.1
1,355.1
−2.8%
2017
2018
2019
Gazprom Group
Including Gazprom Neft Group
Change 2019/2018
Far abroad countries
2017
454.3
2018
641.0
629.8
−1.7%
117.7
144.7
126.3
−12.7%
2019
Gazprom Group
Including Gazprom Neft Group
Change 2019/2018
FSU countries
2017
2018
2019
Gazprom Group
Including Gazprom Neft Group
Change 2019/2018
−18.8%
Note. Excluding intra-group sales and sales of helium.
Total
2017
2018
2019
Change 2019/2018
Russia
2017
2018
2019
Change 2019/2018
Far abroad countries
2017
2018
2019
Change 2019/2018
FSU countries
2017
2018
2019
Change 2019/2018
119
PJSC Gazprom Annual Report 2019
Operations and Marketing
Marketing
Sales of refined products by Gazprom Group, mm tonnes
Diesel fuel
Motor gasoline
Fuel oil
Sulphur
LPG
Aviation fuel
Mineral fertilisers
Lubricants
Polymers
Other refined, petrochemical and gas chemical products
Note. Excluding intra-group sales and sales of helium.
Sales of helium by Gazprom Group
Gaseous helium, mmcm
2017
2018
2019
Change 2019/2018
Liquid helium, tonnes
2017
2018
2019
Change 2019/2018
Note. Excluding intra-group sales.
3.32
3.42
3.63
6.1%
289.6
260.1
214.6
−17.5%
The increase in Gazprom Group’s sales of refined products to
far abroad countries in 2019 was mainly due to higher sales of
sulphur, motor gasolines and fuel oil as this geographical
segment offers higher sales margins compared to sales in
the domestic market and the FSU countries.
The decrease in total helium sales was due to lower
production and processing volumes of helium-rich gas at the
Orenburgskoye OGCF. The increased share of gaseous helium
in the total supplies of marketable helium was due to higher
demand for the gaseous product in the domestic market.
OOO Gazprom pererabotka’s liquid helium production capacity
at the Orenburg Helium Plant was fully utilised, and the output
of marketable liquid helium did not decrease. In turn, liquid
helium filling and regasification capacities were utilised to
match consumer demand for liquid and gaseous products.
2017
15.89
13.39
5.78
5.31
3.70
3.60
0.89
0.41
0.11
16.88
2018
17.20
13.64
6.46
5.24
4.10
3.94
0.86
0.48
0.11
16.83
2019 Change 2019/2018
17.36
13.53
7.00
6.46
4.25
3.98
0.81
0.48
0.10
16.21
0.9%
−0.8%
8.4%
23.3%
3.7%
1.0%
−5.8%
–
−9.1%
−3.7%
Electricity and Heat Sales
In 2019, Gazprom Group’s net electricity and heat sales
(net of VAT) were flat year-on-year at RUB 518.4 bn. Lower
production and sales of heat and electricity in Russia and
other FSU countries were offset by increased capacity sales
and higher competitive (unregulated) electricity prices in
Russia. In particular, the weighted average selling price of
electricity produced by Gazprom energoholding’s generating
companies in the first price zone of the wholesale market
increased at the day-ahead market by 4.0% year-on-year.
Russian wholesale electricity and capacity market
is one of the world’s largest
Electricity produced by the Group’s Russian generating
companies is mainly traded competitively within price zones of
the Russian wholesale market, with a small portion exported
to Norway and Finland.
Gazprom Group’s net revenue from electricity and heat sales
(net of VAT), RUB bn
2017
2018
2019
Change 2019/2018
503.8
522.1
518.4
−0.7%
120
PJSC Gazprom Annual Report 2019 Operations and Marketing
Marketing
Sales of Gas Transportation Services
In 2019, Gazprom Group’s net revenue from sales of gas
transportation services (net of VAT) amounted to RUB 215.3 bn.
The year-on-year decline was due a reduction in services
provided.
In 2019, the average regulated tariffs charged to indepen-
dent companies for services related to gas transportation
via PJSC Gazprom’s trunk pipelines comprising the UGSS
amounted to RUB 65.20 per mcm/100 km. The tariff rate was
set by the FTS of Russia back in 2015 and, despite the repeated
annual requests by PJSC Gazprom to the FAS of Russia to
change the gas transportation rates, setting economically
sound tariffs, the FAS of Russia has been reluctant to adjust
them.
Gazprom Group’s net revenue from sales of gas transportation
services (net of VAT), RUB bn
2017
2018
2019
Change 2019/2018
235.1
225.7
215.3
−4.6%
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
121
PJSC Gazprom Annual Report 2019
Innovations and Import Substitution
Innovations
Gazprom aims for technology leadership in the industry.
The Group is applying primarily domestic hi-tech
equipment meeting the best world standards and invests
in research and development. Engaging Russia-based
R&D organisations is a significant part of this process.
In its evolution as a global energy company and a reliable
energy supplier, Gazprom focuses on research and application
of new knowledge and technology, as well as on continuous
improvement of its innovation capabilities and acceleration of
innovation to address a number of strategic, technological,
and economic challenges that such leadership involves.
PJSC Gazprom’s Innovation Engine
PJSC Gazprom’s Innovative Development Programme until
2025 approved by Resolution of PJSC Gazprom’s Board of
Directors No. 3099 dated 17 April 2018 (Minutes No. 1196 dated
17 April 2018) is a fundamental instrument for longterm planning
and management of innovations embedded into Gazprom’s
strategic development planning. The Programme covers
gas, oil and power generation businesses of the Company.
PJSC Gazprom, PAO Gazprom Neft, OOO Gazprom energo-
holding, and other subsidiaries and associates implement
R&D programmes (plans) to achieve the technology and
organisational priorities set out in the Programme.
Gazprom has in place an extensive innovation manage-
ment framework. The R&D Committee of PJSC Gazprom
serves as a platform to discuss all matters related to R&D
performance at PJSC Gazprom and its subsidiaries through
comprehensive review and collective decision making driven
by the principles of openness, fairness, and independence
while balancing the interests of Operations, Economics,
and Prospective Development. In order to enable the imple-
mentation of R&D products, as well as innovations developed
by third parties, a standing Commission for Innovative Product
Implementation and a single-window system have been set
up and are operating successfully at PJSC Gazprom.
As part of its Corporate Framework for Management of
Innovations at Subsidiaries of PJSC Gazprom, PJSC Gazprom
focuses on further use (roll-out) and commercialisation
of R&D results and protected intellectual property that deliver
a positive and meaningful impact for PJSC Gazprom as well
as on reviewing and following up compliance of its subsidiaries’
innovation efforts with Russian laws and internal documents
of PJSC Gazprom.
Intellectual Property Management
PJSC Gazprom has designed and successfully maintains an
intellectual property management framework, which is
essentially intended to determine company-wide principles
governing the creation, legal protection, registration, commer-
cialisation, and monitoring of the use of intellectual property
across Gazprom Group, as well as to provide incentive
schemes encouraging employees of Gazprom Group entities
to create intellectual property.
In 2019, PJSC Gazprom approved its Patent Strategy until
2025, an instrument regulating decision making on the best
patenting method for developed technical and/or technology
solutions based on their development grounds, R&D capabili-
ties and geography.
In 2019, PJSC Gazprom and its subsidiaries filed more
than 300 patent applications. A total of 260 patents were
granted for previously filed applications, including 4 foreign
patents (patent protection in Japan, Canada, Australia and
Turkmenistan). Russian Federation Patent No. 2691724
(patent owner: OOO Gazprom dobycha Yamburg) for Foam
Agent for Fire Extinguishing in Arctic Conditions was included
by Rospatent (Federal Service for Intellectual Property) into
the top 10 most interesting utility patents in 2019.
122
PJSC Gazprom Annual Report 2019 Innovations and Import Substitution
Innovations
RUB 33 bn
Economic effect from the use of patented items
in operations in 2017–2019
Gas Science and Innovations booth at the InGAS Stream 2019 —
Innovations in the Gas Industry exhibition
In 2019, Gazprom set up the Gas Science and Innovations booth at the
InGAS Stream 2019 — Innovations in the Gas Industry specialist exhibition
held as part of the 9th St Petersburg International Gas Forum.
The booth showcased the capabilities and achievements of corporate
science of PJSC Gazprom as a global energy company focused on the
search for, development, and implementation of innovations.
Number of patents held by PJSC Gazprom and its subsidiaries
and their use in operations
Total number of patents as at 31 December
PJSC Gazprom collaborates with 13 anchor universities
across seven Russian regions to implement targeted R&D
and talent training programmes for Gazprom Group.
2017
2018
2019
2017
2018
2019
Total
Including those used in operations
Economic effect from the use of patented items in operations,
RUB bn
2,365
427
2,555
441
2,674
459
8.0
10.3
14.5
Innovation Performance
The Group allocates significant amounts for its annual R&D
budgets, and R&D results are applied in its priority projects.
The Group’s R&D efforts aim to develop and implement
high-tech equipment and sophisticated engineering complexes
unrivalled in the world, as well as to create advanced R&D
solutions.
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
Total spending on R&D projects commissioned by Gazprom Group
(net of VAT), RUB bn
Cooperation in Science and Technology
Cooperation with Russian and global companies, external
institutions, research centres and anchor universities is vital
for stronger and better innovation at PJSC Gazprom.
Russian research partners of PJSC Gazprom include
RUSNANO, Rosatom, the Skolkovo Foundation, leading
research organisations of the Russian Academy of Sciences,
Russia’s largest pipe manufacturers and innovative SMEs.
Foreign partners, including Wintershall Dea, OMV, Uniper,
VNG, and Gasunie, participate in joint projects with
PJSC Gazprom and work together with the Company under
science and technology cooperation programmes. These
projects include an international R&D project carried
out jointly with German and Austrian companies to test the
possibility of safe storage of methane and hydrogen
mixtures in UGSFs.
2017
2018
2019
Actual economic effect from the use of R&D results in the Group
entities, RUB bn
2017
2018
2019
8.2
9.0
12.1
12.3
12.3
10.5
123
PJSC Gazprom Annual Report 2019
Innovations and Import Substitution
Innovations
Gas Business
Technology priorities in the gas business
— Hydrocarbon field exploration and appraisal, including development
of unconventional resources
— Brownfield enhancement
— Hydrocarbon development on the continental shelf
— Greenfield development
— Efficiency enhancement of trunk gas pipelines, and diversification of
gas distribution methods
— Enhancement of gas storage
— Enhancement of gas and gas condensate processing
— LNG production
— Gas marketing and utilisation
Hydrocarbon exploration and production yielded the best
R&D results in 2019.
The ongoing deployment of Russian software solutions
was continued under a roadmap to reduce reliance on foreign
software in hydrocarbon exploration and production. In
2019, part of the new software was tested and piloted, with
proposals prepared on its deployment for applications in field
exploration and development.
Gas transportation technologies and equipment are also
improved. In particular, knowledge-intensive technologies
were widely used in 2019 in the construction of the Power of
Siberia trunk gas pipeline, the Company’s strategic project.
A silica gel adsorbent system with unique performance
was developed and deployed to prepare natural gas for
transport by the TurkStream trunk gas pipeline. The system is
capable of simultaneous dehydration and NGL removal to
ensure the high quality of pumped gas.
Selected brownfield enhancement solutions developed in 2019
Field
Innovative R&D project outcomes
Legal protection
Yamburgskoye and Zapolyarnoye
OGCFs
Urengoyskoye OGCF
A range of innovative solutions were developed and implemented to minimise
the risks associated with man-made, environmental and geoenvironmental
incidents by using management information systems at PJSC Gazprom’s gas
production facilities in the Extreme North environment
Russia’s first high-tech complex was commissioned to produce and refine
heavy hydrocarbon feedstock from low-permeability reservoirs of the
Achimov deposits using advanced R&D, technology and energy-saving
solutions
The developed technical solutions
are protected by 19 Russian patents
The developed technical solutions
are protected by 10 Russian patents
State-of-the-art knowledge-intensive technologies and equipment used in the construction of the Power of Siberia trunk gas pipeline
Project specifics requiring advanced knowledge-intensive technologies and equipment
Technologies and equipment
— The pipeline route passes through swampy, mountainous, seismically
active, permafrost, and rocky areas with extreme environmental
conditions
— The absolute lowest air temperatures along the Power of Siberia route
range from −62°C in the Republic of Sakha (Yakutia) to −41°C in the
Amur Region
Domestically-produced steel pipe with internal flow coating,
including pipe with enhanced deformation properties
External insulation coating is made of innovative domestic
nanocomposite materials, which ensures high corrosion resistance
of the gas pipeline
Pipes crossing active tectonic faults can withstand high seismic
activity and ground displacements
Special engineering solutions for pipe installation
Unattended cycloidal electric actuators with backup batteries for
use with shutoff and control valves on trunk gas pipelines. Over
100 actuators were supplied for the Power of Siberia gas pipeline
project in 2019
124
PJSC Gazprom Annual Report 2019
Innovations and Import Substitution
Innovations
Oil Business
Technology priorities in the oil business
— Driving mature asset performance
— Development of multiphase fields
— Production from low-permeability reservoirs
— Effective and safe shelf operations in ice conditions
— Development and production of catalysts for refining processes
Innovative development in the oil business includes the E&P
and refining segments and aims to overcome the technological
challenges preventing the achievement of strategic objectives.
Developments in the E&P segment of the oil business
target problems associated with production declines at
mature fields and higher share of new (more difficult to
develop) types of fields in the production portfolio.
The construction of high-tech catalytic facilities in Omsk
entered an active phase, with contracts awarded for main
and auxiliary equipment. The project seeks to develop and
subsequently launch production of catalytic cracking, hydro-
treatment, and hydrocracking catalysts. A next-generation
FCC catalyst AV-Neo was produced in 2019 with subsequent
commercial loading into two units of Omsk Refinery. A diesel
fuel hydrotreatment catalyst was developed with loading
scheduled for the first half of 2020. Catalytic cracking gasoline
hydrotreatment catalyst production technology was tested.
Selected innovations in E&P developed in 2019
Project
Development results
Implementation of a package
of technologies to improve well
productivity
Two horizontal wells were drilled with multistage fracking at the Yamburgskoye field in 2019 to optimise well design
A self-learning computer programme was developed jointly with IBM and the Skolkovo Institute of Science and
Technology to keep a wellbore within a productive reservoir by adjusting the well path
A new digital machine-learning tool was developed for real-time analysis of drilling parameters: vibration, rate of
penetration, RPM, and weight on bit, which vary depending on the formation properties. Real-time identification of
rock composition is enabled by analysing these parameters. As the programme is self-learning, prediction of
changes in rock composition is done more accurately with each metre drilled. A prediction accuracy of 70% has
been achieved, with plans to bring it up to 90%
Development of
surfactant-polymer flooding
technology
Various formulations were tested on core samples to identify cheaper alternatives to Shell’s expensive agents used
in a pilot project at the Zapadno-Salymskoye field.
Two promising surfactant-polymer formulations produced by PAO SIBUR Holding were selected for single-
Development of unconventional
oil production technologies
well testing at the Kholmogorskoye field. Also in 2019, a conceptual model for piloting at the above field was
developed and design work was commenced
The surfactant-polymer flooding technology testing project was underway at the Sutorminskoye field. Gazprom
Neft Science and Technology Centre’s partner in the project is China’s Daqing Oil, a subsidiary of CNPC
The Bazhenov Technology Centre (a subsidiary of PAO Gazprom Neft) completed a 19-stage fracturing of the
Bazhenov formation in a well with a horizontal wellbore length of 1.5 thousand m. This is the project’s most
technically complex well. All wells commissioned within the projects produced commercial amounts of oil. For
commercial deployment of the range of technologies to develop the Bazhenov formation, well drilling costs need
to be reduced to RUB 8.5 thousand per tonne of oil produced. In 2019, well drilling costs were reduced by 32% to
RUB 12.1 thousand per tonne of oil produced.
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
125
PJSC Gazprom Annual Report 2019
Innovations and Import Substitution
Innovations
Power Generation Business
Technology priorities in the power generation business
Increasing efficiency in power generation
—
— Reducing the environmental footprint of operations
Implementing advanced engineering solutions
—
Gazprom energoholding designs and implements innovative
technologies for electricity and heat generation at power
stations.
In 2019, the construction of Unit 2 at the Grozny TPP was
completed. The plant’s total installed electrical capacity is
now 360 MW. The new Unit 2 with a capacity of about 184 MW
comprises a gas turbine and generator by Siemens. The
Grozny TPP units were built with extensive use of domestically-
produced systems and equipment: automation, protective
relaying, mechanical-draft dry cooling towers, emission
monitoring system, gas conditioning and water treatment
system components, and electrical switchgear equipment.
For more details on PJSC Gazprom’s innovation engine and innovations see Gazprom
Group’s Sustainability Reports published on an annual basis
126
PJSC Gazprom Annual Report 2019
Innovations and Import Substitution
Import Substitution
Growing the share of Russian products used in Gazprom
Group’s operations and encouraging the development
of Russian alternatives to critical imported products are
some of the key initiatives being taken to address the risk
associated with using foreign equipment and technologies
in the context of economic and technology sanctions.
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
An action plan has been implemented since 2015 to
address the challenges of import substitution and identify the
Company’s needs for import substituting equipment and
technologies. The economic effect from the deployment
of import substituting equipment and technologies is estimated
annually. PJSC Gazprom Corporate Import Substitution Plan
was developed and approved in 2018. The plan was updated
in 2019.
RUB 35 bn
Economic effect from import substitution initiatives
in 2016–2019
Economic effect from deploying import substituting equipment and technologies at PJSC Gazprom’s facilities in 2016–2019
Segment
Economic effect, RUB bn
Initiatives with the largest economic effect
Hydrocarbon production
Gas transportation
Other
16.4
14.0
4.6
Using Russian-made hydrogen sulphide-resistant downhole equipment
for operation at a pressure of 70.0 MPa (production launched in 2017)
Development of drive repair technology for foreign-made gas pumping
units by a Russian company using domestically made components
(the technology was implemented in 2018)
Purchasing Russian materials and components to replace foreign
alternatives
127
PJSC Gazprom Annual Report 2019
Innovations and Import Substitution
Import Substitution
Summary of PJSC Gazprom’s updated Corporate Import
Substitution Plan
— The corporate plan spans the period until 2025 with due consideration
for the key technology focus areas outlined in the industry’s Import
Substitution Plan* updated in 2019
— The plan covers the gas, oil, and power generation businesses
— The plan details measures for planned and phased substitution of
foreign products with competitive Russian counterparts in the
operations of Gazprom Group companies as well as for the creation
of favourable environment for the development of national
manufacturing base and domestic supply networks
* Import Substitution Plan for Mechanical Engineering in the Petroleum Industry
approved by Order of the Ministry of Industry and Trade (Minpromtorg) of Russia
No. 1229 dated 16 April 2019.
In 2019, PJSC Gazprom’s import substitution strategy was
focused on prioritising Russian equipment and components
in PJSC Gazprom’s procurement. A total of 28 audits of Russian
companies were conducted to check their readiness to pro-
duce import substituting products, and 9 testing laboratories
and centres were audited to evaluate their capabilities for
product certification testing. A total of 310 such audits were
completed between 2015 and 2019.
Launching Production of New High-tech
(Including Import Substituting) Products
by Russian Businesses
Gazprom engages Russian industrial companies and research
institutions to manufacture high-tech and import substituting
products and materials including through collaboration with
Russian regional governments under respective roadmaps.
The purpose of these roadmaps is to launch production
of products listed in PJSC Gazprom’s Corporate Import
Substitution Plan and the List of Priority Products for Import
Substitution and Production Localisation to Promote the
Technological Development of PJSC Gazprom.
A total of 20 roadmaps were being implemented
across 25 Russian regions in 2019
Since 2017, the Company has been using a tripartite coopera-
tion arrangement (PJSC Gazprom, the Russian Ministry of
Industry and Trade, and regional governments) whereas
roadmaps are signed with regional industrial complexes. As
at 31 December 2019, these roadmaps were signed with the
governments of five Russian regions.
The benefits of tripartite roadmaps as a new cooperation
mechanism to engage regional industrial complexes
— A series of consistent initiatives aimed at developing high-tech
(including import substituting) products, as well as state support for
participating businesses from the Russian Ministry of Industry and
Trade
— No binding agreements and no investments in the initiatives from
PJSC Gazprom
— The participants may receive subsidies from the Russian Ministry of
Industry and Trade and PJSC Gazprom may consider entering into
long-term contracts for the supply of developed products
PJSC Gazprom cooperates with more than 50 businesses
from adjacent industries under these roadmaps. Many of
these companies are certified suppliers for the petroleum
industry and supply equipment to PJSC Gazprom. High-tech
(including import substituting) products produced by Russian
businesses are primarily used in gas production and trans-
portation, including at the Chayandinskoye field and the
Power of Siberia trunk gas pipeline.
Long-term Contracts as a Framework
for Import Substitution Projects
In 2019, the Company continued to sign long-term contracts
with Russian manufacturers for mass production, supply,
maintenance, service and repair of import-substituting prod-
ucts against guaranteed future supplies. The signed contracts
include a contract to supply radio relay communication
equipment that can substitute foreign radio relay stations
used by PJSC Gazprom’s networks and a long-term contract
for the manufacture, supply, maintenance, service and repair
of equipment and other components of subsea production
systems.
128
PJSC Gazprom Annual Report 2019 Innovations and Import Substitution
Import Substitution
Import substituting products produced and supplied under
long-term contracts with Russian industrial companies
as at 31 December 2019
— Casing and tubing pipes for hostile environments
— Special-purpose ball valves
— Axial-flow anti-surge and control valves
— Complete modular TAKAT compressor packages
— Microporous silica gel adsorbent and moisture-resistant
microporous silica gel adsorbent to prepare natural gas for trunk
gas pipeline transportation
— Longitudinally welded steel pipes and connections for subsea and
onshore gathering pipelines
— LNG-powered shunting locomotives
— Equipment and other components of subsea production systems
(subsea casing head systems, Christmas trees, 20” and 30”
connection systems, and tubing hangers)
— Radio relay communication complexes
Development of High-tech Import Substituting
Products for Subsea Production Systems
Used in Hydrocarbon Development
In 2019, Russian companies implemented new manufacturing
technologies and produced prototypes of equipment for
offshore field development with subsea production systems
as a result of R&D under the State Programme of the Russian
Federation for the Development of Shipbuilding and Equip-
ment for Offshore Upstream Operations for 2013–2030.
The Subsea Production Complexes expert group
of the Science and Technology Council for Petroleum
Equipment Development under the Ministry
of Industry and Trade (Minpromtorg) is led by
a representative of PJSC Gazprom
In 2019, PJSC Gazprom’s import substituting product procure-
ment regulations were amended, in some cases by concluding
long-term contracts, to incorporate lessons learned.
The research and coordination committee implementing the
state programme approved seven R&D project to be put out
to tender by Minpromtorg in 2020.
Key amendments to the Regulations on the Procurement of Goods,
Works and Services by PJSC Gazprom and Gazprom Group
companies related to import substituting product procurement,
including procurement under long-term contracts
(Resolution of PJSC Gazprom’s Board of Directors No. 3337 dated
19 November 2019)
— Amendments and clarifications to the general procedure for signing
long-term contracts with Russian suppliers of import substituting
products without competitive bidding based on a resolution of the
Steering Committee for Import Substitution, Manufacturing
Localisation and Inventory Management
— Maximum term of long-term contracts extended to 10 years
— Clarification that in situations where several potential suppliers were
preliminarily evaluated for readiness to manufacture products for
PJSC Gazprom, the contract shall be awarded to the supplier with
the highest readiness index
The Company will continue signing long-term contracts with
Russian suppliers: launching another seven types of import
substituting products using this mechanism was considered
in 2019.
The city of Saint Petersburg and PJSC Gazprom continued
implementing a cooperation agreement signed in 2017 on the
establishment of an industrial cluster focused on high-tech
solutions to develop the World Ocean’s resources. Under this
agreement, the Cluster for High-tech Solutions to Develop
the World Ocean’s and Arctic Resources (established with
PJSC Gazprom’s participation) and the Committee for Power
and Utilities of Saint Petersburg developed a programme
for 2020–2024 providing for the establishment of related
infrastructure, training of skilled personnel and launching
production of competitive products not inferior to foreign
counterparts.
Also in 2019, a subsidiary of PJSC Gazprom signed
a long-term contract with AO Almaz–Antey Air and Space
Defence Corporation for the mass production of subsea
production equipment. Pursuant to the contract, required
advance payments have been made and one of the corpora-
tion’s plants was equipped to launch the production of the
equipment. The plant was retrofitted, and the construction of
an advanced assembly and testing facility is underway.
For more details on PJSC Gazprom’s import substitution initiatives see Gazprom
Group’s Sustainability Reports published on an annual basis
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
129
PJSC Gazprom Annual Report 2019
Financial Performance
The Company demonstrated a solid financial position and
maintained leverage at a comfortable level in 2019. This
was achieved despite the negative impact of external
environment factors, including through consistent
operational and capital expenditures optimisation and
exploring additional revenue sources.
PJSC Gazprom’s mid-term financial policy priorities
Positive free cash flow generation
The Company’s main growth drivers are strategic projects to be launched in 2020–2024, with the capex for these
projects spread evenly throughout this period. This approach will ensure the Group’s financial stability even in an
adverse commodity and financial market environment.
Dividend payments out of free
cash flow
To meet its new Dividend Policy, the Company intends to expand its free cash flow generation potential by both
operational performance enhancement and opex and capex optimisation.
The Company has a clear investment project prioritisation system based on strategic importance and
performance measures. Key strategic projects and projects securing gas balance in peak periods have the highest
financing priority. Financing of other projects is subject to budget constraints.
A restructuring of the investment and construction business unit was undertaken in 2019, creating conditions
for a transition to a central contractor-based model and wider use of EPC contracts. More efficient project
implementation is also driven by broader use of project financing.
130
PJSC Gazprom Annual Report 2019
Financial Performance
PJSC Gazprom’s mid-term financial policy priorities (continued)
Increasing performance
efficiency
PJSC Gazprom’s annual budgeting process establishes strict spending limits for the Company and its subsidiaries,
while cost optimisation opportunities are explored on an ongoing basis at implementation stage.
At the same time, PJSC Gazprom keeps improving the budgeting process of Group companies and
strengthening spending control. KPI system implementation in subsidiaries helped discover excess liquidity reserves,
cost reduction and net profit increase opportunities. Starting from 2020, the Group has plans to begin reviewing
and approving consolidated budgets of its gas and power business sub-holdings, i.e. Gazprom mezhregiongaz
Group, Gazprom energoholding Group, Gazprom export Group. The new approach will improve sub-holdings’
business process transparency and operational and investment performance control.
A significant positive effect in cost savings is achieved through PJSC Gazprom and Group companies’ annual
operational efficiency improvement and cost reduction programmes. Plans for 2020 include optimisation of design-
stage project cost estimates, driving cost reduction in procurement, and energy saving and energy efficiency
initiatives.
Group companies widely use banking support of procurement contract execution, which drives spending
efficiency.
The Company accumulates sufficient cash, cash equivalents and bank deposits on its balance sheet to guarantee
that Gazprom Group fulfils its obligations at all times.
A key source of liquidity is centralised cash management across Gazprom Group. PJSC Gazprom continues
to develop a centralised real cash pooling system that allows for optimal intra-group liquidity redistribution,
reducing external borrowing requirements of Group companies and providing additional income from depositing
idle cash.
As at 31 December 2019, the cash pooling system had 481 participants, including 41 overseas entities. Intra-
group liquidity consolidated in PJSC Gazprom’s master accounts increased by 1.8 times, from RUB 289.7 bn as at
31 December 2018 to RUB 509.7 bn as at 31 December 2019, intra-group loans issued by Gazprom Group entities
were RUB 9.9 bn as at 31 December 2019.
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
The Company pursues a conservative debt management policy and intends to maintain the Net debt (including
bank deposits)/EBITDA ratio in the comfortable range of 1 to 2, as well as maintain a balanced debt portfolio
structure with predominantly long-term debt.
Broader use of project financing helps diversify financing sources, maintain a lighter balance sheet and drive
investment programme efficiency. The Company is engaged in a systematic effort to optimise the debt portfolio
structure, manage repayment schedules and reduce borrowing costs, including through refinancing.
Liquidity management
Debt management
Improving tax administration
Gazprom is one of Russia’s major taxpayers. The Company implements a tax monitoring mechanism aimed at
increasing transparency of operations of Gazprom Group entities, reducing fiscal load, and managing operational
risks and costs.
Building a stronger investment
case, driving capitalisation
The Company aims to further develop investor and shareholder engagement, enable their direct dialog with
management, and increase transparency, including through better disclosure and better financial and non-financial
reporting.
PJSC Gazprom IFRS Consolidated Financial Statements is available
on PJSC Gazprom’s website
www.gazprom.com
131
PJSC Gazprom Annual Report 2019
Financial Performance
Revenue
Gazprom Group’s sales revenue (net of VAT, excise tax, and
customs duties) amounted to RUB 7,659.6 bn in 2019. It was
down year-on-year, primarily driven by lower net sales of gas.
A significant part of the Group’s sales revenue is
denominated in foreign currencies (mostly in US dollars and
euros).
RUB 7,659.6 bn
PJSC Gazprom’s revenue in 2019
Net sales revenue, RUB bn
2017
2018
2019
Net revenue from gas sales
Net revenue from sales of refined products
Net revenue from sales of crude oil and gas condensate
Net revenue from sales of electricity and heat
Net revenue from sales of gas transportation services
Other revenues
Total
Variation analysis of net sales revenue in 2019, RUB bn
Net sales revenue in 2018
Change in net revenue from sales of natural gas to far abroad countries
Change in net revenue from sales of natural gas to FSU countries
Change in net revenue from sales of natural gas in the Russian Federation
Retroactive gas price adjustments
Change in net revenue from sales of crude oil and gas condensate
to far abroad countries
Change in net revenue from sales of crude oil and gas condensate
to FSU countries
Change in net revenue from sales of crude oil and gas condensate
in the Russian Federation
Change in net revenue from sales of refined products to far abroad countries
Change in net revenue from sales of refined products to FSU countries
Change in net revenue from sales of refined products in the Russian
Federation
Change in net revenue from sales of electricity and heat
Change in net revenue from sales of gas transportation services
Change in other revenues
Net sales revenue in 2019
132
2019
Change 2019/2018
2017
3,340.6
1,687.1
539.9
503.8
235.1
239.6
2018
4,303.7
2,179.8
734.9
522.1
225.7
258.0
3,800.7
2,111.2
752.8
518.4
215.3
261.2
6,546.1
8,224.2
7,659.6
−11.7%
−3.1%
2.4%
−0.7%
−4.6%
1.2%
−6.9%
8,224.2
−460.8
+7.5
+16.4
−66.1
+17.1
+3.2
−2.4
−11.2
−18.4
−39.0
−3.7
−10.4
+3.2
7,659.6
PJSC Gazprom Annual Report 2019 Financial Performance
Operating Expenses
Gazprom Group’s operating expenses amounted to
RUB 6,387.1 bn in 2019. They were up year-on-year, driven
by higher staff costs, foreign exchange differences on
operating items and depreciation. The change in staff costs
was mainly due to the recognition of income from a change
in provision for post-employment benefits in 2018 caused
by the retirement age increase under the Russian law.
The Group’s operating expenses as a percentage of
sales increased from 75% in 2018 to 83% in 2019.
Gazprom is one of Russia’s major taxpayers. Taxes pay-
able by the Group (net of income tax), totalled RUB 1,409.2 bn
in 2019, down RUB 89.1 bn year-on-year. They were down
year-on-year, predominantly driven by a decrease in the KGP
coefficient value in the MET formula for gas and oil price
decline.
Operating expenses breakdown, RUB bn
2017
2018
2019
Taxes other than income tax
Purchased gas and oil
Staff costs
Depreciation
Transit of gas, oil and refined products
Foreign exchange rate differences on operating items
Other
Total
Breakdown of taxes other than on income, RUB bn
MET
Property tax
Other taxes
Total
2017
2018
2019
133
RUB 6,387.1bn
PJSC Gazprom’s operating expenses in 2019
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
2017
1,246.1
1,236.2
682.1
613.2
593.3
−14.5
1,340.7
5,697.1
2017
915.2
154.6
176.3
1,246.1
2018
1,498.3
1,468.9
600.8
648.0
650.8
−28.0
1,342.4
6 181.2
2018
1,163.9
162.9
171.5
1,498.3
2019
Change 2019/2018
1,409.2
1,403.6
749.7
715.2
665.6
78.3
1,365.5
6 387.1
−5.9%
−4.4%
24.8%
10.4%
2.3%
X
1.7%
3.3%
2019
Change 2019/2018
1,115.0
148.6
145.6
1,409.2
−4.2%
−8.8%
−15.1%
−5.9%
PJSC Gazprom Annual Report 2019
Financial Performance
Profit
In 2019, Gazprom Group’s operating profit amounted to
RUB 1,119.9 bn, adjusted EBITDA was RUB 1,859.7 bn. Both of
them were down year-on-year, primarily due to lower global
oil and gas prices, as well as lower gas sales to European far
abroad countries. Gazprom Group’s adjusted EBITDA margin
went down to 24% in 2019.
Income tax in the reporting year was RUB 357.5 bn.
RUB 1,859.7bn
PJSC Gazprom’s adjusted EBITDA for 2019
Effective tax rate increased to 22.0% (2018: 17.5%).
Profit, RUB bn
The Group’s profit attributable to the owners of
PJSC Gazprom totalled RUB 1,202.9 bn in 2019. It was down
year-on-year, mostly due to lower operating profit, partly
offset by foreign exchange gains due to the strengthening
of the rouble in 2019. The profit margin attributable to the
owners of PJSC Gazprom was 16% in 2019.
2017
2018
2019
Operating profit
Profit margin, %
Adjusted EBITDA margin
2017
2018
2019
2017
2018
2019
Margin on the profit for the year attributable to the owners
of PJSC Gazprom
22
32
24
11
18
16
Change 2019/2018
Adjusted EBITDA
2017
2018
2019
Change 2019/2018
2017
2018
2019
Change 2019/2018
Profit for the year attributable to the owners of PJSC Gazprom
Variation analysis of profit attributable to the owners of PJSC Gazprom in 2019, RUB bn
Profit for 2018 attributable to the owners of PJSC Gazprom
Change in sales revenue
Change in operating expenses
Net gain (loss) from commodity trading activity at high-liquidity European
trading hubs
Change in net financial income (expense)
Change in share of profit of associates and joint ventures
Change in income tax
Other factors
Profit for 2019 attributable to the owners of PJSC Gazprom
134
871.4
1,930.0
1,119.9
−42.0%
1,467.7
2,599.3
1,859.7
−28.5%
714.3
1,456.3
1,202.9
−17.4%
1,456.3
−564.6
−205.9
−43.0
+610.0
−25.4
−33.9
+9.4
1,202.9
PJSC Gazprom Annual Report 2019 Financial Performance
Capital Expenditures
Gazprom Group’s capital expenditures amounted to
RUB 1,818.7 bn in 2019.
Transportation, Gas Production and Refining segments
account for the bulk of the Group’s capital expenditures.
The high share of the Transportation segment in the total
capital expenditures is due to the concurrent implementation
of a number of major gas transportation projects. With
Gazprom’s capex mostly denominated in Russian roubles,
its investment activities are less exposed to external factors.
Total actual expenditure under the Group’s Investment
Programme for 2020 (covering gas, oil, electricity generating,
heat generating, and other assets) and similar plans of the
Group was RUB 1,610.0 bn.
RUB 1,818.7bn
Gazprom Group’s capital expenditures in 2019
For more details on Gazprom Group’s key capital expenditures in 2019 and investment
priorities for 2020 see the Capex Programmes section
Capital expenditures, RUB bn
2017
2018
2019
Gas transportation
Processing/refining
Gas production
Oil and gas condensate production
Electricity and heat generation and sales
Gas distribution
Gas storage
Other segments
Total
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
2019
Change 2019/2018
464.2
437.8
360.2
316.0
79.0
25.8
14.3
121.4
−27.5%
41.5%
16.9%
22.5%
8.4%
−34.0%
−26.3%
−18.6%
1.3%
2017
498.6
225.2
216.5
330.4
58.1
51.7
37.7
86.4
2018
640.1
309.4
308.0
257.9
72.9
39.1
19.4
149.1
1,504.6
1,795.9
1,818.7
Note. Capital expenditures are shown as reported in the segment information of PJSC Gazprom’s IFRS consolidated financial statements.
135
PJSC Gazprom Annual Report 2019
Financial Performance
Cash and Free Cash Flow
Debt Management
According to Gazprom Group’s financial policy, capital expen-
ditures are covered by the operating cash flow.
Net cash from operating activities totalled RUB 1,709.4 bn
As at 31 December 2019, Gazprom Group’s total debt was
RUB 3,863.9 bn, while its net debt amounted to RUB 3,167.8 bn.
The weighted average interest rate decreased to 4.8% as
in 2019. It was up year-on-year, mostly driven by higher cash
driven by decrease in short-term deposits in working capital.
Net cash from operating activities remained lower than
at 31 December 2019 (5.1% as at 31 December 2018). As at
31 December 2019, 80% of debt matured in one year or later.
In 2019, the Group’s Net debt (adjusted)/adjusted
cash capital expenditures in 2019 as the Company was passing
the peak of its investment cycle.
PJSC Gazprom is developing the Group’s centralised
cash flow and liquidity management system.
481 participants
in Gazprom Group’s real cash pooling system
as at 31 December 2019
EBITDA ratio stood at a comfortable level of 1.3.
1.3
Net debt (adjusted)/adjusted EBITDA in 2019
PJSC Gazprom has investment-grade credit ratings from
Standard & Poor’s, Fitch Ratings and Moody’s credit rating
agencies. The credit rating from Moody’s is one notch above
the sovereign rating of the Russian Federation. These ratings
are a credible external recognition of the Group’s high credit-
worthiness and financial stability. Gazprom Group companies
are reliable borrowers in the domestic and international
capital markets, able to raise funds on favourable terms.
1,187.0
1,617.4
1,709.4
Leverage as at 31 December
5.7%
Net debt/adjusted EBITDA
2017
2018
2019
2017
2018
2019
Net debt (adjusted)/adjusted EBITDA
1.6
1.2
1.7
1.4
0.9
1.3
Note. Calculated with net debt and adjusted EBITDA denominated in Russian roubles.
1,405.8
1,639.5
1,775.9
8.3%
−218.8
−22.1
−66.5
Cash and free cash flow, RUB bn
Net cash from operating activities
2017
2018
2019
Change 2019/2018
Cash capital expenditures
2017
2018
2019
Change 2019/2018
Free cash flow
2017
2018
2019
136
PJSC Gazprom Annual Report 2019 Financial Performance
Total debt as at 31 December, RUB bn
2017
2018
2019
Net debt
Cash and cash equivalents
Total
Net debt as at 31 December, RUB bn
2017
2018
2019
2017
2,397.5
869.0
3,266.5
2018
3,014.4
849.4
3,863.8
2019
Change 2019/2018
3,167.8
696.1
3,863.9
5.1%
−18.0%
0.0%
Net debt (adjusted)*
Deposits within current and non-current assets
Total
2017
2,068.0
329.5
2,397.5
2018
2,216.8
797.6
3,014.4
2019
Change 2019/2018
2,491.4
676.4
3,167.8
12.4%
−15.2%
5.1%
* Defined in the Dividend Policy of PJSC Gazprom approved by PJSC Gazprom’s Board of Directors in 2019 (Resolution No. 3363 dated 24 December 2019) as the sum total of the funds
borrowed less cash and cash equivalents (including deposits within other current and non-current assets).
Gazprom successfully raises capital on international debt
markets, making informed decisions when selecting its
sources of financing and prudently using the borrowed funds.
The Group borrows mainly in foreign currency: ca. 21% of its
debt is denominated in US dollars and 48% in euros. This is
due to a number of factors including lower interest rates on
overseas markets and their larger capacity as compared to
rouble-denominated instruments. Considering the gradual
increase of interest rates in US dollars in 2019 and persisting
negative interest rates in euros, the share of euro-denomi-
nated borrowings in the Group’s debt portfolio has been
rising. On top of that, Gazprom Group’s debt currency profile
reflects its prevailing foreign currency revenues, creating
a natural hedge for debt servicing: if the Russian rouble
depreciates against the US dollar/euro, higher payments on
external debt in the rouble equivalent will be offset by the
growing rouble equivalent of foreign currency revenues.
Gazprom Group’s cost of debt, %
Weighted average fixed interest rate
Weighted average floating interest rate
Weighted average interest rate
2017
2018
2019
6.3
3.6
5.6
6.0
2.9
5.1
5.8
3.3
4.8
Rouble-denominated borrowings in the debt portfolios of
Gazprom Group’s subsidiaries account for nearly 24% of the
Group’s total debt.
The Group’s debt portfolio is well-balanced in terms of
maturity, with borrowings maturing in more than five years
account for over a quarter of the portfolio.
For details on bond issues outstanding as at 31 December 2019 see the Share Capital
and Securities Market section
Debt maturities as at 31 December 2019, %
2017
2018
2019
137
Less than 1 year (inclusive)
1–2 years (inclusive)
2–5 years (inclusive)
Over 5 years
2017
2018
2019
27
15
33
25
15
16
43
26
20
12
42
26
s
t
l
u
s
e
R
e
c
n
a
m
r
o
f
r
e
P
PJSC Gazprom Annual Report 2019
Environmental
and Social
Responsibility
138
PJSC Gazprom Annual Report 2019
PJSC Gazprom Annual Report 2019 Personnel 140
Occupational Safety 145
Environmental Protection 150
Energy Saving and Energy Efficiency 155
Social Projects 158
139
y
t
i
l
i
i
b
s
n
o
p
s
e
R
PJSC Gazprom Annual Report 2019 Personnel
The most important strategic tool of Gazprom is its
personnel — a professional workforce aiming for the
highest performance. The key drivers of the Company’s
consistently high profile as an employer include its
responsible social policy, ample opportunities for fulfilling
potential and upgrading skills.
PJSC Gazprom strictly complies with the requirements of
Russian labour laws. The Company’s local regulations are
aligned with Conventions of the International Labour
Organisation and international standards regulating employee
pay, hours, working conditions, remuneration for work, social
security, and holidays with pay.
Personnel Structure
As at 31 December 2019, the total headcount of the Group
was 473.8 thousand employees, including 26.8 thousand
employees in entities registered abroad.
Higher headcount at Gazprom Group in 2019 was due
to the implementation of strategic gas production and trans-
portation projects and the growth of the Group’s operations
in oil and power generation businesses.
Total headcount of Gazprom Group as at 31 December,
thousand people
2017
2018
2019
Change 2019/2018
469.6
466.1
473.8
1.7%
Note. Excluding entities in which Gazprom has investments classified as joint operations.
0.65 %
the share of Gazprom Group personnel in the total
number of employed Russian citizens
140
PJSC Gazprom Annual Report 2019 Personnel
Gazprom Group’s workforce in Russia breakdown, as at 31 December 2019, thousand people
.*
.
.
.
.
.
.
.
.
* Employees involved in projects to develop hydrocarbon deposits on the Russian continental shelf.
Gazprom Group’s workforce by category
as at 31 December 2019, thousand people
Gender balance of Gazprom Group’s workforce
as at 31 December 2019, thousand people
Blue collar
White collar
Managers
Total
Note. Excluding entities in which Gazprom has investments
classifi ed as joint operations.
Gazprom Group’s workforce by entity
as at 31 December 2019, thousand people
PJSC Gazprom
(including branches
and representative offi ces)
Major subsidiaries of Gazprom Group
engaged in gas production,
transportation, underground storage
and processing
Gazprom neftekhim Salavat
Gazprom Neft
Gazprom energoholding
Other subsidiaries
Total
Note. Excluding entities in which Gazprom has investments
classifi ed as joint operations.
249.4
156.4
68.0
473.8
27.1
234.9
14.7
72.7
45.7
78.7
473.8
Men
Women
Total
Note. Excluding entities in which Gazprom has investments
classifi ed as joint operations.
Age balance of Gazprom Group’s workforce
as at 31 December 2019, thousand people
Under 30 years
30 to 40 years
40 to 50 years
50 years and older
Total
Note. Excluding entities in which Gazprom has investments
classifi ed as joint operations.
337.1
136.7
473.8
63.5
152.9
141.5
115.9
473.8
For more details on Gazprom Group’s personnel see Gazprom in Figures 2015–2019
Factbook
141
PJSC Gazprom Annual Report 2019
y
t
i
l
i
i
b
s
n
o
p
s
e
R
Personnel
Employee turnover rate across Gazprom Group entities, %
Collaboration with educational organisations in 2019
2017
2018
2019
4.7
1.3
5.6
2.1
5.8
2.4
Gazprom Group
including major subsidiaries of Gazprom Group engaged in gas
production, transportation, underground storage and processing
Notes:
1. The following grounds for resignation are taken into account in calculating the employee
turnover rate: clauses 3, 6, 7, 9, Article 77 of the Labour Code of the Russian Federation.
Only clause 3, Article 77 of the Labour Code of the Russian Federation was taken into
account in calculating the employee turnover rate before 2018.
2. Excluding entities in which Gazprom has investments classified as joint operations.
— 24 schools, located in 5 federal districts of the Russian Federation,
—
participated in the Gazprom Classes project*
13 anchor universities cooperated with PJSC Gazprom and its
subsidiaries*
— 24 anchor departments of PJSC Gazprom and its subsidiaries were
—
running in universities*
10,081 students of higher education institutions has internships
at Gazprom subsidiaries
— 2,051 target students of PJSC Gazprom and its subsidiaries studied
at universities*
15 job fairs were held in educational organisations
—
— PJSC Gazprom’s Day was held at Gubkin Russian State Oil and Gas
University
* As at 31 December 2019.
Gazprom Group’s workforce profile as at 31 December 2019
Employees with a higher education degree, %
Graduates hired by Gazprom Group entities
University and vocational school graduates hired
by Gazprom Group companies, people
2017
2018
2019
2017
2018
2019
2017
2018
2019
2017
2018
2019
Candidates of Sciences
Doctors of Sciences
Mean age, years
2017
2018
2019
2017
2018
2019
Share in the total number of employees hired
by Gazprom Group companies, %
3,238
2,931
2,896
6.0
5.0
5.0
In order to reduce the induction period for young talent
and enhance their skills in line with chosen career paths,
subsidiaries run dedicated development programmes, and
PJSC Gazprom runs a three-stage post-graduate training
programme, the Young Specialist Training School.
49.4
51.1
52.0
2,654
2,531
2,522
141
172
159
41.6
41.3
41.4
Note. Excluding entities in which Gazprom has investments classified as joint operations.
Young talent management in 2019
Young Talent Management
To develop a promising talent pool of the most capable stu-
dents motivated to fulfill their professional potential, Gazprom
Group companies consistently collaborate with schools and
universities. The Group actively engages with educational
organisations in targeted training of specialists. In order to
build a quality educational process Gazprom Group companies
organise onsite practice for research and teaching staff,
assist educational organisations in developing and aligning
educational programmes, enhancing laboratory and training
facilities, organising internships for students and engaging
Gazprom Group specialists in teaching activities.
—
194 people were trained at Gazprom’s Young Specialist Training
School workshops
— More than 200 employees from 51 subsidiaries of PJSC Gazprom,
as well as students from PJSC Gazprom’s partner universities attended
the 13th All-Russian Conference of Young Scientists, Specialists and
Students New Technologies in the Gas Industry (gas, oil, energy)
hosted by Gubkin Russian State Oil and Gas University
— Employees representing 36 subsidiaries of PJSC Gazprom took part
in PJSC Gazprom’s Best Young Employee contest
In order to involve young people in solving the industry’s
R&D challenges, subsidiaries run regular workshops and
conferences for young scientists and specialists.
142
PJSC Gazprom Annual Report 2019 Personnel
Employee Training and Development
To facilitate the upgrading of professional skills, the Company
has in place PJSC Gazprom’s Continuous Vocational Education
and Training System, which ensures that Gazprom’s employees
are trained throughout their professional life under corporate
training programmes.
The Continuous Vocational Education and Training System
includes mandatory (for admission to perform works at
hazardous production facilities of PJSC Gazprom), special-
purpose (proactive) and regular (skill upgrading) trainings.
Training is conducted by the Company’s educational
organisations, PJSC Gazprom subsidiaries’ work-study centres,
as well as at leading Russian universities. Training is also
organised at production facilities and training centres of foreign
companies partnering with PJSC Gazprom.
Number of Gazprom Group employees
trained under career enhancement and retraining programmes,
thousand people
2017
2018
2019
Change 2019/2018
342.9
381.1
456.2
19.7%
A considerable increase in the number of employees who were
trained under career enhancement and retraining programmes
was driven by active development and implementation of
distance learning solutions. The use of these platforms helps
ensure prompt delivery of relevant information to employees,
conduct on-the-job training and streamline training costs.
Over180 thousand employees
were trained in 2019 using distance learning solutions
Gazprom runs targeted employee training programmes tailored
for specifi c activities, such as development of hydrocarbon
fi elds on the continental shelf, GTS dispatch control, LNG
production, use of innovative process equipment, and a wide
range of talent pool building programmes.
Targeted training programmes for Gazprom Group employees
developed in 2019
— Professional Risk Management in the Oil and Gas Business —
Effective Management Methods, a career enhancement programme
— A set of career enhancement programmes on compliance with the
Code of Corporate Ethics of PJSC Gazprom, including Corporate
Ethics at PJSC Gazprom, an online training course
— Gazprom MBA — Management of Innovative Development
Programmes and Projects, a retraining programme
— Career enhancement programmes on preventing and combating
corruption
In 2019, for the fi rst time ever, the Company implemented
an Oil and Gas Trading full-year eight-module retraining
programme, a unique joint programme run by Gubkin Russian
State Oil and Gas University and Gazprom Corporate Institute
(piloted 24 graduates). Under the new Professional Risk
Management in the Oil and Gas Business — Effective Manage-
ment Methods programme, two workshops were conducted
in 2019, attended by 26 employees of Gazprom Group entities.
Remuneration and Social Security
The Company has in place the Remuneration Management
Policy for Employees of PJSC Gazprom Entities, which sets out
uniform corporate remuneration standards for Gazprom
Group employees. Its purpose is to provide a framework for
attracting and retaining people with required skills, and
motivate employees to perform as expected.
Key objectives of the Remuneration Management Policy
for Employees of PJSC Gazprom Entities
— Adopting unifi ed corporate employee remuneration standards
— Maintaining real pay levels refl ecting the consumer price index
growth
— Ensuring competitive pay levels for employees of PJSC Gazprom
entities based on market wage rate assessment
— Establishing an average monthly pay level for employees of
Gazprom Group entities based on uniform corporate remuneration
standards
— Monitoring application of remuneration systems based on the
uniform corporate reporting on HR costs
Current remuneration schemes link fi xed salaries and pay
rates to qualifi cations and business skills, and also provide for
monthly performance bonuses, premiums and additional
allowances for work scope and conditions, as well as ad-hoc
and annual bonuses.
143
PJSC Gazprom Annual Report 2019
y
t
i
l
i
i
b
s
n
o
p
s
e
R
Personnel
Staff costs of Gazprom Group, RUB bn
2017
2018
2019
Change 2019/2018
682.1
600.8
749.7
24.8%
To maintain the real value of pay in accordance with the
General Collective Bargaining Agreement of PJSC Gazprom
and its subsidiaries, the salaries and wages of employees
at entities included in the budgeting system of PJSC Gazprom
and located in Russia were increased by 4.6% on 1 January
2019.
Increase of employee fixed salaries and pay rates in PJSC Gazprom
and its budgeted subsidiaries and entities in Russia, %
From 1 January 2017
From 1 January 2018
From 1 January 2019
5.0
3.7
4.6
Moreover, the pay rates of workers whose pay is based on
the Unified Wage Scale were increased by 15% on 1 October
2019 to maintain competitive salaries at PJSC Gazprom sub-
sidiaries.
The interests of Gazprom Group employees are repre-
sented by Gazprom’s Interregional Trade Union, which is part
of the Russian Oil, Gas and Construction Workers’ Union.
The Company’s social policy provides it with a competitive
advantage in the employment market, seeks to additionally
motivate employees for strong and sustainable performance,
and aims to form stable professional teams.
The mechanism of social partnership in the form of a dialogue
between employees and employers on social and labour
relations is central to implementing our social policy, with its
key aspects set out in the General Collective Bargaining
Agreement of PJSC Gazprom and its entities and in the
collective bargaining agreements of its subsidiaries.
Gazprom’s social policy is implemented mainly through
long-term programmes which facilitate attracting and retaining
of duly qualified and experienced employees.
To better incentivise and drive improvements in employee
development, promote transfer of skills and knowledge, and
cultural exchanges, Gazprom holds regular vocational skills
competitions.
Starting from 2018, vocational skills competitions are held
as part of Labour (vocational skills) Festivals in even-numbered
years.
Gazprom Group’s social expenses, RUB bn
2017
2018
2019
Change 2019/2018
34.5
42.8
45.1
5.4%
For more details on employee training, the incentive scheme and social benefits see
Gazprom Group’s Sustainability Reports published on an annual basis
Key aspects of employees’ social security
Social benefits
Social benefits provide for necessary social security of both all the Company employees and certain employee
groups (employees of subsidiaries located in regions of the Far North and equated localities, young talent, families
with many children, employees supporting dependant children with disabilities, etc.)
Voluntary medical insurance
Voluntary medical insurance programmes provide for comprehensive medical services for employees, retirees and
their families (including rehabilitation treatment) by leading healthcare providers, including medical and preventive
treatment facilities of Gazprom Group
Housing programme
Private pension plans
The Company has in place a corporate housing programme funded by both employees and the employer through
bank mortgage lending facilities (using a co-financing approach). Operational needs based participation in the
programme allows the Company to retain key employees for longer periods
In accordance with the Long-Term Development Strategy of the Pension System in the Russian Federation, the
Company provides a private pension arrangement, which is part of the employee long-term incentive scheme and
provides for post-employment social benefits. The arrangement is run through Non-State Pension Fund GAZFOND
144
PJSC Gazprom Annual Report 2019 Occupational Safety
Gazprom puts the health and safety of its employees
at the top of its agenda by consistently improving its safety
management system and monitoring risks and challenges
to its stable operations.
In its activities, the Company is guided by its Occupational
Health, Industrial, Fire and Traffi c Safety Policy.
Unifi ed Occupational Health
and Safety Management System
Objectives relating to occupational health, industrial,
fi re and traffi c safety are to:
— create safe working conditions and protect the health and safety
—
—
of employees
reduce the risks of accidents and incidents at hazardous industrial
facilities
reduce the risks of traffi c accidents resulting from operating
activities
— ensure fi re safety
For more details on commitments relating to occupational health, industrial, fi re and
traffi c safety set out in PJSC Gazprom’s Occupational Health, Industrial, Fire and
Traffi c Safety Policy see PJSC Gazprom’s website
www.gazprom.com
The Company has in place a Unifi ed Occupational Health
and Safety Management System (UOHSMS). It is a part of
PJSC Gazprom’s integrated management system developed
and introduced to manage OHS risks and meet the Company’s
objectives and commitments under its Occupational Health,
Industrial, Fire and Traffi c Safety Policy.
In 2019, the list of the Company’s industrial safety
goals was supplemented with efforts to reduce
the risk of traffi c accidents resulting from operating
activities
The scope of the UOHSMS covers PJSC Gazprom, its major
gas exploration, production, processing, transportation,
underground storage and energy subsidiaries, as well as
subsidiaries supporting the operation of the Russian UGSS,
with a total headcount of around 319 thousand employees.
145
PJSC Gazprom Annual Report 2019
y
t
i
l
i
i
b
s
n
o
p
s
e
R
Occupational Safety
UOHSMS improvements in 2019
— Road traffic safety obligations were revised and included into
PJSC Gazprom’s Occupational Health, Industrial, Fire and Traffic
Safety Policy
— Procedure of occupational safety risk assessment integrated into
the risk management and internal control system of PJSC Gazprom
(STO Gazprom 18000.1-002-2020 “Unified Occupational Health and
Safety Management System. Hazard Identification and Risk
Management for Occupational Safety”) was developed
— Procedure for setting goals, developing programmes and activity
plans in occupational safety, and monitoring their implementation
(STO Gazprom 18000.1-003-2020 “Unified Occupational Health
and Safety Management System. Setting Goals, Developing
Programmes and Monitoring Programme Implementation”), was
updated
— Procedure for organising and conducting audits of the Unified
Occupational Health and Safety Management System in
PJSC Gazprom was updated (STO Gazprom 18000.3-004-2020
“Unified Occupational Health and Safety Management System.
Organisation and Conduct of Audits”) was updated
— Procedure for identification of the root causes of occupational
safety incidents and their analysis in order to develop and
implement measures to prevent such incidents (STO Gazprom
18000.4-008-2019 “Unified Occupational Health and Safety
Management System. Root Cause Analysis. Procedure for Incident
Identification and Development of Preventive Measures”) was
developed
— Occupational safety leadership workshops were organised for the
executive management of PJSC Gazprom and its subsidiaries
— Corporate requirements for behavioural safety audits (R Gazprom
18000.3-009-2019 ‘Unified Occupational Health and Safety
Management System. Behavioural Audit. Guidelines”) were
established
— Operational control over compliance with industrial safety
requirements when operating gas and gas condensate processing
facilities, gas distribution and consumer networks, oil production,
transportation and processing facilities, as well as over compliance
with requirements when operating power generation facilities was
enhanced
In 2014, the UOHSMS was certified to OHSAS 18001:2007
and is annually audited for compliance with this international
standard by relevant organisations while also being expanded
to cover more subsidiaries of PJSC Gazprom.
The UOHSMS is planned for certification
to ISO 45001:2018 in 2020
Number of PJSC Gazprom’s UOHSMS certified subsidiaries
as at 31 December
2017
2018
2019
Change 2019/2018
Average headcount of PJSC Gazprom’s UOHSMS certified
subsidiaries, thousand people
2017
2018
2019
Change 2019/2018
51
56
58
3.6%
266.4
275.3
275.3
–
In the reporting year, corporate requirements to the UOHSMS
were reviewed to comply with ISO 45001:2018. The UOHSMS
is planned for certification to ISO 45001:2018 in 2020.
Outcomes of OHS Activities
Gazprom makes consistent efforts to prevent injuries, occu-
pational diseases, accidents, incidents and fires.
Based on the identified critical and material risks,
PJSC Gazprom develops and approves its industrial safety
targets for the year, and develops programmes to achieve the
annual targets while all its subsidiaries and entities develop
programmes to improve labour conditions and action plans
to ensure occupational safety at hazardous industrial facilities.
Pre-FEED and design documents are reviewed by
internal experts for compliance with statutory regulations and
PJSC Gazprom’s requirements to occupational safety.
Compliance with the Company’s OHS standards and
regulations by suppliers and contractors operating at the
facilities of PJSC Gazprom and its subsidiaries is an essential
requirement of occupational safety. In its activities, the
Company engages suppliers and contractors who share the
principles set out in PJSC Gazprom’s Occupational Health,
Industrial, Fire and Traffic Safety Policy.
146
PJSC Gazprom Annual Report 2019
Occupational Safety
Industrial safety incidents at hazardous production facilities
of entities covered by the UOHSMS
Number of injuries and fatalities resulting from accidents
and injury rates in entities covered by the UOHSMS
2017
2018
2019
Change 2019/2018
Injuries
26
16
10
−37.5%
2017
2018
2019
Fires at facilities of entities covered by the UOHSMS
2017
2018
2019
Change 2019/2018
Accidents across entities covered by the UOHSMS
2017
2018
2019
Change 2019/2018
4
3
2
−33.3%
49
63
37
−41.3%
2019 saw a signifi cant reduction in the number of injuries
caused by accidents and the number of man-made incidents
and fi res, as compared to previous years. However, the
number of accidents with fatalities increased to six (three in
2018) with seven employee deaths, including four employees
at gas and condensate processing facilities. OOO Gazprom
pererabotka conducted a number of investigations to identify
the root causes, followed by the development of technical,
organisational, and HR improvement measures.
For more details on the Unifi ed Occupational Health and Safety Management System
see PJSC Gazprom’s website
www.gazprom.com
Change 2019/2018
Fatalities
2017
2018
2019
Change 2019/2018
Lost time injury frequency rate (LTIFR)*
2017
2018
2019
Change 2019/2018
Fatal accident rate (FAR)**
2017
2018
2019
Change 2019/2018
61
89
47
−47.2%
6
3
7
133.3%
0.11
0.17
0.09
−47.1%
1.17
0.57
1.35
136.8%
y
t
i
l
i
i
b
s
n
o
p
s
e
R
* Lost time injuries/total hours worked by all employees × 1,000,000.
** Fatalities/total hours worked by all employees × 100,000,000.
A plan that included organisational and technical measures
to ensure fi re safety was implemented in the reporting period.
The plan consisted of 53 measures and resulted from a root
cause analysis of, and contributing factors to, fi res that
happened in the previous periods. The Company continuously
improves the performance of professional emergency
response services and fi re safety units that maintain and
protect PJSC Gazprom’s facilities.
Occupational Health and Safety at Gazprom Group
Entities Outside the UOHSMS
Gazprom Group has in place the Occupational Health and
Safety Management System across its oil, power generation
and petrochemical businesses.
147
PJSC Gazprom Annual Report 2019
Occupational Safety
Accidents across Gazprom Group
entities outside the UOHSMS
Gazprom Neft
Lost time injury frequency rate (LTIFR) across Gazprom Group
entities outside the UOHSMS
Gazprom Neft
0.33
0.26
0.26
–
0.25
0.28
0.12
−57.1%
0.14
–
0.13
0.92
0.89
1.56
75.3%
1.57
–
–
6.97
–
–
2017
2018
2019
36
*
29
33
2017
2018
2019
Change 2019/2018
Gazprom energoholding
13.8%
Change 2019/2018
Gazprom energoholding
2017
2018
2019
16
18
8
2017
2018
2019
Change 2019/2018
−55.6%
Change 2019/2018
Gazprom neftekhim Salavat
Gazprom neftekhim Salavat
2017
2018
2019
2
–
2
2017
2018
2019
* Number of people injured in accidents across Gazprom Neft in 2018 has been
adjusted from the number published in the 2018 Annual Report due to the fact that
6 accidents were found not to be production-related as a result of their investigation.
Note. Lost time injuries/total hours worked by all employees × 1,000,000.
Number of people injured in accidents across Gazprom Group
entities outside the UOHSMS
Fatal accident rate (FAR) across Gazprom Group
entities outside the UOHSMS
Gazprom Neft
Gazprom Neft
2017
2018
2019
36
29
34
2017
2018
2019
Change 2019/2018
Gazprom energoholding
17.2%
Change 2019/2018
Gazprom energoholding
16
18
8
−55.6%
2
–
2
2017
2018
2019
2017
2018
2019
Gazprom neftekhim Salavat
Note. Fatalities/total hours worked by all employees × 100,000,000.
2017
2018
2019
Change 2019/2018
Gazprom neftekhim Salavat
2017
2018
2019
148
PJSC Gazprom Annual Report 2019 Occupational Safety
Occupational health and safety management structure at Gazprom Group entities outside the UOHSMS
Subsidiary
Occupational health and safety management
Governance bodies and responsibilities
Gazprom Neft
Vertically integrated industrial and environmental
safety, occupational safety, and civil protection
management system
— Occupational Safety Department
(coordinates activities at the corporate
centre level)
— Expert Council on Occupational Safety
(engages production functions in
occupational safety issues)
Certifi cation
ISO 14001
Gazprom
energoholding
Occupational health and safety management
in line with the requirements of Russian laws
and applicable statutory regulations
Gazprom neftekhim
Salavat
Occupational Health and Safety Management
System
— Managing directors of Gazprom
–
energoholding Group companies
(coordinate activities)
— Chief engineers of Gazprom energoholding
Group companies and their branches,
structural subdivisions (responsible for
occupational safety)
— Deputy General Director — Chief Engineer,
Environmental, Health and Safety
Department (coordinates activities)
— Division managers (responsible for
occupational safety)
OHSAS 18001:2007 /
ISO 45001:2018,
GOST 12.0.230-2007
For more details on industrial safety across Gazprom Group see
Gazprom Group’s Sustainability Reports published on an annual basis
149
PJSC Gazprom Annual Report 2019
y
t
i
l
i
i
b
s
n
o
p
s
e
R
Environmental Protection
Gazprom sets a good example as environmentally
conscious company efficiently using green technologies
throughout the process chain. While steadily developing,
the Group has the lowest carbon footprint across the
world’s largest oil and gas companies. Gazprom’s
Environmental Policy is based on the aspiration to
maintain favorable environment for the benefit of present
and future generations.
Environmental responsibility is a key element in Gazprom
Group’s sustainable development strategy, based on the
corporate Environmental Policy (approved by Resolution of
the Company’s Management Committee No. 21 dated 21 May
2015) and effective environmental management system.
Environmental Policy
The Environmental Policy of PJSC Gazprom reflects current
trends in environmental protection, energy efficiency and
climate impact mitigation. It defines obligations and
mechanisms of following these trends, such as: ensuring
environmental security, including the development of hydro-
carbon fields on the continental shelf and in the Arctic zone
of the Russian Federation; mitigating environmental risks,
including the impact on particularly vulnerable natural sites
and areas of high conservation value. PJSC Gazprom’s
Environmental Policy was recommended by the Board of
Directors for adoption across Gazprom Group entities.
To reduce its environmental impact and maintain its competi-
tive edge in the global market, Gazprom pursues a targeted
policy of reducing greenhouse gas (GHG) emissions. The
Company implements the Programme for Expansion of Gas
Infrastructure in Russian Regions and consistently works
on developing NGV fuel markets, as well as on reducing its
carbon footprint.
The Environmental Policy is available on PJSC Gazprom’s website
www.gazprom.com
150
PJSC Gazprom Annual Report 2019 Environmental Protection
Gazprom Group’s efforts to reduce its carbon footprint
— The Corporate GHG Emissions Management System has been
Recognition of Gazprom Group’s environmental performance
by stakeholders
implemented
— Pipeline gas supplies via new routes (Nord Stream, TurkStream)
have the lowest carbon footprint among the existing routes of
natural gas supplies to Europe
— Since the trend towards low-carbon energy sources has strengthened
the role of hydrogen in the energy sector, PJSC Gazprom is running
hydrogen projects to demonstrate how natural gas can be used
in low-carbon power generation, such as production and use of
methane-hydrogen mixtures for own energy needs and development
of innovative technologies using natural gas to produce CO2-free
hydrogen
— Gazprom Group supports the use of alternative energy sources in
fi nancially and technically challenging circumstances, particularly in
remote or isolated areas with poor access to technology. Gazprom
Group uses renewable energy sources and secondary energy
resources to generate power. In 2019 Gazprom Group facilities used
2,358 generating units based on renewables and secondary energy
resources, such as hydro power turbines, turboexpanders, thermal
power generators, solar modules and panels, wind and solar
generators. The total electricity produced by the generating units
was 11.7 billion kWh
— Gazprom continued conversion of own equipment to natural gas.
By the end of 2019, the number of NGVs in the Gazprom Group
vehicle fl eet suitable for conversion to natural gas reached 55%
PJSC Gazprom’s climate policy and strategy on management
of GHG emissions and reduction of man-made impact on
the environment meets the requirements of the Russian
Federation for energy effi ciency, energy saving and environ-
mental protection.
PJSC Gazprom participates in international environ-
mental initiatives and ratings, living up to its environmental
commitment to the international community. In particular,
PJSC Gazprom has been a voluntary partner within the
Guiding Principles on Reducing Methane Emissions
across the Natural Gas Value Chain since 2018. Along with
PJSC Gazprom, the project has found support of 21 major
international energy companies.
Since 2018, PJSC Gazprom has been conducting
independent annual audits (certifi cations)
of corporate reporting on GHG emissions
Participation of PJSC Gazprom in the international Carbon
Disclosure Project (CDP) on GHG emissions disclosure is an
important part the Company’s efforts to improve transparency
of its activities and a factor driving its investment case.
— According to the CDP’s international rating, PJSC Gazprom has
been a top player in the energy sector of the Russian investment
partnership rating for eight years — a strong position refl ecting
the effectiveness of the corporate climate policy
In 2019, PJSC Gazprom became a leader in the Russian Union of
Industrialists and Entrepreneurs’ Transparency and Responsibility,
and Sustainable Development Vector sustainability indices
—
Rating results are used by the Company to improve its public
reporting, corporate responsibility and sustainability.
For more details on the Corporate Climate Policy, methane emissions and the carbon
footprint of natural gas supplies see Gazprom Group’s Sustainability Reports and
PJSC Gazprom’s Environmental Reports published on an annual basis
Environmental Management System
The Environmental Management System (EMS) is a key tool
to implement the Company’s Environmental Policy. The EMS
covers PJSC Gazprom’s business units, the Environmental
Inspection Service, and 34 wholly-owned subsidiaries
engaged in core activities: gas and condensate exploration,
production, transportation, storage, and processing, or
capital project management.
In 2019, PJSC Gazprom’s EMS underwent
an independent recertifi cation audit, receiving
a certifi cate of compliance with ISO 14001:2015,
valid until December 2020
Corporate Environmental Targets are set and environmental
activities are grouped into focused programmes within
PJSC Gazprom’s EMS and based on an annually updated
list of signifi cant environmental aspects. The Company’s
Corporate Environmental Targets are set for three-year
periods.
In 2019, PJSC Gazprom met all its Corporate Environmental
Targets for 2017–2019.
151
PJSC Gazprom Annual Report 2019
y
t
i
l
i
i
b
s
n
o
p
s
e
R
Environmental Protection
Achievement of PJSC Gazprom’s corporate environmental targets in 2019
№ Corporate Environmental Target
1
2
3
4
5
6
Reduction of methane emissions (when making gas transportation system repairs)
Reduction of specific emissions of nitrogen oxides
Reduction of waste and effluent water discharge into surface water bodies
Reduction of landfill share
Reduction of above-limit impact charges as an integrated negative environmental impact indicator
Reduction of specific fuel & energy consumption for own operational needs
Progress against the target
(vs the 2014 baseline)
Down 13.1%
Down 5.0%
Down 28.2%
Down 52.9%
Down 7.5%
Down 0.4%
In order to further improve performance, PJSC Gazprom’s
Corporate Environmental Targets for 2020–2022 were
approved in 2019, with the 2018 indicators adopted as a new
baseline. PJSC Gazprom’s Integrated Environmental
Programme for 2020–2024 was developed and approved in
the reporting year in order to implement measures aimed
at achieving the Corporate Environmental Targets.
The decrease in wastewater discharge into surface water
bodies across Gazprom Group is attributed to the transfer
of treatment facilities by the Troitskaya GRES, a branch of
PAO OGK-2, to the books of the Troitsk Administration.
The share of clean and treated as per standards wastewater
in the total volume discharged into surface water bodies
was 97.3%.
The Gazprom Group companies not covered by
PJSC Gazprom’s EMS also have in place their own effective,
business-specific environmental management systems.
The decrease in waste generation was due to lower
Class 5 (mostly bottom ash) waste levels at Gazprom energo-
holding’s facilities due to the fuel mix shift to natural gas.
100 %
of Gazprom Group subsidiaries and entities
covered by environmental reporting have adopted
the greenhouse gas stocktaking system
The area of land disturbed by construction was smaller in
the reporting year due to the completion of construction by
OOO Gazprom dobycha Urengoy and by OOO Gazprom
dobycha Nadym. At the same time the area of rehabilitated
land increased year-on-year. Supported by rehabilitation
plans, these activities will continue into 2020.
For more details on the environmental management systems in the Group companies
see PJSC Gazprom’s Environmental Report or information on the companies’ official
websites
Environmental Performance
and Environmental Protection Costs
The highest reduction of air pollutant emissions was registered
for sulphur dioxide due to replacement of coal and fuel oil
with natural gas in the fuel mix of Gazprom energoholding.
Reduction of specific GHG emissions in the gas business
Implementation of the Roadmap for the GHG Management System at
Gazprom Group Companies until 2020 and Looking Forward to 2030
helped reduce specific GHG emissions in the gas business according
to plan: from 0.275 tonnes of CO2 equivalent per toe of products sold in
2014 to 0.259 tonnes of CO2 equivalent per toe of products sold in 2019.
Key Roadmap activities included reduction of fuel gas consumption,
prevention of gas venting when making trunk gas pipeline repairs, and
reduction of methane emissions in production processes.
152
PJSC Gazprom Annual Report 2019 Environmental Protection
Gazprom Group’s environmental performance in Russia
Air pollutant emissions, thousand tonnes
carbon oxide
nitrogen oxides
sulphur dioxide
hydrocarbons (including methane)
GHG emissions, mm tonnes of CO2 equivalent
Wastewater discharge into surface water bodies, mmcm
including clean and treated as per standards
Waste generation, thousand tonnes
Area of land disturbed in the reporting year, thousand ha
Area of land rehabilitated during the year, thousand ha
Note. Excluding entities in which Gazprom has investments classifi ed as joint operations.
Lower current environmental protection costs in the Russian
Federation in 2019 mainly resulted from changes in recording
current operating costs within environmental protection
at OOO Gazprom neftekhim Salavat and, overall, had no
negative impact on environmental protection efforts.
The decline in capital expenditures on environmental
protection was due to the completion by Gazprom Neft of
a number of capital-intensive hydrocarbon exploration and
production projects in 2018.
Gazprom Group’s environmental protection costs in Russia, RUB bn
2017
2018
2019
2017
2,795.9
529.9
313.6
262.7
1,495.7
233.8
3,905.3
3,781.7
4,130.3
42.2
19.6
2018
2,894.0
594.1
328.6
276.2
1,497.8
240.0
3,658.4
3,579.5
3,555.1
25.8
15.8
2019
Change 2019/2018
2,862.7
596.4
307.7
221.5
1,542.6
236.5
3,241.8
3,152.7
3,337.1
22.9
17.7
−1.1%
0.4%
−6.4%
−19.8%
3.0%
−1.5%
−11.4%
−11.9%
−6.1%
−11.2%
12.0%
For more details on the capacities commissioned during the reporting year to
increase APG use see the Exploration and Production section
Current environmental protection costs
Capital expenditures for environmental protection and sustainable use
of natural resources
Negative environmental impact charges
Total
Note. Excluding entities in which Gazprom has investments classifi ed as joint operations.
2017
34.47
35.58
0.77
70.82
2018
39.15
29.19
0.62
68.96
2019
Change 2019/2018
32.18
−17.8%
20.42
0.62
53.22
−30.0%
–
−22.8%
153
PJSC Gazprom Annual Report 2019
y
t
i
l
i
i
b
s
n
o
p
s
e
R
Environmental Protection
Penalties and compensation for environmental damage in Russia
by Gazprom Group, RUB mm
Penalties
2017
2018
2019
Change 2019/2018
Compensation for environmental damage
2017
2018
2019
Total
including for previous years
Change 2019/2018
11
17
15
−11.8%
91
90
189
177
119
90
−37.0%
In the FSU countries, PJSC Gazprom operates through its
subsidiaries — OAO Gazprom transgaz Belarus, ZAO Gazprom
Armenia, and OsOO Gazprom Kyrgyzstan. From the date their
assets were acquired by PJSC Gazprom, these companies
have been putting much focus on upgrading production facil-
ities and enhancing environmental management systems in
line with PJSC Gazprom’s corporate standards and ISO 14001.
In the reporting year, OAO Gazprom transgaz Belarus con-
ducted a number of activities to reduce air pollutant emissions,
including the replacement of less sophisticated boilers at the
Syanno gas distribution station, the replacement of boiler
combustion equipment with adjustments to off-gas fume
collection piping at the Minskaya CS, reduction of gas venting
when conducting repairs or maintenance of pipeline valves
at the Orsha CS and the Orshanskaya CS. In addition to
these activities, the subsidiary optimised its production waste
management practices to reduce landfill waste.
In 2019, operations of PJSC Gazprom’s subsidiaries
outside Russia did not have a significant environmental impact.
Note. Excluding entities in which Gazprom has investments classified as joint operations.
For more details on Gazprom Group’s environmental performance and environmental
protection costs see PJSC Gazprom’s Environmental Report
Gazprom Group’s subsidiaries operating abroad are also
committed to minimising their environmental footprint in strict
compliance with both local regulations and PJSC Gazprom’s
Environmental Policy.
Gazprom EP International B.V., a single operator of
PJSC Gazprom’s projects focused on prospecting, exploration
and development of hydrocarbon fields outside the Russian
Federation, is using innovative technology and research
specifically aimed at minimising the environmental footprint.
154
PJSC Gazprom Annual Report 2019 Energy Saving and Energy Effi ciency
Saving and making the most of fuel and energy is an
important element of Gazprom’s sustainability and a tool
for streamlining its operations. In addition to economic,
these efforts have a tangible environmental effect.
Gazprom works consistently to save energy and improve
its energy effi ciency in accordance with the Energy Effi ciency
and Energy Saving Policy approved in 2018.
Commitments to continuously improve energy effi ciency,
save natural energy resources and further reduce GHG
emissions at its production facilities are met by the Company
in full and considered a top priority.
For more details on PJSC Gazprom’s energy saving efforts see PJSC Gazprom’s
website
www.gazprom.com
The Energy Effi ciency and Energy Saving Policy of PJSC Gazprom is available
on PJSC Gazprom’s website
www.gazprom.com
Key commitments in PJSC Gazprom’s Energy Effi ciency
and Energy Saving Policy
— Consistently improve energy effi ciency
— Save natural energy resources
— Further reduce GHG emissions from production facilities
PJSC Gazprom achieves its energy saving and energy
effi ciency improvement objectives through energy saving
initiatives run across all subsidiaries engaged in natural gas
transportation, production, processing, underground
storage and distribution, as well as in OOO Gazprom energo.
155
PJSC Gazprom Annual Report 2019
y
t
i
l
i
i
b
s
n
o
p
s
e
R
Energy Saving and Energy Efficiency
Fuel and energy consumption, mm t c.e.
Fuel and energy savings, mm t c.e
2017
2018
2019
60.86
65.03
63.13
2017
2018
2019
Change 2019/2018
−2.9%
Change 2019/2018
3.63
3.56
3.94
10.7%
Note. Fuel and energy consumption rates have been converted to t c.e. using the following
ratios: 1 mcm of gas = 1.155 t c.e.; 1 thousand kWh = 0.325 t c.e.; 1 thousand Gcal = 0.143 t c.e.
Note. Fuel and energy saving rates have been converted to t c.e. using the following ratios:
1 mcm of gas = 1.155 t c.e.; 1 thousand kWh = 0.325 t c.e.; 1 thousand Gcal = 0.143 t c.e.
Fuel and energy consumption by type
Fuel and energy savings by type
Natural gas, mmcm
Natural gas, mmcm
2017
2018
2019
Change 2019/2018
Electricity, million kWh
2017
2018
2019
Change 2019/2018
Heat, thousand Gcal
2017
2018
2019
46,416
49,870
48,272
−3.2%
12,497
12,958
12,887
−0.5%
22,312
22,565
22,642
2017
2018
2019
Change 2019/2018
Electricity, million kWh
2017
2018
2019
Change 2019/2018
Heat, thousand Gcal
2017
2018
2019
Change 2019/2018
0.3%
Change 2019/2018
6.2 %
fuel and energy savings in 2019
RUB13.5 bn
value of PJSC Gazprom’s fuel and energy savings
under the Energy Saving Programme in 2019
For more details on fuel and energy consumption and savings across all segments
by the subsidiaries covered by PJSC Gazprom’s energy saving programmes see
the Environmental Report and Gazprom Group’s Sustainability Reports published
on an annual basis
9.3 bcm
natural gas savings under the energy saving
programmes in 2017–2019
Value of fuel and energy savings, RUB bn
2017
2018
2019
Change 2019/2018
Note. Calculations are based on the actual energy prices in respective period.
3,014
2,952
3,287
11.3%
331
364
330
−9.3%
268
236
253
7.2%
11.6
12.0
13.5
12.5%
156
PJSC Gazprom Annual Report 2019 Energy Saving and Energy Effi ciency
As natural gas consumed by trunk gas pipelines accounts
for the largest share of the fuel and energy consumption mix
of the subsidiaries covered by PJSC Gazprom’s energy
saving programmes, key energy saving and energy effi ciency
improvement initiatives, such as deploying energy effi cient
equipment, are focused on natural gas.
In , Gazprom energoholding’s energy effi ciency
programme helped to save . mm t c.e. of fuel and energy
worth RUB . bn.
The economic effect from Gazprom Neft’s energy saving
programme was RUB . bn worth of fuel and energy.
For more details on energy saving programmes run by Gazprom Neft, Gazprom
energoholding and Gazprom neftekhim Salavat see their respective websites,
PJSC Gazprom’s Environmental Report, or Gazprom Group’s Sustainability Reports
published on an annual basis
Key energy saving and energy effi ciency improvement initiatives
under PJSC Gazprom’s energy saving programmes in
— Optimising operation modes for power generating equipment
at operating facilities
— Upgrading smart lighting, heating, and ventilation systems
— Replacing and upgrading gas pumping units to improve effi ciency
— Reducing fuel gas consumption by replacing the fl ow channels
at centrifugal gas compressors
— Reducing gas losses during well surveys and repairs on linear
sections of trunk gas pipelines
During the reporting year, PJSC Gazprom implemented an
extensive set of initiatives to improve its energy management
system: internal audits, continuous training of PJSC Gazprom
specialists in energy effi ciency and energy saving. In ,
PJSC Gazprom also certifi ed its corporate Energy Management
System for compliance with ISO :.
For more details on the Corporate Climate Policy see Gazprom Group’s sustainability
reports and environmental reports published on an annual basis
Gazprom Neft, Gazprom energoholding and Gazprom
neftekhim Salavat are not covered by PJSC Gazprom’s energy
saving programmes, as they have their own energy saving
and energy effi ciency programmes compliant with federal laws
and corporate requirements of Gazprom Group.
2.1 bcm
gas savings planned for under
the Energy Effi ciency Programme
PJSC Gazprom Annual Report 2019
y
t
i
l
i
i
b
s
n
o
p
s
e
R
Social Projects
Supporting culture, art, education, healthcare
and promoting sports is an integral part of Gazprom’s
operations. The Group supports a large number
of respective projects every year.
In order to promote social and economic development,
Gazprom Group undertakes a significant number of charity
and sponsorship initiatives. While most of the Group’s social
investments are in Russia, the geography of its operations
enables it to support certain social, cultural and sports
initiatives abroad.
For more details on the social initiatives of PJSC Gazprom and its subsidiaries
and entities see Gazprom Group’s Sustainability Reports published on an annual
basis or the Social Responsibility section of PJSC Gazprom’s website
www.gazprom.com
Charitable Activities
Gazprom Group’s charitable activities are aimed at supporting
the social and economic development of Russian regions,
strengthening its business image and improving partnership
relations in the regions of operation.
Over 3,000
charitable projects and initiatives financed
by Gazprom Group companies in 2019
PJSC Gazprom’s charitable expenditures, RUB bn
2017
2018
2019
27.3
35.0
27.7
Note. In accordance with the annual accounting (financial) statements of PJSC Gazprom.
PJSC Gazprom and its subsidiaries consistently provide
significant support to science, art, environmental, healthcare,
physical education and sports initiatives. A significant amount
of investments is allocated for construction and renovation
of sports and social infrastructure facilities, participation
in restoration projects aimed at preserving the historical and
cultural heritage and implementation of programmes to
support indigenous minorities of the Russian North. A special
emphasis is placed on preserving the historical memory of
the Great Patriotic War.
In 2019 PJSC Gazprom supported the launch
of Russia — My History historical parks in Surgut
and Chelyabinsk
158
PJSC Gazprom Annual Report 2019 Social Projects
Key charity efforts of PJSC Gazprom and its subsidiaries and entities in 2019
The Gazprom for Children Programme
Support for beautifi cation and
restoration of War Memorials in
Russia and FSU countries
Donations for maintaining Eternal Flame memorials in Russia’s Hero Cities and Cities of Military Glory
Maintaining a gas infrastructure for Eternal Flame memorials, including connecting both existing and new Eternal
Flame memorials to the gas grid instead of using gas cylinders
Support for beautifi cation of War Memorials
Restoring and renovating memorials and war grave sites
Supporting healthcare
Supporting construction and renovations of medical facilities
Supporting vulnerable groups
Financing charity events for children from foster, low-income, and large families, and children from care institutions
Supporting medical projects run by Dmitry Rogachev National Research Centre of Paediatric Haematology,
Oncology, and Immunology
Assistance in holding charity events for elderly people
Financing treatment courses for people with disabilities and severely ill children
Financing of projects aimed at providing comprehensive support to people with disabilities, including those related
to creating the environment for their social and cultural rehabilitation and unlocking their creative potential
Charitable support in acquisition of pharmaceuticals and medical devices
Support for victims of natural disasters and environmental catastrophes
Support for preserving cultural
and historical heritage and reviving
cultural and spiritual values
Participation in fi nancing the Russia — My History initiative
(an initiative for designing historical parks illustrating the history of the country and its individual regions
in a multimedia format using state-of-the-art technology)
Supporting church construction and renovation and restoration of religious sites and church complexes
Support for exhibition projects aimed at the preservation of cultural and historical heritage
Supporting the cultural education programmes run by the Russian Orthodox Church
Supporting research expeditions as well as expeditions dedicated to memorable dates in the history of Russia
Supporting culture and the arts
Assisting restoration projects in the Tsarskoye Selo State Museum-Preserve and the Chinese Palace in
Oranienbaum, part of the Peterhof State Museum-Reserve
Financial support for theatres, museums and musical groups
Support musical education and artistic projects for children
Supporting indigenous minorities of the Russian North
Supporting education
Running the Gazprom Classes project
Financial support for educational institutions with a particular focus on schools (renovation projects, provision
of equipment and specialised classrooms)
Support for awareness-raising projects
Supporting city science festivals for schoolchildren
Supporting sports
Supporting the athletes’ training programmes
Supporting organisations whose projects focus on environmental protection and population growth of rare animal species
Supporting sports events and competitions, including children’s and youth competitions
Supporting veteran organisations
159
PJSC Gazprom Annual Report 2019
y
t
i
l
i
i
b
s
n
o
p
s
e
R
Social Projects
34 locations
across 21Russian regions
were covered by the Gazprom for Children
Programme in 2019
Gazprom for Children Programme
The Programme aims to contribute a positive effect in the intellectual,
cultural and physical development of children and teenagers and involve
as many of them as possible in sports. PJSC Gazprom is the only Russian
company with such an ambitious social project.
Since the start of the Programme in 2007, 1,821 various facilities have
been built in Russia.
In 2019, the Group completed the construction of 164 sports facilities
under the Programme:
—
10 capital construction projects, including a large public indoor
fitness and health facility (Avangard Hockey Academy), two fitness
and health facilities with swimming pools in the Khabarovsk Territory
and one in Voronezh
154 outdoor sports fields, including 13 school stadiums and 141 multi-
courts
In 2019, 37 infrastructure projects were under construction.
—
PJSC Gazprom supported the complete restoration
of the Holy Rus painting by the outstanding artist
Mikhail Nesterov from the permanent exposition
of the State Russian Museum
Restoration projects implemented in 2019
in the Tsarskoe Selo State Museum and Heritage Site,
which were financed by PJSC Gazprom
— The Imperial Court Church of the Resurrection in the Catherine
Palace opened to visitors. The Company has provided financial
support for the restoration of the church since 2015
— The restoration of the Lyons Hall in the Catherine Palace was
completed. The ornate plafond, lapis-lazuli mosaic panels, braided
trims and silk walls and curtains have been restored. The project
was implemented with financial support from PJSC Gazprom and
the ENGIE Foundation of France
— A large-scale restoration project titled The Private Space of
Catherine II was launched to revive eight interiors in the Zubov Wing
of the Catherine Palace
Over100
artifacts from the Beijing Palace Museum (Gugong)
(China) collection were presented at an exhibition
in the Moscow Kremlin Museums supported
by PJSC Gazprom
160
Employees from across Gazprom Group entities are actively
involved in charitable activities. Employees join voluntary
service, directly participate in repair and restoration, provide
targeted assistance, implement environmental initiatives and
revive arts patronage traditions.
Gazprom Group’s gas distribution entities
cleaned up and prepared for the Victory Day in 2019
1,331 Eternal Flame memorials
Football for Friendship International Children’s Social Programme
The Programme aims is to support children’s and youth sports, promote
a healthy and active lifestyle and build respect among the younger
generation for national and cultural diversity.
The reporting year saw the eighth season of the Programme. From
20 May to 2 June, Viktor Zubkov, Chairman of PJSC Gazprom’s Board of
Directors, attended the UEFA Champions League Final official closing
events in Madrid. Over 800 children and adults from Europe, Asia, Africa,
South and North America took part in the events. On the eve of the finals,
young athletes of Football for Friendship from different countries took
part in the most diverse football lesson on the planet and set the Guinness
World Record.
The International Football for Friendship Coaches Academy was
also launched as part of the project in June 2019. The Academy is
a unique free online platform offering a set of practical exercises aimed
at improving the skills of coaches from youth teams, physical education
teachers and football club coaches. The training course was developed
by the authors of sports and humanitarian educational programmes of
the Football for Friendship project — training managers and coaches of
football clubs’ academies of different countries and experts from FIFA’s
humanitarian programmes. By the end of 2019, the Academy had trained
more than 4,000 people.
Sponsorships
PJSC Gazprom, its subsidiaries and entities sponsor sports
federations, clubs and professional tournaments, act as
partners in many significant cultural, social and business
events held both in Russia and abroad.
Sponsorship projects help Gazprom Group entities
effectively inform the public about their production activities,
efforts to support a large number of initiatives in education,
culture, sports, promotion of a healthy lifestyle and responsible
attitude towards the environment. Sponsored business events
(forums and congresses) are held with the participation of
top state officials and attract participants from many countries.
Over180
projects and events sponsored by Gazprom Group
companies in 2019
PJSC Gazprom Annual Report 2019 Social Projects
Key sponsorship efforts of PJSC Gazprom and its subsidiaries and entities in 2019
Supporting sports
Partnerships with UEFA
Sponsoring the Russian Olympic Committee and Russian national teams in competition preparation
and participation
Sponsoring sports federations and sports clubs
Sponsoring competitions and sports events
Sponsoring the Energy of Victories national sports journalism festival contest
Supporting cultural and art projects Sponsoring Children’s Radio
Sponsoring exhibition projects
Sponsoring business events
Sponsoring the Sound of a Beautiful Past. Russian Porcelain
from the Hermitage exhibition in the Vietnam National Museum
of History in Hanoi
Expanding the geography of international cultural cooperation, Gazprom
EP International, a subsidiary of the Group, supported the Sounds of
a Beautiful Past exhibition of Russian porcelain in the Vietnam National
Museum of History in 2019, organised by the State Hermitage, the Vietnam
National Museum of History, the Imperial Porcelain Factory (Russia) and
the G�m Chu �u Porcelain Factory (Vietnam). The project was one of the
key cultural events of Russia–Vietnam bilateral year 2019/2020. The concept
of the exhibition is remarkable in that it combines historical heritage
and contemporary art, conveying their deep relationship. Contemporary
art forms and aesthetics symbolise progress and innovation, values that
Gazprom Group fully shares.
Major business forums supported by PJSC Gazprom
and its subsidiaries and entities in 2019
— 9th St Petersburg International Gas Forum
— Sochi International Investment Forum
— 23rd St Petersburg International Economic Forum
— 5th Eastern Economic Forum in Vladivostok
—
— Russian Energy Week International Forum 2019
— Global Manufacturing and Industrialisation Summit held
10th Gaidar Forum, Russia and the World: Values and Virtues
in Yekaterinburg
— 5th International Arctic Forum Arctic: Territory of Dialogue
Sponsoring sports federations and sports clubs, as well as competitions and sporting events in 2019
Sport
Football
Ice hockey
Volleyball
Basketball
Sponsorship recipient
Zenit, Tom, Volgar and Orenburg clubs
SKA, Avangard and Vityaz clubs
Volleyball Federation of Russia and the Zenit-Kazan, Zenit-Saint Petersburg, Fakel and Gazprom-Yugra clubs
Zenit and Khimki clubs
Rhythmic Gymnastics
Rhythmic Gymnastics Federation of Russia
Swimming
Biathlon
Russian Swimming Federation
Russian Biathlon Union
Kayaking and canoeing
Russian Canoe Federation
Billiards
Tennis
Table tennis
Auto racing
Sailing sports
Aeronautics
Handball
Federation of Billiard Sports of Russia
St. Petersburg Ladies Trophy WTA women’s tournament, St. Petersburg Open ATP men’s tournament
Fakel-Gazprom club
Silk Way International Rally
Nord Stream Race — an offshore regatta for the Baltic region champion teams; Bronenosec Sailing Team, Saint
Petersburg Yacht Club
24th International Balloon Meet, which involves the Russian Hot Air Balloon Championship (Russia, Velikiye Luki)
SEHA Gazprom League, a handball association in Southeast Europe
161
PJSC Gazprom Annual Report 2019
y
t
i
l
i
i
b
s
n
o
p
s
e
R
Corporate
Governance
162
PJSC Gazprom Annual Report 2019
PJSC Gazprom Annual Report 2019 Letter to Shareholders
by the Chairman of PJSC Gazprom’s
Board of Directors 164
PJSC Gazprom’s Corporate Governance Compliance
Report, including Statement of Compliance
with the Corporate Governance Principles Set Out
in the Russian Corporate Governance Code 165
PJSC Gazprom’s Corporate Governance Model 169
Board of Directors’ Report on PJSC Gazprom’s
Development in Priority Business Areas 177
Remuneration of Members of Governing
and Supervisory Bodies 180
Liability Insurance of Directors, Officers
and the Company 185
Shareholdings of Members of the Board of Directors
and Management Committee and Transactions
with PJSC Gazprom Shares 186
Internal Audit 188
External Audit 190
Risk Management and Internal Control 191
Procurement Performance 197
Ensuring Compliance of Operations
with Legal Requirements 201
Share Capital and Securities Market 207
163
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
PJSC Gazprom Annual Report 2019
Letter to Shareholders
by the Chairman of PJSC Gazprom’s
Board of Directors
Dear Shareholders,
In 2019, PJSC Gazprom maintained its course on strategic priorities and posted strong opera-
tional and fi nancial performance while also focusing on corporate governance.
Gazprom continued its efforts to develop corporate ethics policies and implement the
Code of Corporate Ethics of PJSC Gazprom across over 300 controlled entities at the second
and subsequent levels of ownership.
In 2019, the Company made a number of important corporate governance decisions
aligned with the interests of its shareholders and longer-range growth targets.
First and foremost, these decisions were aimed at structural shifts and staff changes.
Over the course of the year, Gazprom signifi cantly modifi ed the organisation of PJSC Gazprom’s
Administration, announcing a number of new appointments to some key positions. These
large-scale changes are intended to enhance the overall effi ciency of the Company and
eliminate overlapping functions across business units.
In December, the Board of Directors approved the new Dividend Policy of PJSC Gazprom,
which places the utmost focus on dividend accrual simplicity and transparency. The new formula
is based on the Group’s IFRS net profi t adjusted for fi ve non-cash items. The Company
expects to increase its dividend payout ratio to 50% of adjusted IFRS net profi t within a three-
year period.
Investors have positively responded to the steps taken by the Company: PJSC Gazprom
fi nished the year as Russia’s largest company by market capitalisation.
In 2020, the Company is planning to further increase its transparency, maintain a dialogue
with the investment community and enhance corporate governance practices across its
controlled entities. The Company is also developing a long-term top management incentive
programme tied to PJSC Gazprom’s share performance.
Dear Shareholders, the Board of Directors will continue to be actively involved in the life
of the Company. Gazprom will use a prudent, responsible and ethical approach to address its
business objectives in the best interests of its shareholders and society at large.
Viktor Zubkov
Chairman of PJSC Gazprom’s Board of Directors
164
PJSC Gazprom Annual Report 2019
PJSC Gazprom’s Corporate Governance Compliance
Report, including Statement of Compliance
with the Corporate Governance Principles Set Out
in the Russian Corporate Governance Code
Key documents of PJSC Gazprom ensuring protection
of shareholder rights
— Articles of Association of Public Joint Stock Company Gazprom
(amended in 2019)
— Code of Corporate Governance of PJSC Gazprom
— Code of Corporate Ethics of PJSC Gazprom (amended in 2019)
— Dividend Policy of Public Joint Stock Company Gazprom (approved
in 2019)
— Regulations on the General Shareholders Meeting of PJSC Gazprom
(amended in 2019)
— Regulations on the Board of Directors of PJSC Gazprom (amended
—
in 2019)
Induction Programme for First-Time Elected Members of the Board
of Directors of PJSC Gazprom (approved in 2019)
— Regulations on the Audit Committee of JSC Gazprom’s Board
of Directors (amended in 2019)
— Regulations on the Nomination and Remuneration Committee
of PJSC Gazprom’s Board of Directors (amended in 2019)
— Regulations on the Management Committee of PJSC Gazprom
(amended in 2019)
— Regulations on the Chairman of the Management Committee
of PJSC Gazprom
— Regulations on the Audit Commission of JSC Gazprom, new version
— Procedure for Documenting Shareholder Proposals and Requests
Related to the Convocation of the General Shareholders Meeting
of PJSC Gazprom
— Procedure for Providing Information about PJSC Gazprom
to Shareholders
— Regulations on Information Disclosure by PJSC Gazprom
— Regulations on Monitoring Compliance with Laws on Countering
the Illegal Use of Insider Information and Market Manipulation
at PJSC Gazprom (approved in 2019)
— Anti-Corruption Policy of PJSC Gazprom
— Regulations on the Hotline for Fighting Fraud, Corruption and
Embezzlement at Gazprom Group
PJSC Gazprom’s Articles of Association and other internal documents are available
on PJSC Gazprom’s website
www.gazprom.com
PJSC Gazprom’s activities are based on key generally
accepted principles of corporate governance, which meet,
inter alia:
— key recommendations of the Corporate Governance
Code approved by the Board of Directors of the Bank
of Russia on 21 March 2014 and recommended by the
Bank of Russia as a guidance for all publicly traded joint
stock companies (the “Russian Corporate Governance
Code” or the “Code”)
listing rules of Russian stock exchanges
—
— corporate governance guidance of the federal executive
authorities of the Russian Federation
— Russian and international best practices.
PJSC Gazprom’s Board of Directors believes that
compliance with the principles and recommendations set out
in the Russian Corporate Governance Code, is key to the
Company’s long-term growth and stronger investment case.
In accordance with the requirements of paragraph 70.4.
of the Regulations on Disclosing Information by the Issuers of
Issue-Grade Securities No. 454-P approved by the Bank of
Russia on 30 December 2014, key principles and recommen-
dations of the Russian Corporate Governance Code not fully
complied or not complied with at PJSC Gazprom are listed
below, along with the description of corporate governance
mechanisms and tools used by PJSC Gazprom instead of
those recommended by the Russian Corporate Governance
Code. PJSC Gazprom includes in the key provisions of the
Code principles and recommendations that correspond to
the mandatory requirements of Russian stock exchanges
(PAO Moscow Exchange and PAO Saint Petersburg Exchange)
applicable to issuers’ corporate governance for the purposes
of inclusion of their shares in the first (top) level quotation
list, which are mandatory for PJSC Gazprom to maintain its
top listing on these exchanges.
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
165165
PJSC Gazprom Annual Report 2019
PJSC Gazprom’s Corporate Governance Compliance
Report, including Statement of Compliance
with the Corporate Governance Principles Set Out
in the Russian Corporate Governance Code
1
The Code recommends that independent directors
2 To preview matters of supervision over the
constitute at least one third of the elected members
of the board of directors
(paragraph 2.4.3 of the Code)
In 2019, the Company did not comply with this principle
of the Code.
The Board of Directors of PJSC Gazprom (11 mem-
bers) was elected by the Annual General Shareholders
Meeting on 28 June 2019 from among the nominees
proposed by shareholders.
The Board of Directors included three independent
directors, who were determined to be independent by
Resolution of the Board of Directors of PJSC Gazprom
No. 3287 dated 25 June 2019, as part of the procedures
set forth in the listing rules of Russian stock exchanges
and the Russian Corporate Governance Code. As part
of discussing the matter of Determining certain nominees
to PJSC Gazprom’s Board of Directors as independent
nominees to PJSC Gazprom’s Board of Directors,
PJSC Gazprom’s Board of Directors passed a resolution
determining Timur Kulibaev, Viktor Martynov and Vladimir
Mau to be independent nominees to PJSC Gazprom’s
Board of Directors although Timur Kulibaev and
Vladimir Mau met the formal criteria of being related to
PJSC Gazprom, Vladimir Mau and Viktor Martynov met
the formal criteria of being related to the state, and
Viktor Martynov met the formal criteria of being related
to PJSC Gazprom’s significant counterparty, as it does
not affect their ability to make impartial and independent
judgements in good faith considering their professional
experience, knowledge and business reputation.
company’s financial and business performance,
the Code recommends to set up an audit committee
comprised of independent directors
(paragraph 2.8.1, Recommendation 173 of the Code)
To preview matters of adopting an effective and
transparent remuneration scheme, the Code
recommends to set up a remuneration committee
comprised of independent directors and headed
by an independent director who is not the chairman
of the board of directors
(paragraph 2.8.2, Recommendation 179 of the Code)
To preview matters of talent management
(succession planning), professional composition
and efficiency of the board of directors, the Code
recommends to set up a nomination (appointments
and HR) committee, predominantly comprised
of independent directors
(paragraph 2.8.3 of the Code)
Where setting up a separate nomination committee
is not practicable, its functions may be assigned
to any other committee of the board of directors,
i.e. a corporate governance committee or
a remuneration committee
(Recommendation 185 of the Code)
In 2019, PJSC Gazprom partially complied with these
principles of the Code due in part to objective reasons
related to an insufficient number of independent
directors on the Board of Directors. At the same time,
independent directors Viktor Martynov and Vladimir
Mau represent the majority in the composition of the
Board of Directors’ Audit Committee and the Board
of Directors’ Nomination and Remuneration Committee
formed by the Board of Directors of PJSC Gazprom in
the reporting year, and Mikhail Sereda who sits on both
Committees, is not a member of the Management
Committee of PJSC Gazprom. An independent director,
Viktor Martynov, serves as Chairman of the Audit
Committee of the Board of Directors.
This approach complies with the Moscow Exchange
Listing Rules, according to which, if for objective reasons
it is impossible for all committee members to have the
status of independent director, independent directors
must be a majority of committee members, and the
remaining committee members may be members of the
Board of Directors who are not the sole executive body
and/or members of the issuer’s collective executive
body.
166
PJSC Gazprom Annual Report 2019
PJSC Gazprom’s Corporate Governance Compliance
Report, including Statement of Compliance
with the Corporate Governance Principles Set Out
in the Russian Corporate Governance Code
PAO Moscow Exchange and PAO Saint Petersburg Exchange
confirm the compliance of PJSC Gazprom’s corporate
governance with the listing rules of stock exchanges, as
required to maintain the shares on the first (top) level
quotation list.
PJSC Gazprom continuously improves its corporate
governance system. When shaping approaches to enhance-
ment of its corporate governance, PJSC Gazprom primarily
refers to its role in the national and global economy as a leader
in the global energy market and the national capital market.
In 2018, following a scheduled independent audit of the
corporate governance, PJSC Gazprom developed a Further
Corporate Governance Enhancement Plan of PJSC Gazprom
for 2018–2019. All scheduled and a number of unscheduled
corporate governance enhancement activities have been
completed by PJSC Gazprom in the reporting year.
The Company continues to enhance its corporate gover-
nance standards in line with recommendations of independent
experts who conduct scheduled independent audits of
PJSC Gazprom’s corporate governance practice.
PJSC Gazprom heavily relies on the Russian Corporate
Governance Code in enhancing its corporate
governance system
Enhancement of PJSC Gazprom’s corporate governance standards
Focus area
Progress in 2019
Plans for 2020
PJSC Gazprom’s Long-Term Development Programme approved by the
resolution of PJSC Gazprom’s Board of Directors in 2019, expanded to the
oil and power generation businesses of Gazprom Group.
PJSC Gazprom’s Articles of Association and the Regulations on the
General Shareholders Meeting of PJSC Gazprom stipulate procedures for
electronic voting at the General Shareholders Meeting.
Launch electronic voting
at the General Shareholders
Meeting.
Strategic planning
Shareholder rights
Governing bodies
A new version of the Dividend Policy of PJSC Gazprom was approved.
PJSC Gazprom’s quasi-treasury shares were sold (2.93% and 3.59% of
the authorised capital of PJSC Gazprom).
The Regulations on the Board of Directors of PJSC Gazprom were
supplemented by provisions on identifying and preventing conflicts of
interest of Board members.
Performance of PJSC Gazprom’s Board of Directors, the Audit Committee,
and the Nomination and Remuneration Committee was duly assessed
by means of a written survey (questionnaires) covering their composition
and profile, activities, and key functions (the performance assessment
was recommended by the Russian Corporate Governance Code).
The Induction Programme for First-Time Elected Members of the Board
of Directors of PJSC Gazprom was approved.
Corporate ethics
The Code of Corporate Ethics of PJSC Gazprom was amended in order
to extend its provisions to members of PJSC Gazprom’s Board of Directors.
The Code compliance clause for the Company’s contracts with
counterparties was drafted.
The standards of corporate ethics were extended to members of boards
of directors at entities controlled by PJSC Gazprom.
Employees of such entities started taking ethical awareness tests on
a regular basis.
Under the Further Corporate Governance Enhancement Plan of PJSC Gazprom for 2018–2019.
167167
Obtain the National Rating
of Corporate Governance.
Continue with the National
Anti-Corruption Plan for 2018–2020,
including annual retraining
for eligible employee categories.
Enhance corporate ethics standards
at controlled entities, including the
extension of restrictions to
members of their boards of
directors, as well as regular training
of their employees followed by final
knowledge tests.
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
PJSC Gazprom Annual Report 2019
PJSC Gazprom’s Corporate Governance Compliance
Report, including Statement of Compliance
with the Corporate Governance Principles Set Out
in the Russian Corporate Governance Code
Enhancement of PJSC Gazprom’s corporate governance standards (continued)
Focus area
Progress in 2019
Insider information protection
A new version of the Regulations On Monitoring Compliance with Laws on
Countering the Illegal Use of Insider Information and Market Manipulation
at PJSC Gazprom was approved. The new version sets forth a general
monitoring profile for monitoring compliance of PJSC Gazprom with the
requirements of Federal Law No. 224-FZ On Countering the Misuse of
Insider Information and Market Manipulation and Amending Certain Laws
of the Russian Federation dated 27 July 2010 and with relevant regulations
adopted thereunder.
Information disclosure
Plans for 2020
Further improvement of safeguards
to protect insider information,
including:
— drafting a new version of the
Regulations on Access to
Insider Information of Joint
Stock Company Gazprom and
Maintaining its Confidentiality
— development of internal
controls to identify and
prevent misuse of insider
information and/or market
manipulation.
Hold public hearings on the draft
Gazprom Group’s Sustainability
Report 2019.
Shareholder and investor relations
The practice of interfacing with the investment community and shareholders
was continued at conferences, meetings in the offices of Company, in
a conference call format, as well as during the Investor Day.
Conduct a survey of ADR holders
on possible corporate governance
enhancement measures.
Targeted meetings of independent directors (Vladimir Mau and Viktor
Martynov) with investors were held, including meetings on matters pertaining
to the environment, environmental protection, and corporate governance.
Dedicated foreign roadshows on corporate governance were conducted.
Continue meetings of independent
directors with investors and
management on the environment,
environmental protection and
corporate governance.
168
PJSC Gazprom Annual Report 2019 PJSC Gazprom’s Corporate Governance Model
The corporate governance model in place at PJSC Gazprom
relies on Russian laws, the requirements of Russian stock
exchanges applicable to issuers whose shares have been
included in the first (top) level quotation list.
The Company’s Corporate Governance Model ensures
robust corporate governance while protecting the interests
of shareholders and maintaining the highest standards of
disclosure.
This model also implies the establishment and continuous
operation of an effective risk management and internal
control system and provides for a clear division of roles and
responsibilities and a performance assessment framework
for each governing body of PJSC Gazprom. In addition,
PJSC Gazprom’s corporate governance model and practice
reflect particularly high levels of transparency and commit-
ment to shareholder interests.
Significant aspects of the Company’s corporate governance model and practices
Priority of shareholder rights and interests
Informational transparency
Strategic decisions at PJSC Gazprom are made with due consideration
of their impact on all shareholders
Strategic governance
of the Company
by the Board of Directors
Effective supervision over
the executive bodies
by the Board of Directors;
accountability of governing bodies
to shareholders
The Company consistently keeps its investors and shareholders
informed of all key events and intentions.
PJSC Gazprom fosters an ongoing dialogue with shareholders,
diverse investor groups and analysts
Balanced and efficient
internal audit
and risk management
Division of roles
and responsibilities
in Company management
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
169169
PJSC Gazprom Annual Report 2019
PJSC Gazprom’s Corporate Governance Model
PJSC Gazprom’s Corporate Governance Structure
External Auditor
approves
General Shareholders Meeting
Audit Commission
reports to
elects
Audit Committee
Department responsible
for internal audit
Coordinating Committee
for Shareholder and Investor
Relations
Coordinating Committee
for Responsible Use
of Natural Resources
s
t
c
e
e
l
o
t
s
t
r
o
p
e
r
develops
recommendations
elects
Board
of Directors
reports to
resolves
on appointments
(dismissals)
of executives
s
t
c
e
e
l
p
u
s
t
e
s
o
t
s
t
r
o
p
e
r
o
t
s
t
r
o
p
e
r
Business units with
Corporate Secretary roles
Nomination and Remuneration
Committee
Commission on Strengthening
Financial Discipline for Domestic
Gas Supplies
approves
appointments
(dismissals)
of executives
report to
elects
develops
recommendations
establishes
develops
recommendations
r
e
p
o
r
t
s
t
o
reports to
Chairman of the
Management Committee
determines
Business unit responsible
for insider information
leads
Management
sets up
sets up
reports to
s
d
a
e
l
o
t
s
t
r
o
p
e
r
Management Committee
The basic principles of the Company’s corporate governance
are set forth in the Code of Corporate Governance of
PJSC Gazprom, the new version of which was approved by
the General Shareholders Meeting of PJSC Gazprom on
30 June 2017.
PJSC Gazprom’s corporate governance pillars include
governing and supervisory bodies: the General Shareholders
Meeting, the Board of Directors, the Management Committee,
the Chairman of the Management Committee and the Audit
Commission.
The Audit Committee of PJSC Gazprom’s Board of
Directors and the Nomination and Remuneration Committee
of PJSC Gazprom’s Board of Directors have been established
under PJSC Gazprom’s Board of Directors. Their purpose
is to preview the most important matters of PJSC Gazprom’s
business reserved to the Board of Directors.
Financial and business operations of the Company are
reviewed by an independent external auditor.
The Department of the Management Committee
Administration is responsible for internal audit, performs
an impartial assessment of internal controls and develops
improvement recommendations.
In order to maintain a transparent and constructive
dialogue with the investment community, PJSC Gazprom has
in place the Coordinating Committee for Shareholder and
Investor Relations (set up by JSC Gazprom’s Order No. 292
dated 17 November 2008). Relations with the investment
community are governed by the annual plan of the Coordi-
nating Committee.
170
PJSC Gazprom Annual Report 2019
PJSC Gazprom’s Corporate Governance Model
PJSC Gazprom has in place the role of Corporate Secretary
(Resolution of the Board of Directors No. 2817 dated 30 Sep-
tember 2016). The functionality of the Corporate Secretary
is distributed, to the extent recommended by the Russian
Corporate Governance Code, among several business units
of the Company, in line with the regulations governing their
functions as approved by the Board of Directors.
PJSC Gazprom also has in place the Coordinating
Committee for Responsible Use of Natural Resources. The
Company’s environmental management system covers
different levels of management, from the Board of Directors
to branches and production facilities of its subsidiaries. To
ensure an integrated approach and coordinate the environ-
mental management activities of PJSC Gazprom’s business
units, PJSC Gazprom has in place a permanent Working
Group for EMS Enhancement.
General Shareholders Meeting
General Shareholders Meeting is the supreme governing
body of PJSC Gazprom and is held on an annual basis. Any
General Shareholders Meeting other than the Annual General
Shareholders Meeting shall be deemed extraordinary.
Annual General Shareholders Meeting held on 28 June 2019
— Held in person (in the form of joint attendance of shareholders to
discuss agenda items and pass resolutions on matters put to vote)
— Location — Saint Petersburg
— The quorum required to pass resolutions on all the agenda items
was present
— Resolutions were passed on the following agenda items
The Meeting approved PJSC Gazprom’s Annual Report, the
Company’s annual accounting (financial) statements, dividend amount
(RUB 16.61 per share), the dividend record date — 18 July 2019, deadline to
receive dividends for the nominee shareholders and trustees who are
professional security traders recorded in the Register of Shareholders —
01 August 2019, and for the rest of the registered shareholders — 22 August
2019. Limited Liability Company Financial and Accounting Consultants was
approved as PJSC Gazprom’s auditor. Amendments to PJSC Gazprom’s
Articles of Association, the Regulations on the General Shareholders
Meeting of PJSC Gazprom, the Regulations on the Board of Directors
of PJSC Gazprom, the Regulations on the Management Committee of
PJSC Gazprom were also approved.
The Meeting resolved to distribute PJSC Gazprom’s profit for 2018
and pay remuneration to members of PJSC Gazprom’s Board of Directors
and Audit Commission holding no public office in the amount stipulated
by the Company’s internal documents.
The Meeting elected a new Board of Directors and Audit Commission
of PJSC Gazprom, and also resolved on invalidation PJSC Gazprom’s
Dividend Payout Procedure.
The voting power at General Shareholders Meetings is
attributed to holders of the Company ordinary shares. Any
shareholder may participate in a General Shareholders
Meeting in person or by proxy. A General Shareholders
Meeting is duly constituted if attended by the shareholders
holding in aggregate more than a half of voting shares.
The responsibilities of the General Shareholders Meeting
include, inter alia, amending PJSC Gazprom’s Articles of
Association, approving annual reports and the Company’s
auditor, distributing profit, electing members to the Board of
Directors and the Audit Commission, making decisions on
reorganisation or liquidation of PJSC Gazprom and on increase
or decrease of the Company’s charter capital.
In 2019, PJSC Gazprom held its Annual General Share-
holders Meeting on 28 June.
PJSC Gazprom held no extraordinary General Sharehold-
ers Meetings in 2019.
PJSC Gazprom’s Board of Directors
The Board of Directors is responsible for the general manage-
ment of PJSC Gazprom’s operations, excluding matters
reserved to the General Shareholders Meeting. The Company’s
Board of Directors is elected by the General Shareholders
Meeting until the next Annual General Shareholders Meeting.
The Board of Directors determines the Company’s
business priorities, approves the annual budget and invest-
ment programmes, makes decisions on convening General
Shareholders Meetings and setting up executive bodies
of PJSC Gazprom, develops recommendations on per share
dividend payouts, and resolves other matters reserved to the
Board of Directors by PJSC Gazprom’s Articles of Association.
Performance assessment of PJSC Gazprom’s Board of Directors
and its committees
As recommended by the Russian Corporate Governance Code, the
performance of PJSC Gazprom’s Board of Directors, Audit Committee,
and Nomination and Remuneration Committee has been assessed
in-house on an annual basis since 2018.
The assessment is carried out through a written survey (question-
naires) covering the following key areas:
— composition and profile
— activities
— key functions.
The assessment results are reviewed at the Board of Directors’
meeting.
Based on the 2019 self-assessment, the Board
of Directors and its committees were highly praised
with no comments made to challenge their activities
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
171171
PJSC Gazprom Annual Report 2019
PJSC Gazprom’s Corporate Governance Model
The Board of Directors of PJSC Gazprom has a well-balanced
composition to ensure the performance of their tasks for the
benefit of all shareholders and the Company as a whole.
Composition of the Board of Directors by status, %
Executive director
Non-executive director
Independent director
27
46
27
The activities of PJSC Gazprom’s Board of Directors are
governed by the duly approved six-month activity plans. In
2019, the Board of Directors held a total of 55 meetings,
including 13 meetings held in person and 42 meetings held in
absentia. At these meetings, the Board of Directors passed
166 resolutions, including 48 resolutions in person and
118 resolutions in absentia.
In 2019, the share of items related to enhancing the
corporate governance on the Board’s agenda was higher
than in 2018. During the reporting year, members of the Board
of Directors were actively involved in its activities — the
overall attendance rate for both in-person and in-absentia
meetings was 99%.
Matters reviewed by PJSC Gazprom’s Board of Directors
in 2019, by line of business, %
Strategic development
Enhancing corporate governance
Financial and business activity,
investment activity
HR policy
Audit
28
25
25
18
4
The full list of agenda items reviewed by PJSC Gazprom’s Board of Directors in 2019
is available on PJSC Gazprom’s website
www.gazprom.com
PJSC Gazprom has in place internal controls
to monitor the execution of instructions given
by PJSC Gazprom’s Board of Directors
Approval of the Induction Programme for First-Time Elected Members of the Board of Directors of PJSC Gazprom
(Resolution of the Board of Directors No. 3304 dated 7 August 2019)
Key provisions
Meaning
The Programme describes the induction of first-time elected members of PJSC Gazprom’s Board of Directors and
the procedure for providing information on PJSC Gazprom’s activities, including documents and materials required
to resolve matters reserved to PJSC Gazprom’s Board of Directors.
The Bank of Russia recommends that companies develop such programmes and deems them a pre-condition for
a fair self-assessment of a board of directors’ performance. The concept of an induction programme (an orientation
process) for new directors complies with the G20/OECD international corporate governance principles. Since
shareholders participate in governing PJSC Gazprom indirectly, through their elected members of the Board of
Directors, the adoption of the document is also aimed at exercising shareholder rights.
Committees of the Board of Directors
Audit Committee of the Board of Directors
The committees’ priorities are to conduct holistic previews
of selected matters reserved to the Board of Directors of
PJSC Gazprom and develop recommendations on resolutions
for the Board of Directors.
In 2019, the Audit Committee of PJSC Gazprom’s Board of
Directors continued its work. The Committee reports to the
Board of Directors and operates as set forth in the Regulations
on the Audit Committee of JSC Gazprom’s Board of Directors
approved by Resolution of the Board of Directors of the
Company No. 2314 dated 25 February 2014 (with subsequent
amendments approved by Resolution No. 3333 of the Board
of Directors of PJSC Gazprom dated 29 October 2019).
172
PJSC Gazprom Annual Report 2019
PJSC Gazprom’s Corporate Governance Model
Committee is primarily responsible for: reviewing the
Company’s financial statements for completeness, accuracy
and reliability; reviewing the reliability and effectiveness of
the risk management and internal control system; assurance
of independence and fairness of the internal and external
audit; assessment of proposed Company’s auditors and
reviewing the auditor’s opinion.
Composition of the Board of Directors’ Audit Committee in 2019
— Committee Chairman:
Viktor Martynov (independent director)
— Committee members:
Mikhail Sereda, Vladimir Mau (independent director)
The Audit Committee of PJSC Gazprom’s Board of Directors
addressed the specific planned activities, meeting at least
on a quarterly basis. In 2019, the Committee held 9 meetings,
including 2 meetings held in person. In 2019, the Committee
reviewed the information of OOO FBK on the most important
audit matters pertaining to PJSC Gazprom and its subsidiaries,
the external auditor’s reports on ensuring an independent
and robust external audit, as well as on the corporate risk
management system of PJSC Gazprom, risk assessments
and regular updates.
The key relevant recommendations made by the Com-
mittee to the Board of Directors concerned compliance and
alignment with provisions of the Russian Corporate Gover-
nance Code. External and internal audits were determined to
have been duly conducted, with no comments made.
The full list of matters reviewed by the Audit Committee of PJSC Gazprom’s Board
of Directors in 2019 makes part of the Additional Information for the Annual Report
available on PJSC Gazprom’s website
www.gazprom.com
Nomination and Remuneration Committee
of the Board of Directors
In 2019, the Nomination and Remuneration Committee of
PJSC Gazprom’s Board of Directors continued its work. The
Committee reports to the Board of Directors and operates
as set forth in the Regulations on the Nomination and Remu-
neration Committee of JSC Gazprom’s Board of Directors
approved by Resolution of the Board of Directors of the
Company No. 2819 dated 30 September 2016 (with subsequent
amendments approved by Resolution of the Board of Directors
of PJSC Gazprom No. 3329 dated 17 October 2019).
Composition of the Board of Directors’ Nomination
and Remuneration Committee in 2019
— Committee Chairman:
Mikhail Sereda
— Committee members:
Vladimir Mau (independent director),
Viktor Martynov (independent director)
In 2019, the Committee held 16 meetings, including 2 meetings
held in person. The Committee reviewed the following matters:
election of members of PJSC Gazprom’s Management
Committee; approval of the Company’s actual 2018 KPI values
for the purposes of the Annual Bonus Scheme for the
Management of PJSC Gazprom, as well as target (planned),
threshold, and maximum KPI values for 2019; remuneration of
members of PJSC Gazprom’s Board of Directors and Audit
Commission; assessment of the Board of Directors’ and its
committees’ performance, etc.
The full list of matters reviewed by the Nomination and Remuneration Committee of
PJSC Gazprom’s Board of Directors in 2019 makes part of the Additional Information
for the Annual Report available on PJSC Gazprom’s website
www.gazprom.com
The Audit Committee maintained close contact with
the external auditor OOO FBK, the Audit Commission, and
PJSC Gazprom’s Internal Audit Department, as well as
PJSC Gazprom’s department charged with risk management
and internal control.
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
173173
PJSC Gazprom Annual Report 2019
PJSC Gazprom’s Corporate Governance Model
Commission on Strengthening Financial Discipline
for Domestic Gas Supplies
Corporate Secretary
PJSC Gazprom’s Board of Directors pays particular attention
to strengthening financial discipline for gas supplies in the
domestic market and measures taken to ensure repayment
of overdue debt owed by consumers.
For additional coordination of efforts undertaken by
PJSC Gazprom to improve the situation with regard to pay-
ments for gas deliveries, the Commission on Strengthening
Financial Discipline for Domestic Gas Supplies operates
on a permanent basis at PJSC Gazprom’s Board of Directors.
The Commission develops recommendations to the Board
of Directors on PJSC Gazprom’s policy on strengthening
financial discipline for domestic gas supplies, improving
coordination between the Company and the federal and
regional executive authorities to increase financial discipline
for domestic gas supplies, monitoring the debt owed by
consumers in Russian regions and developing measures to
reduce this debt, and improving the laws on consumer
payments for supplied natural gas.
The Commission has 5 members. Commission Chairman:
Viktor Zubkov, Chairman of PJSC Gazprom’s Board of
Directors; Commission Secretary: Nikolai Kruglikov, Head of
the Secretariat of PJSC Gazprom’s Management Committee
Administration.
In 2019, the functionality of the Corporate Secretary was
distributed, to the extent recommended by the Russian
Corporate Governance Code, among the following business
units of PJSC Gazprom:
— Directorate at the Department of PJSC Gazprom’s
Management Committee Administration (Dmitry Pichugin)
— Secretariat of PJSC Gazprom’s Management Committee
Administration (Nikolai Kruglikov)
— Department Directorate of PJSC Gazprom (Alexey Finikov)
— Department Directorate Division of PJSC Gazprom
(Maksim Babich)
For more details on the functions of the Corporate Secretary at PJSC Gazprom see
PJSC Gazprom’s website
www.gazprom.com
Key functions of the Corporate Secretary
The Commission operates on a permanent basis. In 2019,
— Ensuring the Company’s communication with regulators, stock
the Commission held three meetings which discussed the
most pressing matters of strengthening financial discipline for
domestic gas supplies and specifically supplies to certain
regions of the Russian Federation.
The Commission’s activities will continue into 2020.
Scheduled agenda items are to include handling of the current
arrears for natural gas supplied by PJSC Gazprom to regions
of the Russian Federation and in the industry context, as
well as improving legislation to strengthen financial discipline
for natural gas supplies to consumers.
exchanges, the registrar, and other professional security traders on
matters related, inter alia, to the security market development,
share capital monitoring, depositary receipt programme support
and development, and security issuance in new stock markets
Involvement in the organisation of the General Shareholders
Meeting
—
— Ensuring operation of the Board of Directors and its committees
Involvement in the implementation of the information disclosure
—
policy
Involvement in corporate governance enhancement
— Shareholder and investor relations
—
— Ensuring safekeeping of corporate documents
— Ensuring and monitoring the execution of procedures aimed at
exercising shareholder rights
— Notifying the Board of Directors about detected violations of the
law and internal documents when the Corporate Secretary is
responsible for ensuring relevant compliance
For more details on distribution of the Corporate Secretary functionality across the
Company’s business units see PJSC Gazprom’s website (information is available
in Russian only)
www.gazprom.ru
174
PJSC Gazprom Annual Report 2019
PJSC Gazprom’s Corporate Governance Model
Heads of business units of PJSC Gazprom having the
Corporate Secretary functionality report on relevant
performance to the Company’s Board of Directors. They
are appointed and removed from office by the Chairman
of PJSC Gazprom’s Management Committee upon approval
of PJSC Gazprom’s Board of Directors.
Business units of PJSC Gazprom having the Corporate
Secretary functionality are guided by applicable Russian laws,
the Regulations on the Board of Directors of PJSC Gazprom,
regulations on business units concerning corporate secretary
functions, approved by PJSC Gazprom’s Board of Directors
(Resolution No. 2817 dated 30 September 2016, Resolution
No. 3339 dated 19 November 2019).
In 2019, the Corporate Secretary functions were performed
in full. In particular, the business units of PJSC Gazprom having
the Corporate Secretary functionality were directly involved
in the implementation of decisions of the Annual General
Shareholders Meeting, including the on dividend payouts, in
preparation of proposals to enhance information disclosure
processes, as well as in the development of corporate
governance standards. No violations of the law and internal
documents when the Corporate Secretary is responsible for
ensuring relevant compliance were detected.
For more details on enhancement of the Company’s corporate governance standards
see PJSC Gazprom’s Corporate Governance Compliance Report, including Statement
of Compliance with the Corporate Governance Principles Set Out in the Russian
Corporate Governance Code
Executive Bodies
Day-to-day operations of PJSC Gazprom are managed by the
Chairman of the Management Committee (sole executive
body) and the Management Committee (collective executive
body). They are responsible for implementing resolutions
passed by PJSC Gazprom’s General Shareholders Meeting
and the Board of Directors and are accountable to them.
The Chairman and members of the Management Commit-
tee are elected by the Board of Directors for a five-year term.
The matters reserved by PJSC Gazprom’s Articles of Associa-
tion to the Management Committee include drafting of the
annual budget, investment programmes, future and current
activity plans, preparing reports, gas flow management,
and monitoring Russia’s Unified Gas Supply System.
175175
Composition of the Management Committee by tenure
of its members in the governing body as at 31 December 2019, %
1 year or less
1–7 years (inclusive)
Over 7 years
42
29
29
Note. Distributed according to the number of full years of service
as a member of the Management Committee as at 31 December 2019.
In 2019, the Management Committee of PJSC Gazprom
was refreshed by more than 30%
In 2019, the Management Committee held a total of
22 meetings (11 meetings held in person and 11 meetings held
in absentia). At these meetings, the Management Committee
passed 49 resolutions, including 36 resolutions passed in
person and 13 resolutions passed in absentia.
Matters reviewed by PJSC Gazprom’s Management Committee
in 2019, by line of business, %
Corporate governance
Preview of business priorities,
strategy and budget of PJSC Gazprom
Reliable operation of the UGSS and
consumer gas supplies
Forward-looking plans and key business
activity programmes of PJSC Gazprom
PJSC Gazprom’s internal regulations
on matters reserved to the Management
Committee
Other matters reserved to the
Management Committee
43
19
14
12
8
4
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
PJSC Gazprom Annual Report 2019
PJSC Gazprom’s Corporate Governance Model
Audit Commission
The Audit Commission’s authority is set forth in the Federal
Law On Joint-Stock Companies and PJSC Gazprom’s Articles
of Association. The Audit Commission operates under
the Regulations on the Audit Commission of JSC Gazprom
approved by the Resolution of JSC Gazprom’s Annual
General Shareholders Meeting (Minutes No. 1 dated 28 June
2013).
Key roles of the Audit Commission:
— Monitor the fairness of presentation of PJSC Gazprom’s
financial and accounting statements and other informa-
tion on PJSC Gazprom’s financial and business operations
and condition of its assets
— Supervise statutory compliance of PJSC Gazprom’s
accounting practices and of submission of its financial
statements and information to relevant authorities
and shareholders
— Prepare proposals on enhancing the Company’s asset
management and other financial and business operations
of PJSC Gazprom, mitigate financial and operational
risks, and improve internal controls
The Audit Commission is accountable to the General Share-
holders Meeting and coordinates its activities with the Audit
Committee of the Board of Directors.
Following an audit of PJSC Gazprom’s financial and
business operations, the Audit Commission presented its
opinion confirming the fairness of data in the Company’s
statements and other financial documents.
The Audit Commission of nine members is elected by
the General Shareholders Meeting.
Members of the Audit Commission elected by the General Shareholders Meeting on 28 June 2019
Year of birth
Position as at 31 December 2019
1980
1957
1969
1964
1963
1974
1966
1985
1961
Director of Department, the Ministry of Economic Development
of the Russian Federation
Deputy Department Head — Head of Directorate at Department
of the Management Committee Administration,
Secretary of the Audit Commission of PJSC Gazprom
Department Director, the Russian Ministry of Energy
First Deputy Head of the Management Committee Administration —
Department Head of the Management Committee Administration,
Chairwoman of the Audit Commission of PJSC Gazprom
Member of the Audit Commission of PJSC Gazprom
Department Head, PJSC Gazprom
Deputy Department Director, the Russian Ministry of Finance
Director of Department, the Ministry of Transport of the Russian Federation
Department Director, the Russian Ministry of Energy
Name
Ivan Bezmenov
Vadim Bikulov
Alexander Gladkov
Margarita Mironova
Yury Nosov
Karen Oganyan
Sergey Platonov
Evgeny Stolyarov
Tatiana Fisenko
176
PJSC Gazprom Annual Report 2019
Board of Directors’ Report on PJSC Gazprom’s
Development in Priority Business Areas
In 2019, the activities of PJSC Gazprom’s Board of Directors
were aimed at creating the environment to maintain consistent
performance and development of PJSC Gazprom as a global
energy company, increasing PJSC Gazprom’s capitalisation
and improving its investment appeal, ensuring efficient control
over asset management, investment and financial and busi-
ness operations, improving the performance and transparency
of internal governance mechanisms, enhancing internal
controls and accountability of the Company’s management
bodies, and protecting shareholder rights.
Strategic Development
Most PJSC Gazprom’s strategic documents and development
programmes on priority business areas had been adopted
by its Board of Directors in prior periods. That is why the
members of PJSC Gazprom’s Board of Directors primarily
focused on matters related to implementation and annual
adjustment of previously adopted strategies and programmes
during the Board meetings held in 2019.
Key strategic development matters reviewed by the Board of Directors in 2019
Agenda items
Material discussion points
Updated PJSC Gazprom’s
Long-Term Development
Programme and Gazprom Group’s
strategic planning framework
— PJSC Gazprom’s existing planning system provides an optimal
combination of modern Russian and international best practice in
strategic planning
— The planning system is continuously improved taking into account
Instructions and approved documents
PJSC Gazprom’s Long-Term
Development Programme
(2020–2029) was approved
Amendment of PJSC Gazprom’s
Investment Programme and budget
(financial plan) for 2019
worldwide best practice and methodologies
— To ensure optimal development of PJSC Gazprom in the context of
internal and external changes, the Long-Term Development Programme
is updated and approved by the Board of Directors on an annual basis
—
In accordance with the new version of the Investment Programme
for 2019, total actual expenditure was RUB 1,322.58 bn (down by
RUB 3.142 bn from the level approved in December 2018), including:
— RUB 962.23 bn — capital construction plan
— RUB 179.86 bn — long-term investment plan
— RUB 180.49 bn — non-current asset acquisition plan
— Total funding of the new version of PJSC Gazprom’s Investment
Programme for 2019 is RUB 1,339.25 bn
— Adjustment of the parameters for the Investment Programme for 2019
was due to investment project portfolio optimisation
— The new version of the budget (financial plan) for 2019 has no budget
deficit and will ensure that all PJSC Gazprom’s liabilities are covered
in full
The new versions of
PJSC Gazprom’s Investment
Programme and budget
(financial plan) for 2019 were
approved
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
177177
PJSC Gazprom Annual Report 2019
Board of Directors’ Report on PJSC Gazprom’s
Development in Priority Business Areas
Key strategic development matters reviewed by the Board of Directors in 2019 (continued)
Agenda items
Material discussion points
Instructions and approved documents
Efficient use of funds allocated
for R&D, progress in the
implementation of PJSC Gazprom’s
Innovative Development Programme
until 2025, and approval of the 2018
report on PJSC Gazprom’s updated
Innovative Development Programme
until 2025
Approval of the integrated
innovation key performance
indicator for 2019
— The annually developed PJSC Gazprom’s R&D Programme includes
initiatives aimed at implementation of technological and organisational
priorities of the Company’s innovative development set forth in
PJSC Gazprom’s Innovative Development Programme until 2025
— The programme of R&D projects carried out for PJSC Gazprom by
research institutes of the Russian Academy of Sciences is under way
— R&D cooperation with Russian research institutes and universities
(on four R&D programmes), companies from related industries and
international partners is in progress
in 2018, Gazprom Group implemented 279 R&D-generated solutions
(excluding the oil and power generation businesses), with a total
expected economic effect of over RUB 204 bn
—
The 2018 progress report on
PJSC Gazprom’s Innovative
Development Programme until
2025 was approved
The integrated innovation key
performance indicator for 2019
was approved
— Consistent expansion of gas infrastructure in Russian regions is one
of Gazprom’s priorities in the domestic market
—
— The average gas penetration in Russia is steadily growing and reached
68.6% as at 1 January 2019 (an increase of 15.3 p.p. compared to 2005)
In 2019, the Gas Infrastructure Expansion Program covered
66 constituent entities of the Russian Federation, with plans to complete
construction of approximately 1,700 kilometers of gas pipelines
Issues related to extending gas grid coverage in the Krasnoyarsk
Territory were also considered
—
The Management Committee was
instructed to:
continue implementing the
gas infrastructure expansion
programs in the constituent
entities of the Russian
Federation
ensure that the programs for
gas supply and gas
infrastructure expansion in
Russian regions for 2021–2025
are drawn up on the basis of
outlooks for gas consumption
and plans for preparing
consumers to receive gas as
confirmed by regional
administrations.
— PJSC Gazprom’s corporate import substitution plan is being
implemented successfully, with import substitution effect growth rate
higher in 2018 than in 2017 (47.9% vs 16.3%)
— The corporate import substitution plan now includes an integrated
The 2018 progress report
on the Corporate Import
Substitution Plan of
PJSC Gazprom
performance indicator to assess the outcomes of action items of that
plan
— Measures to stimulate the introduction of Russian-made equipment and
technologies in Gazprom Group’s operations have been proposed
Progress on PJSC Gazprom’s
programmes for expansion of gas
infrastructure in the constituent
entities of the Russian Federation,
including its economic model,
alignment with regional
programmes for converting the
housing and utilities sectors to gas,
as well as extension of gas grid
coverage in the Krasnoyarsk
Territory
Progress of import substitution
initiatives in 2018, approval of 2018
progress report on PJSC Gazprom’s
corporate import substitution plan,
inclusion into that plan of an
integrated performance indicator to
assess the outcomes of action
items of that plan, and measures to
incentivise the use of Russian-made
equipment and technology in
Gazprom Group’s operations
178
PJSC Gazprom Annual Report 2019
Board of Directors’ Report on PJSC Gazprom’s
Development in Priority Business Areas
Key strategic development matters reviewed by the Board of Directors in 2019 (continued)
Agenda items
Material discussion points
Approval of the Dividend Policy
of PJSC Gazprom
—
— According to the new Dividend Policy, dividends will be calculated on
the basis of adjusted profit for the period attributable to the owners of
PJSC Gazprom in accordance with the IFRS financial statements, with
adjustments for a number of non-cash items
Including a complete list of adjustments into the document increases
transparency of dividend calculation and makes payouts to the
shareholders and investors more predictable, in line with existing best
practice
It is planned to reach the target payout level within three years, with
dividends of not less than 30% based on the results for 2019, not less
than 40% for 2020, and not less than 50% for 2021 and subsequent years
—
Instructions and approved documents
The new Dividend Policy
of PJSC Gazprom was
approved
— Approval of the proposed version of the Dividend Policy will meet the
requirements of the Russian Government and reinforce PJSC Gazprom’s
investment case
Also in 2019, the Board of Directors continued to monitor
implementation of the Company’s major investment projects,
paid due attention to strategically important areas of
PJSC Gazprom’s activities (promoting natural gas (methane)
as a vehicle fuel, shareholder and investor relations, risk
management and internal control), the prospects, opportuni-
ties and threats for the Company related to shale gas and
LNG industry development, and assessment of the impact of
2019 events on the long-term outlook for the global energy
market.
Financial and Business Activity,
Investment Activity, Audit
Throughout 2019, PJSC Gazprom’s Board of Directors
exercised control over financial and business activities as well
as investment activities of Gazprom Group, including review
of reports on the results of procurement activities (on
a quarterly basis), and made decisions related to transaction
approval and the management of the property and other
assets of PJSC Gazprom and its subsidiaries.
Reflecting the changes in the legislation and the Com-
pany’s internal documents, the Board of Directors approved
amendments to the documents governing the internal audit
function, i.e. the Regulations on the Board of Directors’ Audit
Committee, Regulations on Internal Audit of PJSC Gazprom,
and the Internal Auditors’ Code of Ethics.
Corporate Governance Improvement and HR Policy
Throughout 2019, the Board of Directors paid close attention
to the HR policy and initiatives aimed at enhancing the
effectiveness of corporate governance. In addition to the
matters reviewed on an annual basis, such as analysis of the
Company’s HR policy and incentive scheme efficiency, the
progress in KPI achievement by top managers, introduction
of professional standards, assessment of the Board of
Directors’ and its committees’ performance, in 2019 the Board
of Directors also discussed the matter of PJSC Gazprom’s
transition to predominantly using Russian-made software.
Following the meeting, the Management Committee was
instructed to present for approval by the Board of Directors
a 2018–2021 action plan for PJSC Gazprom’s transition to
predominantly using Russian-made software, to incorporate
relevant initiatives in PJSC Gazprom’s Long-Term Development
Programme, and to ensure the adoption of this approach by
the subsidiaries directly and/or indirectly controlled by the
Company by more than 50% in total.
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
179179
PJSC Gazprom Annual Report 2019
Remuneration of Members of Governing
and Supervisory Bodies
Documents defining remuneration of members
of PJSC Gazprom’s governing and supervisory bodies
— Regulations on the Guidelines on Remuneration of the Board
of Directors of JSC Gazprom (approved by Resolution of the Board
of Directors No. 2523 dated 15 April 2015)
— Regulations on Remuneration of the Audit Commission of
PJSC Gazprom (approved by Resolution of the Board of Directors
No. 2641 dated 9 December 2015, as amended)
— Regulations on the Annual Bonus Scheme for the Management
of PJSC Gazprom (approved by Resolution of JSC Gazprom’s Board
of Directors No. 927 dated 19 December 2006, as amended)
— Regulations on PJSC Gazprom’s Key Performance Indicators
(approved by Resolution of JSC Gazprom’s Board of Directors
No. 2435 dated 21 October 2014, as amended)
Remuneration Scheme for Members of the Management
Committee and Other Executives of PJSC Gazprom
Remuneration of PJSC Gazprom’s Management Committee
members (including the Chairman of the Management
Committee) and other executives of the Company (including
the remuneration of PJSC Gazprom’s executives who are
also members of the Company’s Board of Directors, which
is not related to their service on the Board of Directors) is
determined by their employment agreements and is short-
term. Members of the Management Committee are not
remunerated for their service on PJSC Gazprom’s Manage-
ment Committee.
Remuneration paid by PJSC Gazprom to its executives
creates sufficient incentives for them to work effectively. The
Annual Bonus Scheme for the Management of PJSC Gazprom
is an important component of the remuneration system
for PJSC Gazprom’s executives, including members of the
Management Committee.
The Annual Bonus Scheme covers executives of
PJSC Gazprom and its key gas production, transportation,
underground storage, processing and sales subsidiaries.
The annual bonus payable to members of PJSC Gazprom’s
Management Committee (excluding the Chairman of the
Management Committee) comprises two components —
corporate (80%) and individual (20%). The corporate
component is linked to PJSC Gazprom’s performance, while
the individual component is determined based on the
achievement of individual targets. The annual bonus payable
to the Chairman of the Management Committee only
comprises the corporate component.
Amendments to the Regulations on the Annual Bonus Scheme
for the Management of PJSC Gazprom
(Resolution of PJSC Gazprom’s Board of Directors No. 3370
dated 26 December 2019)
— Coordination of the composition, calculation methods and target
value of the integrated innovation key performance indicator with
federal executive authorities was introduced
— The list of positions included in the Company’s Annual Bonus
Scheme (due to organisational and staff changes in PJSC Gazprom)
and key performance indicators of subsidiaries (due to consolidation
of processing assets) was updated
As per the Annual Bonus Scheme, remuneration is linked to
the achievement of corporate KPIs. Planned and actual values
of corporate KPIs are approved by PJSC Gazprom’s Board
of Directors on an annual basis.
To determine the amount of actual payments, a corporate
correction factor reflecting the actual KPI achievement level
is applied to the corporate and individual components of the
annual bonus. If the KPIs are not achieved, the amount of the
annual bonus is reduced, which establishes a link between
the KPIs and the amount of remunerations, as well as execu-
tives’ personal motivation to achieve the KPIs. There are no
plans to change the terms of executives’ eligibility for the
Annual Bonus Scheme and approaches to calculating the
bonus in 2020.
Executives’ annual bonus is linked to PJSC Gazprom’s
performance (achievement of corporate KPIs and personal
contribution of executives — achievement of individual targets).
In 2019, PJSC Gazprom paid the annual bonus for
2018 taking into account the corporate correction factor of
123.75%.
180
PJSC Gazprom Annual Report 2019
Remuneration of Members of Governing
and Supervisory Bodies
Corporate KPIs for 2019 to be used in the Annual Bonus Scheme
KPI
Description
Financial and economic KPIs
Per unit costs in Production
Total costs of gas production subsidiaries divided by the total volume of gas, unstable gas
condensate and oil production
Per unit costs in Transportation Total costs of gas transportation subsidiaries divided by the total transportation volume
Reduction of operating
costs (expenses)
Reduction of operating costs (expenses) in the reporting year
Total shareholder return
Estimated shareholder’s income for the reporting year from share price growth and dividend
received
Return on equity
Ratio of net income to average annual shareholders’ equity
Labour productivity
Industry-specific KPIs
Gas sales by volume
Total revenue from sales of products, proceeds from work done and services provided,
revenue from sales of goods purchased for resale less expenses on such purchased goods,
divided by total man-hours worked by full-time employees and external part-time employees
PJSC Gazprom’s gas sales by volume, including both its own gas and purchased gas, excluding
sales to PJSC Gazprom’s subsidiaries for own operational needs, as well as the volumes
purchased and sold in far abroad countries
Commissioning of priority
production facilities
Completion of activities related to commissioning of priority production facilities (as per the
approved list)
Integrated innovation key
performance indicator
Sum of scores reflecting the achievement of KPI targets, with application of weights allocated
to each of the KPIs:
— Patents obtained in the reporting year
— Reduction of relative rates of GHG emissions expressed as CO2 equivalent
— Share of R&D costs in revenue
— Assessment of the quality of design/annual implementation of the Innovative
Development Programme
KPIs established in pursuance of Russian Government directives
Weight in the
reporting period
bonus
70%
15%
15%
5%
10%
20%
5%
30%
10%
10%
10%
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
181181
PJSC Gazprom Annual Report 2019
Remuneration of Members of Governing
and Supervisory Bodies
For more details on calculating the progress against corporate KPIs in 2018, as well
as the explanation of variance between target and actual KPI values see
PJSC Gazprom’s Annual Report 2018
www.gazprom.com
Members of PJSC Gazprom’s governing bodies and other
executives of the Company are also eligible for long-term
post-employment payments. These payments comply with
the applicable laws, PJSC Gazprom’s local regulations,
and the procedure which is applicable to all employees of the
Company, and comprise private pension plans provided by
Non-State Pension Fund GAZFOND, and one-off payments
upon retirement made by PJSC Gazprom.
The Company also provides voluntary medical insurance.
Remuneration for Service on a Governing Body
Pursuant to the Regulations on the Board of Directors
of PJSC Gazprom approved by the Annual General Share-
holders Meeting (Minutes No. 1 dated 30 June 2016, as
amended) and PJSC Gazprom’s Articles of Association, the
General Shareholders Meeting may resolve to remunerate
and/or reimburse members of the Board of Directors during
the period of their service for expenses incurred by them
as members of the Board of Directors. The amount of
remuneration and/or reimbursement is determined by the
General Shareholders Meeting.
Members of the Board of Directors holding public or civil
office in the Russian Federation receive no remuneration
from PJSC Gazprom.
Approaches to determining the amount of remuneration
to members of the Board of Directors are set forth by the
Regulations on the Guidelines on Remuneration of the Board
of Directors of JSC Gazprom (approved by Resolution of the
Board of Directors of JSC Gazprom No. 2523 dated 15 April
2015).
Remuneration of members of PJSC Gazprom’s Board of Directors
— Fixed base remuneration for service on the Board of Directors
— Additional remuneration for additional responsibilities such as acting
as Chairman of the Board of Directors, Deputy Chairman of the
Board of Directors, or serving on committees of the Board of
Directors
— Bonus component for achieving corporate key performance
indicators (KPIs)
The Regulations also stipulate that the Board of Directors
may recommend the General Shareholders Meeting not to pay
remuneration to members of the Board of Directors or pay
a lower remuneration calculated under the Regulations.
Remuneration of Members of the Board of Directors
and Members of the Management Committee
Remuneration of members of PJSC Gazprom’s Board of Directors,
RUB thousand
Remuneration of members of
PJSC Gazprom’s Board of Directors
paid by PJSC Gazprom*
370,339
346,971
367,684
2017
2018
2019
Including by type
of remuneration:
Remuneration for service
on a governing body
Salary
Bonuses
245,486
210,708
227,258
64,775
71,986
76,225
49,594
53,897
53,821
Commission fees
–
–
–
Other remuneration
10,484
10,380
10,380
Insurance premiums paid
by PJSC Gazprom**
Total
56,581
50,178
52,727
426,920
397,149
420,411
* The amounts are inclusive of personal income tax.
** In line with Russian laws, PJSC Gazprom pays insurance premiums under mandatory
pension insurance, mandatory social insurance in case of temporary disability or
a maternity leave, mandatory medical insurance, and industrial accident and
occupational disease insurance, which the Company calculates based on the amount
of remuneration and other payments.
182
PJSC Gazprom Annual Report 2019
Remuneration of Members of Governing
and Supervisory Bodies
Remuneration of members of the Board of Directors for service on a governing body paid in 2019
(in accordance with Resolution of the Annual General Shareholders Meeting dated 28 June 2019, Minutes No. 1)
Name
Viktor Zubkov
Alexey Miller
Andrey Akimov
Timur Kulibaev
Denis Manturov
Vitaly Markelov
Viktor Martynov
Vladimir Mau
Alexander Novak
Dmitry Patrushev
Mikhail Sereda
Position
Holding public or civil office
Chairman of the Board of Directors Holds no such office
Deputy Chairman of the Board of
Directors
Holds no such office
Member of the Board of Directors
Holds no such office
Member of the Board of Directors
Holds no such office
Member of the Board of Directors
Holds an office
Member of the Board of Directors
Holds no such office
Remuneration paid, RUB
Including additional
remuneration for
additional
responsibilities while
serving on the Board
of Directors, or serving
on committees of the
Board of Directors
5,926,500
4,938,750
–
–
–
–
Total
32,234,760
31,247,010
26,308,260
26,308,260
–
26,308,260
Member of the Board of Directors,
Chairman of the Board of Directors’
Audit Committee, member of the
Board of Directors’ Nomination and
Remuneration Committee
Member of the Board of Directors,
member of the Board of Directors’
Nomination and Remuneration
Committee, member of the Board
of Directors’ Audit Committee
Holds no such office
28,613,010
2,304,750
Holds no such office
27,625,260
1,317,000
Member of the Board of Directors
Holds an office
Member of the Board of Directors
Holds an office
–
–
–
–
Member of the Board of Directors,
Chairman of the Board of Directors’
Nomination and Remuneration
Committee, member of the Board
of Directors’ Audit Committee
Holds no such office
28,613,010
2,304,750
Total
Note. The amounts are inclusive of personal income tax.
227,257,830
16,791,750
Minutes No. 1 of the Annual General Shareholders Meeting dated 28 June 2019 are
available on PJSC Gazprom’s website (information is available in Russian only)
www.gazprom.ru
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
183183
PJSC Gazprom Annual Report 2019
Remuneration of Members of Governing
and Supervisory Bodies
Remuneration of members of PJSC Gazprom’s Management
Committee, RUB thousand
2017
2018
2019
Remuneration of members
of PJSC Gazprom’s Management
Committee paid by
PJSC Gazprom*,**
Including by type
of remuneration:
Remuneration for service
on a governing body
2,445,656
2,551,450
1,331,825
–
–
–
Salary
861,443
1,035,748
821,064
Bonuses
(including the annual bonus)
1,532,323
1,475,344
479,583
Commission fees
–
–
–
Other remuneration (including
short-term benefits related
to healthcare)
Insurance premiums paid by
PJSC Gazprom***
Total
51,890
40,358
31,178
396,416
413,804
204,504
2,842,072
2,965,254
1,536,329
* The amounts are inclusive of personal income tax.
** Income received by members of PJSC Gazprom’s Board of Directors who are also
members of PJSC Gazprom’s Management Committee and full-time employees of the
Company for service on the Board of Directors was accounted for in the income
received by members of the Board of Directors. Other types of remuneration paid
to such members of the Board of Directors and/or reimbursement for their expenses
are included in the total remuneration and/or reimbursement for expenses of
PJSC Gazprom’s Management Committee.
*** In line with Russian laws, PJSC Gazprom pays insurance premiums under mandatory
pension insurance, mandatory social insurance in case of temporary disability or a
maternity leave, mandatory medical insurance, and industrial accident and
occupational disease insurance, which the Company calculates based on the amount
of remuneration and other payments.
PJSC Gazprom’s voluntary medical insurance premiums paid for
members of the Management Committee and executives who are
also members of the Company’s Board of Directors, RUB thousand
2017
12,781
2018
12,420
2019
10,632
From 2017 to 2019, PJSC Gazprom paid no reimbursement
to members of the Board of Directors or members of
the Management Committee for expenses incurred while
serving on a Company’s governing body.
From 2017 to 2019, the Company did not provide any
loans to members of PJSC Gazprom’s Board of Directors or
members of its Management Committee.
Remuneration of Members of the Audit Commission
To calculate the remuneration of a member of the Audit
Commission, the Company uses, inter alia, a personal contri-
bution factor which reflects the member’s attendance at the
meetings of the Audit Commission and additional responsibil-
ities as Chairman of the Audit Commission.
Members of the Audit Commission holding public or civil
office receive no remuneration.
Remuneration of members of PJSC Gazprom’s Audit Commission for serving on a financial
and business performance supervisory body paid in 2019
(in accordance with Resolution of the Annual General Shareholders Meeting dated 28 June 2019, Minutes No. 1)
Name
Position
Holding public or civil office*
Remuneration paid, RUB
Margarita Mironova
Chairwoman of the Commission
Holds no such office
Alexander Gladkov
Member of the Commission
Holds an office
Yury Nosov
Karen Oganyan
Alexandra Petrova
Sergey Platonov
Member of the Commission
Holds no such office
Member of the Commission
Holds no such office
Member of the Commission
Holds an office
Member of the Commission
Holds an office
Oksana Tarasenko
Member of the Commission
Holds an office
Tatiana Fisenko
Vadim Bikulov
Total
Member of the Commission
Holds an office
Member of the Commission (Secretary) Holds no such office
* As at the date of payment.
Note. The amounts are inclusive of personal income tax.
5,289,204
–
4,068,618
4,068,618
–
–
–
–
4,068,618
17,495,058
184
PJSC Gazprom Annual Report 2019
Liability Insurance of Directors, Officers
and the Company
The insurance coverage under the current liability insurance
policy is in line with PJSC Gazprom’s needs and international
insurance standards in terms of risk coverage and indemnity
limits.
PJSC Gazprom has insured the liability of its directors
(excluding directors holding public office), officers and the
Company since 2008. Under the liability insurance contract,
shareholders, creditors or other third parties are compensated
for damages incurred as a result of in-scope errors (omissions)
by PJSC Gazprom’s key executives. The importance of the
liability insurance programme for directors, officers and the
Company is driven by the integration of PJSC Gazprom’s
activities into the global economy, the implementation of the
external financial borrowing programme and the need to
cover risks for the Company’s property interests. The policy
terms in 2019 remained the same as in 2018.
Liability insurance programme for directors, officers and the Company in 2019
Insurance coverage
USD 100 mm
Insurance premium
USD 900 thousand
Persons insured
Members of the Company’s Board of Directors (excluding directors who hold public office) and Management
Committee, as well as heads of PJSC Gazprom’s Departments who are not members of the Company’s
Management Committee
Risks insured
— Risk of third-party claims against the insured for losses arising from unintentional errors made by the insured
in their management roles
— Risk of third-party claims against PJSC Gazprom for losses arising from unintentional errors made by the
insured in their management roles: claims related to PJSC Gazprom securities; claims initially made against
the insured
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
185185
PJSC Gazprom Annual Report 2019
Shareholdings of Members of the Board of Directors
and Management Committee and Transactions
with PJSC Gazprom Shares
As at 31 December 2019, members of the Board of Directors,
members of the Management Committee and the Chairman
of the Management Committee had a 0.010577% stake in
PJSC Gazprom (direct ownership).
The Employee Equity Sharing Plan for the Management
of PJSC Gazprom aims to provide an extra financial incentive
for PJSC Gazprom’s executives to support PJSC Gazprom
share performance.
PJSC Gazprom’s executives holding positions of depart-
ment heads or higher, and the management of subsidiaries
engaged in core activities are eligible to participate in
the Programme. As at 31 December 2019, 68 executives were
eligible for the Programme.
Terms of the Employee Equity Sharing Plan
for the Management of PJSC Gazprom
(set out in the Regulations on the Employee Equity Sharing Plan
for the Management of PJSC Gazprom approved by Resolution
of JSC Gazprom’s Board of Directors No. 2105 dated 26 December
2012, as amended)
— Executives hold Company shares
— Executives can acquire shares at their own cost or with loans
granted by AO Gazprombank as part of the Programme
— AO Gazprombank also provides depositary and broker services
under the Programme
Direct ownership of PJSC Gazprom shares by members of the Board of Directors, members of the Management Committee
and the Chairman of the Management Committee as at 31 December 2019
Name
Position
Members of the Board of Directors
Shareholding in PJSC Gazprom, %
Chairman of the Board of Directors
Deputy Chairman of the Board of Directors, Chairman of the Management
Committee
Member of the Board of Directors
Member of the Board of Directors
Member of the Board of Directors
–
0.000958
–
–
–
Member of the Board of Directors, member of the Management Committee
0.006203
Member of the Board of Directors, Chairman of the Board of Directors’
Audit Committee, member of the Board of Directors’ Nomination and
Remuneration Committee
Member of the Board of Directors, member of the Board of Directors’
Audit Committee, member of the Board of Directors’ Nomination and
Remuneration Committee
Member of the Board of Directors
Member of the Board of Directors
Member of the Board of Directors, Chairman of the Board of Directors’
Nomination and Remuneration Committee, member of the Board of
Directors’ Audit Committee
–
–
–
0.001013
0.000232
Viktor Zubkov
Alexey Miller
Andrey Akimov
Timur Kulibaev
Denis Manturov
Vitaly Markelov
Viktor Martynov
Vladimir Mau
Alexander Novak
Dmitry Patrushev
Mikhail Sereda
186
PJSC Gazprom Annual Report 2019
Shareholdings of Members of the Board of Directors
and Management Committee and Transactions
with PJSC Gazprom Shares
Direct ownership of PJSC Gazprom shares by members of the Board of Directors, members of the Management Committee
and the Chairman of the Management Committee as at 31 December 2019 (continued)
Name
Position
Shareholding in PJSC Gazprom, %
Members of the Management
Committee*
Oleg Aksyutin
Deputy Chairman of the Management Committee — Head of Department
Elena Burmistrova
Deputy Chairwoman of the Management Committee
Elena Vasilieva
Mikhail Putin
Famil Sadygov
Deputy Chairwoman of the Management Committee — Chief Accountant
Deputy Chairman of the Management Committee
Deputy Chairman of the Management Committee
Sergey Khomyakov
Deputy Chairman of the Management Committee
Sergey Kuznets
Vladimir Markov
Member of the Management Committee, Head of Department
Member of the Management Committee, Head of Department
Sergey Menshikov
Member of the Management Committee, Head of Department
Elena Mikhailova
Member of the Management Committee, Head of Department
Vyacheslav Mikhalenko
Member of the Management Committee, Head of Department
Gennady Sukhov
Member of the Management Committee, Head of Department
* For shareholdings of executive directors see the Members of the Board of Directors section of this table.
0.000218
–
0.000281
0.000313
–
0.000232
–
0.000148
0.000169
0.000217
0.000424
0.000169
Transactions with PJSC Gazprom shares by members of PJSC Gazprom’s Board of Directors and Management Committee in 2019
Name
Andrey Akimov
Transaction date
Transaction type
Number of ordinary registered shares of
PJSC Gazprom involved in the transaction
04 April 2019
05 April 2019
08 April 2019
Purchase
Purchase
Disposal
2,043,220
2,138,950
4,182,170
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
187187
PJSC Gazprom Annual Report 2019
Internal Audit
Internal audit assists in achieving PJSC Gazprom’s goals
through applying a holistic consistent approach to assessment
and improvement of risk management, control and corporate
governance processes.
Pursuant to the Regulations, the internal audit at
PJSC Gazprom is organised by the relevant Department,
a business unit of PJSC Gazprom, and by internal audit
units — at PJSC Gazprom subsidiaries and entities.
To improve the internal audit function and in accordance
The key priority of the Department is to provide the
with Directive of the Russian Government for persons repre-
senting interests of the Russian Federation No. 3984p-P13
dated 24 June 2015, PJSC Gazprom developed and approved
the Regulations on Internal Audit of PJSC Gazprom in
2015 (Resolution of the Board of Directors No. 2621 dated
6 November 2015, amended versions No. 3212 dated 1 February
2019 and No. 3335 dated 29 October 2019).
These Regulations determine the goals, objectives,
status, powers and liability of the Internal Audit Department
of PJSC Gazprom, as well as the scope of internal audit.
Board of Directors (through the Audit Committee of the
Board of Directors) and management of PJSC Gazprom with
independent and unbiased assurances and advice as to the
improvement of the Company’s operations.
The Department has administrative subordination to
the Chairman of PJSC Gazprom’s Management Committee
within the Management Committee Administration and
functionally reports to the Board of Directors (through the
Board of Directors’ Audit Committee). The Head of Depart-
ment is appointed and dismissed by the Chairman of the
Management Committee of PJSC Gazprom. The Audit
Committee of the Board of Directors is responsible for
preliminary approval of candidates for the position of the
Head of Department, extension of their term and their
dismissal.
Internal audit system of PJSC Gazprom
Board of Directors
Audit Committee of the Board of Directors
Chairman of the Management Committee
Functional accountability
Administrative accountability
Department charged with internal audit
Subsidiaries
Functional accountability
Administrative accountability
Internal audit functions of subsidiaries
Subordination
Accountability
188
PJSC Gazprom Annual Report 2019
Internal Audit
In 2019, the documents of PJSC Gazprom regulating
the internal audit function were updated
The Department’s organisation is coordinated with the Audit
Committee and approved by the Chairman of the Management
Committee. The Department consists of three Directorates.
Activities of the Department are governed by the
Regulations on Internal Audit of PJSC Gazprom, the
Internal Auditors’ Code of Ethics (approved by Resolution
of the Board of Directors No. 1956 dated 14 March 2012, as
amended by Resolution No. 3334 dated 29 October 2019),
JSC Gazprom’s Internal Audit Development Concept (approved
by the Board of Directors’ Audit Committee on 25 June 2015),
Regulations on the Department (approved by the Board
of Directors’ Audit Committee and PJSC Gazprom’s Order
No. 419 dated 23 June 2016, as amended by Order of
PJSC Gazprom No. 163 dated 22 March 2017), International
Standards for the Professional Practice of Internal Auditing,
and internal audit guidelines of the Federal Agency for State
Property Management.
PJSC Gazprom’s internal audit meets the corporate
governance principles set out in the Russian Corporate
Governance Code (Recommendations 263–273).
The Department is responsible for organising and conducting
internal audits at business units, subsidiaries and entities of
PJSC Gazprom in accordance with the established procedure
and Russian and international best practices for internal
audit. The Department conducted its 2019 audits to identify
risks and assess the performance for the Company’s signifi-
cant business segments and processes based on:
— achievement by the auditees of their objectives
— efficiency and effectiveness of operations
— protection of assets
— compliance of operations with the terms and conditions
of contracts, legal requirements and local regulations.
Results of internal audits conducted by the Department
are used to develop and submit proposals to PJSC Gazprom’s
management on elimination of violations, irregularities
and root causes. Based on the proposals made by the Depart-
ment, the Chairman of the Management Committee gives
instructions to business units, subsidiaries and entities of
PJSC Gazprom, aimed at improving PJSC Gazprom’s per-
formance. The Department monitors the execution of such
instructions.
Amendments to PJSC Gazprom’s internal audit regulations made in 2019
Document
Amendments
Internal Auditors’ Code of Ethics
Provisions ensuring that PJSC Gazprom’s internal auditors are independent and unbiased were updated.
Regulations on Internal Audit
of PJSC Gazprom
Definitions of the mission and basic principles of internal audit were introduced, sections on ensuring that the
internal auditors are independent and unbiased and local regulations for PJSC Gazprom’s internal auditors were
updated.
Regulations on the Audit
Committee of PJSC Gazprom’s
Board of Directors
Sections regulating the Committee’s activities within the risk management and internal control system
of PJSC Gazprom were updated.
In December 2015, an external assessment was carried
out and the opinion was issued on the compliance of
PJSC Gazprom’s internal audit function with the Definition of
Internal Auditing, Code of Ethics, and International Standards
for the Professional Practice of Internal Auditing.
— Report on the performance of PJSC Gazprom’s Depart-
ment of the Management Committee Administration
in 2018
— Amending the Regulations on Internal Audit of
PJSC Gazprom
The Department also has in place and implements an
— Amending the Internal Auditors’ Code of Ethics of
Internal Audit Quality Programme covering all aspects of
internal audit.
PJSC Gazprom
— Amending the Regulations on the Audit Committee of
The internal audit function conducts annual performance
PJSC Gazprom’s Board of Directors
assessments (self-assessments) with results reported to the
Audit Committee of the Board of Directors.
In 2019, the following internal audit matters were reviewed
at the meetings of the Board of Directors’ Audit Committee:
— Drafting the 2020 Activity Plan of PJSC Gazprom’s
Department of the Management Committee
Administration
The 2020 Internal Audit Plan was approved by the Order
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
of PJSC Gazprom.
189189
PJSC Gazprom Annual Report 2019
External Audit
The External Audit Policy for PJSC Gazprom, its subsidiaries
and entities approved by PJSC Gazprom’s Board of Directors
(Resolution of the Board of Directors of PJSC Gazprom
No. 2847 dated 15 November 2016) sets forth key principles of
organising and conducting external audits of PJSC Gazprom
and its subsidiaries and entities, the auditor selection proce-
dure and criteria, as well as approaches to ensuring the
auditor’s compliance with the principles of independence
and absence of a conflict of interest.
PJSC Gazprom, its subsidiaries and entities
provide the auditor with all assistance necessary
for conducting a timely and full audit
PJSC Gazprom selects its auditor annually by a public tender
in accordance with applicable Russian laws. Assessment
of potential auditors is one of the main duties of the Audit
Committee of PJSC Gazprom’s Board of Directors.
Bid assessment criteria for entering into an audit service contract
— Price criterion:
— Contract price
— Non-price criteria:
— Quality profile of the service to be procured
— Bidder qualification, including the track record in auditing
accounting (financial) statements, consolidated accounting
statements, and consolidated IFRS financial statements,
as well as availability of the bidder’s personnel with a certain
qualification level
OOO FBK won the public tender for the service contract to
audit PJSC Gazprom’s accounting (financial) statements,
Gazprom Group’s consolidated accounting statements, and
Gazprom Group’s consolidated IFRS financial statements
for 2019 and 2020.
The contract price for auditing PJSC Gazprom’s accounting
(financial) statements, Gazprom Group’s consolidated
accounting statements, and Gazprom Group’s consolidated
IFRS financial statements for 2019 offered by the winner was
RUB 210,000,000 (exclusive of VAT) and was approved by
Resolution of the Board of Directors No. 3274 dated 21 May
2019.
By resolution of PJSC Gazprom’s Annual General
Shareholders Meeting held on 28 June 2019, OOO FBK
became an approved auditor responsible for auditing
PJSC Gazprom’s accounting (financial) statements, Gazprom
Group’s consolidated accounting statements, and Gazprom
Group’s consolidated financial statements for 2019.
OOO FBK also provided audit services to the Company
in 2017 and 2018.
OOO FBK provided other audit-related services to
PJSC Gazprom outside the audit contract in 2017–2019.
The contract price for auditing accounting (financial) statements,
approved by the Board of Directors (exclusive of VAT),
RUB thousand
2017
2018
2019
The fee paid by the Company to the auditor
for other audit-related services outside the audit contract
(inclusive of VAT), RUB thousand
2017
2018
2019
208,000
195,000
210,000
20,917
44,284
3,661
190
PJSC Gazprom Annual Report 2019
Risk Management and Internal Control
Gazprom has in place an effective risk management
and internal control system which helps achieve corporate
goals and optimise business process management
to ensure the Group’s sustainable development.
Principles of RMICS organisation and operation
— Consistency (integration)
— Comprehensiveness
— Alignment (with goals)
— Reasonable assurance
— Agility and development
— Relevance and availability of resources
— Continuity (of operation)
—
— Accountability
— Separation of duties
— Assessment of results
— Streamlined structure and promptness
— Single regulatory framework
— Economic feasibility
—
Three lines of defence
Interaction and collective decision-making
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
PJSC Gazprom has developed an effective risk management
and internal control system (RMICS) which helps promptly
identify, evaluate and respond to potential events, circum-
stances, and internal and external factors that may influence
the achievement of its goals.
Risk Management and Internal Control System
The Company acknowledges that its operations are exposed
to uncertainties such as risks, and implements measures
to provide adequate assurance that the goals set for
PJSC Gazprom by its governing bodies are achieved.
The RMICS is an integral part of PJSC Gazprom’s corpo-
rate governance and is embedded into the planning and
project management systems, and occupational health and
safety management programmes. The RMICS covers all
operations of PJSC Gazprom and Gazprom Group entities,
as well as all management levels, business segments and
risks across PJSC Gazprom and Gazprom Group entities.
191191
PJSC Gazprom Annual Report 2019
Risk Management and Internal Control
Implementation of the three lines of defence principle in PJSC Gazprom’s RMICS
First line of defence
Risk management and internal control at the business process level
Second line of defence
Development of a unified risk management and internal control policy,
providing its implementation guidelines, and coordination of risk
management and internal control activities at business units
of PJSC Gazprom (Gazprom Group entities)
Third line of defence
Internal assessment of the RMICS performance
Implemented by business process owners in business units
of PJSC Gazprom (Gazprom Group entities)
Implemented by the risk management and internal control unit and risk
management and internal control centres
Performed by a business unit of PJSC Gazprom (Gazprom Group entities)
responsible for duly organising and conducting internal audits
Key RMICS participants and their key risk management and internal control functions
PJSC Gazprom’s Board of Directors — Approves the internal documents of PJSC Gazprom, which define the policy of PJSC Gazprom in setting up
risk management and internal control processes
— Establishes upper tolerable and threshold limits of risks for PJSC Gazprom and Gazprom Group
— Reviews matters pertaining to RMICS organisation, functioning and effectiveness
Risk management and internal
control unit
— Ensures implementation of the uniform risk management and internal control policy of PJSC Gazprom
and Gazprom Group entities, provides implementation guidelines
— Coordinates risk management and internal control activities at business units of PJSC Gazprom (Gazprom
Group entities)
— Develops, approves and ensures updating of PJSC Gazprom’s local regulations and guidelines on risk
management and internal control
— Defines guides to handling risk management processes and internal control procedures
Owners and co-owners of risks
Implement risk management stages
—
— Provide risk reports
— Select risk response options and develop and implement risk management measures
— Ensure the implementation of risk management measures
Owners and co-owners of internal
control procedures
— Ensure the implementation, execution and continuous monitoring of the effectiveness of internal controls
— Provide reporting on internal controls
PJSC Gazprom’s RMICS is aligned with the principles
of the Russian Corporate Governance Code
Risk management and internal control activities provide
for continuous functioning of the system’s components.
192
PJSC Gazprom Annual Report 2019
Risk Management and Internal Control
RMICS structure
Reporting
and information
sharing as part
of the RMICS,
relevant IT support
RMICS
performance
assessment
and monitoring
Creating the internal control environment
Goal-setting
Risk identification
Risk assessment
Risk response
Development and implementation of risk management initiatives
Internal control procedures
Monitoring risks and risk management initiatives
Risk response options (management methods)
used by Gazprom Group entities
Chain of RMICS internal regulations
— Evasion (avoidance) of risk, abandonment of measures/activities
causing risk, abandonment of possible sources of risk
— Risk mitigation (reduction) — implementation of measures and
activities aimed at reducing the level of risk
— Redistribution (transfer) of risk — sharing the risk with the other party
or parties, insurance
— Risk adoption (retention) — absence of actions commonly taken
within other risk response options, self-insurance, hedging
In 2019, PJSC Gazprom, its subsidiaries and entities imple-
mented risk management and internal controls in key focus
areas, continued to improve the legal framework and
guidelines and develop RMICS local regulations. They also
organised and coordinated activities aimed at introducing
and enhancing risk management systems at subsidiaries and
entities of PJSC Gazprom, improved and formalised the
processes of gathering and consolidating information on
risks and the processes of preparing and submitting regular
risk reports. To achieve the targets, PJSC Gazprom has in
place an operating Department responsible for implementa-
tion of the uniform risk management and internal control
policy of PJSC Gazprom and Gazprom Group entities.
In addition, risk management automation was continued
and employees were retrained in risk management and
internal controls in 2019.
Risk Management and Internal Control
Policy of PJSC Gazprom
Risk index of PJSC Gazprom, its subsidiaries
and entities
Provisions defining approaches to managing individual
risk groups
— Regulations on Credit Risk Management
at PJSC Gazprom and its Subsidiaries and Entities
— Regulations on Foreign Exchange Risk Management
at Gazprom Group
— Regulations on Interest Risk Management at Gazprom
Group
— Regulations on Liquidity Risk Management at Gazprom
Group
— Regulations on Operational Risk Management
at Gazprom Group
Risk management guidelines
Key Risk Factors
In 2019, the key risk factors identified for the Company
remained largely unchanged. PJSC Gazprom conducts
assessments of the possible impact of short- and medium-
term consequences of the COVID-19 outbreak on its
operations, including financial and market risk ratios, as well
as risks associated with PJSC Gazprom’s operations.
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
193193
PJSC Gazprom Annual Report 2019
Risk Management and Internal Control
Strategic and country risks
Risk
Description
Risk management/mitigation
Risks related to the global economy
An unfavourable economic environment can
lead to a slowdown in energy demand and drive
the cost of borrowed capital
European gas market risks
Political risk
Natural gas transit risks
Russian regulatory risks for the gas industry
Unconventional gas development risks
The EU pursues a policy of diversifying its gas
supply sources and increasing the share of
natural gas exchange trade, which affects
PJSC Gazprom as one of the main suppliers of
natural gas to the EU countries
Starting from 2014, Russia is under sanctions
imposed by the EU, the United States and other
countries
Gas transmission via third countries is
associated with the risks of the counterparties
defaulting on their transit obligations, as well as
uncertainty about the future conditions of transit
contracts, which exposes Gazprom Group to
the risk of improper performance of its
obligations under gas supply contracts
PJSC Gazprom’s operations are regulated by
Federal Law No. 147-FZ On Natural Monopolies
dated 17 August 1995
Shale gas appeals mostly to countries with
limited conventional gas reserves and
resources; however, the risk that these countries
will reduce gas imports in the mid-term is
assessed as insignificant
Risks related to the development of renewable
energy sources
Renewable energy output can be expected to
grow in some countries, which may squeeze gas
consumption in these markets
To ensure growth of energy sales, PJSC Gazprom
considers numerous markets and distribution
channels and expands the uses of natural gas.
To maintain its financial stability, PJSC Gazprom
optimises its leverage
To mitigate the risk of lower supply levels, a set of
initiatives continues to be implemented to both
build new infrastructure and bolster demand for
natural gas, as well as strengthen PJSC Gazprom’s
position in the sectors with a potential for extra
gas supplies
PJSC Gazprom pursues a policy of ensuring
technology independence
A number of measures are taken such as
diversification of export routes, expanding access
to UGSFs abroad, and development of LNG trade
PJSC Gazprom is engaged in intensive dialogue
with government authorities to improve the pricing
and tariff policy; objective supporting cases
are prepared to inform decision making by
PJSC Gazprom’s Board of Directors
PJSC Gazprom continuously monitors the
evolution of the shale gas industry and
developments in other unconventional
hydrocarbons industries around the world. The
monitoring results, including the economics of
unconventional gas production and its potential
as a competition to PJSC Gazprom in its existing
or prospective markets, are reviewed by the
Company’s governing bodies on a regular basis,
which enables PJSC Gazprom to efficiently
implement its marketing policy in respective
regions taking into account various gas sales
channels
The use of natural gas, inter alia, for electricity
generation offers consumers economic,
technological, and environmental benefits, which,
PJSC Gazprom believes, will support natural gas
as common energy source. In most cases,
renewable electricity generation supplements
other sources and may entail certain risks for the
natural gas market if subsidising renewable
energy is maintained at national and/or
supranational levels
194
PJSC Gazprom Annual Report 2019 Risk Management and Internal Control
Customs, currency and tax regulation risks
Risk
Description
Risk management/mitigation
Risk of changes in the Russian currency
regulation and tax legislation
Currency regulation and tax legislation risks
persist, along with the risk of a heavier tax burden
on companies operating in the fuel and energy
sector. Changes in the Russian currency
regulation and tax legislation, as well as tax
legislation changes in the countries in which
Gazprom Group has a presence may affect the
operations of PJSC Gazprom and Gazprom
Group entities
Changes in currency and tax laws are consistently
monitored. PJSC Gazprom liaises with
government authorities to ensure timely
adjustment of its operations in line with changes
in Russian and international laws
Risks related to changes in Russian rules
on customs control and duties
Customs authorities may introduce additional
customs requirements if the rules of customs
control and export duty payment are amended
PJSC Gazprom complies with the requirements
of customs laws and communicates with
government authorities
Financial risks
Risk
Foreign exchange and inflation rate risks
Description
Risk management/mitigation
Potential cash flow reduction due to adverse
change in foreign exchange rates. High
exchange rate volatility coupled with income
and expenses denominated in different
currencies affect PJSC Gazprom’s performance.
The current inflation rate has no significant
influence on PJSC Gazprom’s financial position
PJSC Gazprom ensures the optimal ratio of assets
and liabilities denominated in foreign currency,
calculates earnings considering the foreign
exchange risk, and forecasts exchange rates to
develop a forecast balance. To minimise losses
from exchange rate volatility, PJSC Gazprom
hedges its foreign exchange and interest rate risks
Credit and liquidity risks
Delayed or incomplete discharge of contractual
obligations by some counterparties entails risks
for PJSC Gazprom’s operations
Relations with credit institutions are subject to
credit risk limits revised on a regular basis and
reflecting, inter alia, the calculated credit rating.
Performance of contractual obligations is
monitored and credit quality of counterparties is
assessed with the adoption of measures to
reduce risks in case of low creditworthiness
Market risks
Risk
Market price and size risks
Description
Risk management/mitigation
If oil prices and gas exchange quotations drop
and/or maintain at current levels for a long
time, resulting risks may lead to a decline in
revenues. There are also volume risks
associated with a certain flexibility that buyers
have in terms of gas withdrawal
These risks are managed by adjusting contract
terms and conditions or entering into new
contracts, determining approved types
of transactions and financial instruments and
counterparties to enter into such transactions
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
195195
PJSC Gazprom Annual Report 2019
Risk Management and Internal Control
PJSC Gazprom’s operating risks
Risk
Description
Risk management/mitigation
Risks of early termination and suspension
of subsoil licences
Risks of failure to reach the peak gas withdrawal
capacity at UGSFs
Risk of power outages at UGSS facilities
Non-compliance with licence agreements
exposes PJSC Gazprom to risks of early
termination or suspension of subsoil licences
for survey, exploration and production of
hydrocarbons
Failure to reach necessary gas supply volumes
in the context of a steep increase in gas
consumption
Internal and external factors may lead to power
outages at UGSS facilities
Risks related to occupational health, industrial
and fire safety
PJSC Gazprom’s performance depends on its
occupational health, industrial and fire safety
practices
Regular monitoring, control of compliance with
licence requirements, and timely amendment of
licence agreements minimise the likelihood of
licence revocation and suspension
UGSFs are tested to confirm their maximum daily
deliverability
PJSC Gazprom implements comprehensive
programmes to enhance reliability of power
supply facilities, insure equipment and create
reserves to cover potential losses
PJSC Gazprom has in place and operates the
UOHSMS integrated into its management system
to manage OHS risks and meet the objectives
and commitments relating to occupational health,
industrial and fire safety
Cost risks
Facilities risks
Increased prices for equipment, technical
devices, components, as well as works and
services, which form the actual cost of capital
construction projects, constitute an investment
risk
Entering into contracts for performance of works
(provision of services, supply of inventory) with
a fixed price, and relevant monitoring during the
execution of contracts help reduce the cost risks
of investment activities
The key operations, including hydrocarbon
production, transportation, processing/refining,
and storage, carry process and engineering,
natural and climatic risks, as well as risks of
adverse actions by personnel or third parties
The Unified Gas Supply System (UGSS) ensures
reliable gas supplies. Stable operation of the
system is achieved by implementing advanced
and innovative diagnostic methods, carrying out
timely turnaround and maintenance, revamping
and upgrading existing facilities. Insurance
coverage is provided to protect Gazprom Group
entities’ property interests, which includes
property insurance (including offshore facilities),
business interruption insurance, and liability
insurance for construction, repair and operation
of production facilities
Reserve estimation procedures have been
developed and are implemented, including in
accordance with international standards.
Gazprom’s reserves estimated under Russian
reserves classification standards are recorded
in its books after the annual review and approval
by the State Reserves Commission of the Russian
Ministry of Natural Resources
Hydrocarbon reserve estimation risks
PJSC Gazprom’s strategic and financial goals
depend on hydrocarbon reserves. Thus,
inaccurate reserve estimation bears potential
risks for PJSC Gazprom’s operations
Environmental risks
Climate risks
Risk
Climate change risk
196
The key operations, including hydrocarbon
production, transportation, processing/refining,
and storage, carry environmental risks (risks of
environmental pollution, non-compliance with
environmental regulations) that may lead to
legal, financial and reputational implications
PJSC Gazprom implements a uniform
Environmental Policy, programmes and initiatives
to reduce its environmental footprint, takes out
voluntary environmental liability insurance,
introduces best available innovative technology
for mitigating the environmental impact.
PJSC Gazprom has developed and operates
an efficient EMS integrating environmental
controls of both PJSC Gazprom and Gazprom
Group entities. Efforts taken by PJSC Gazprom
help maintain high levels of environmental risk
manageability
Description
Risk management/mitigation
Identification and assessment of climate risks
are central to PJSC Gazprom’s commitment
to adapting to climate change
PJSC Gazprom’s risk mitigation measures include
expanding gas infrastructure across Russian
regions to reduce GHG emissions, implementing
energy saving and carbon footprint reduction
initiatives, and adapting to possible climate
changes
PJSC Gazprom Annual Report 2019 Procurement Performance
Procurement principles followed by Gazprom Group
Creating conditions for timely and full supply to
Gazprom Group of goods, works and services,
and identification of a supplier (contractor,
service provider) who is able to both meet the
customer’s needs in due time and show strong
performance and comply with price, quality
and reliability requirements
Ensuring safe operation of hazardous
UGSS facilities
Procurement transparency
Equality, fairness, non-discrimination,
no unreasonable and restrictive business prac-
tices towards bidders
Targeted and cost-efficient spending, and
implementation of measures to reduce the
customer’s costs
No restriction of access to bidding
Fostering competition between bidders
Ensuring the balance of costs related to organising and conducting
competitive procurement and expected economic benefits
Documents regulating procurement procedures
at PJSC Gazprom and its subsidiaries
— Federal Law No. 223-FZ On Procurement of Goods, Works and
Services by Certain Types of Legal Entities, dated 18 July 2011 (the
“Federal Law On Procurement”)
— A new version of the Regulations on the Procurement of Goods,
Works and Services by PJSC Gazprom and Gazprom Group
Companies (approved by Resolution of PJSC Gazprom’s Board of
Directors No. 3168 dated 19 October 2018, as amended)
Gazprom Group runs an effective vertically integrated
procurement system.
The role of PJSC Gazprom’s Central Procurement Office
is assigned to its Department established to implement the
uniform procurement policy of Gazprom Group in accordance
with the principles set forth in the Regulations on Procurement.
Procurement activities include cost optimisation through
the use of procurement procedures ensuring the selection
of counterparties on a competitive basis, evaluation of initial
(highest) prices of goods, works and services, as well as
prices of contracts concluded with sole suppliers (contractors,
service providers).
Procurement by PJSC Gazprom and its subsidiaries
is public, transparent, standardised, and
straightforward to the maximum possible extent
In line with the Federal Law On Procurement, information on
procurement, including procurement plans, notices and
competitive procurement documentation, minutes, informa-
tion on signed contracts and their execution, information
on the number and total price of contracts signed as a result
of procurement procedures are published in the Unified
Information System of public procurement of goods,
works and services for state and municipal needs (UIS,
www.zakupki.gov.ru).
Except for the information access to which is legally
restricted, the above mentioned information is available to the
general public.
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
197197
PJSC Gazprom Annual Report 2019
Procurement Performance
Procurement methods used by Gazprom Group
I
Competitive procurement
— Bidding — tender, auction, request for proposal, request for
quotation
— Competitive selection other than bidding
II
Non-competitive procurement
— Marketing research
— Procurement through the Trading Portal
— Non-alternative procurement
— Procurement through participation in bidding
— Procurement from a sole supplier (contractor, service provider)
The share of online procurement in the total value
of competitive procurement by PJSC Gazprom and its subsidiaries, %
2017
2018
2019
98.7
99.3
99.8
Total price of contracts awarded by PJSC Gazprom
and its subsidiaries through a competitive procurement process,
RUB bn
2017
2018
2019
427.9
(more than
15 thousand
contracts)
584.1
(more than
18 thousand
contracts)
520.1
(more than
16.9 thousand
contracts)
~ RUB20 bn
of annual savings of PJSC Gazprom and its
subsidiaries come from competitive procurement
To maintain procurement business processes, Gazprom
Group uses PJSC Gazprom’s Automated Electronic Procure-
ment System (AEPS, https://zakupki.gazprom.ru) covering
the entire procurement cycle from planning to signing and
executing a contract.
Gazprom Group’s online procurement is arranged
through the Electronic Trading Platform of Gazprombank
(ETP-GPB) (the Gazprom Group Procurement section
at https://etpgpb.ru/pao_gazprom/) integrated with the UIS
and the AEPS. ETP-GPB is included in the list of electronic
platform operators complying with the requirements set out in
the Federal Law On Procurement, including requirements
to procurements accessible to small and medium-sized
enterprises (SMEs).
In 2019, the Company complied with the targets
for the share of procurement from SMEs set
by the Russian Government
The Regulations on Procurement provide for PJSC Gazprom’s
pre-qualification process to compile a Register of Gazprom
Group’s potential bidders.
Savings by PJSC Gazprom and its subsidiaries
following a competitive procurement process, RUB bn
2017
2018
2019
Entities within the pre-qualification system and entities
included in the Register of Gazprom Group’s potential bidders
20.3
22.1
19.6
Total
including
SMEs
As at 1 February
2018
As at 1 February
2019
As at 1 February
2020
451
179
530
292
668
461
Note. Savings are defined as the difference between the initial (highest) and final contract
prices including the cost of the procurement process, as well as evaluation of initial
(highest) prices of goods, works and services.
198
PJSC Gazprom Annual Report 2019 Procurement Performance
As part of the pre-qualification process, Gazprom Group’s
Central Procurement Office monitors participating entities on
a quarterly basis, in particular, to assess instances of deadline
violation, change of price, lower quality of work, negative
references.
69 %
the share of SMEs among entities included
in the Register of Gazprom Group’s potential bidders
as at 1 February 2020
In the course of their procurement activities PJSC Gazprom
and its subsidiaries use all available levers not conflicting with
Russian laws to optimise the initial price of procured goods
(works, services).
Methods and tools used by PJSC Gazprom and its subsidiaries
to optimise the initial price of procured goods (works, services)
Before the tender is announced
One or more methods used:
— comparable market prices
— per unit rates
— cost method
—
rate method
— design estimates
— R&D estimates
— price calculation based on external factors
— price calculation for long lead engineering goods
During the tender
— Extension of deadlines to attract more bidders
— Submission of new business and price offers
In case of procurement from a sole supplier, prior to signing
a contract, Gazprom Group’s Central Procurement Office and
PJSC Gazprom’s Budget Committee review the price rationale
of contracts and supplementary agreements and typically
identify an opportunity to reduce the price by 10%–20%.
Enhancing access for small and medium-sized enterprises (SMEs)
to PJSC Gazprom’s procurement opportunities
Pursuant to resolutions issued by the Russian Government, PJSC Gazprom
implements a number of activities to enhance SMEs’ access to the
procurement process of PJSC Gazprom.
— A List of Goods, Works and Services to be procured by
PJSC Gazprom from SMEs was developed, approved and published
in the UIS
— PJSC Gazprom’s Procurement Plan designates procurement
opportunities accessible exclusively to SMEs
— Draft plans for procurement by PJSC Gazprom and individual
Gazprom Group companies of goods, works and services (including
innovative and high-tech products) set forth by Russian Government
Decree No. 2258-r dated 6 November 2015 are duly agreed with
Russian Small and Medium Business Corporation to ensure
compliance with the applicable Russian laws providing for involvement
of SMEs in procurement, including allocation of the SME quota in
the procurement plan
— PJSC Gazprom involves innovative SMEs under its Innovative
Development Programme until 2025
To roll out innovative SME products and review innovative
proposals coming from individuals and legal entities, the Company
operates a One-Stop System (www.oknogazprom.ru), managing the
whole process of submitting innovative proposals to be used in
PJSC Gazprom’s operations, from submission to the final decision.
Workshops are held on PJSC Gazprom’s relations with
innovative SME providers.
In 2019, PJSC Gazprom’s procurements from SMEs determined
pursuant to Resolution of the Russian Government No. 1352 On
Specifics of Participation of Small and Medium-Sized Enterprises in the
Procurement of Goods, Works and Services by Certain Types of Legal
Entities, dated 11 December 2014 (including the amounts paid) accounted
for 38.8% of the aggregate annual contract values, including 24.8% from
procurements accessible exclusively to SMEs. PJSC Gazprom complies
with the targets for the share of procurement from SMEs set by the
Russian Government.
In 2019, the aggregate value of contracts signed by Gazprom Group
with SMEs included in the Unified Register of Small and Medium-Sized
Enterprises (https://ofd.nalog.ru) amounted over RUB 380 bn, including
5.5 thousand contracts worth over RUB 122 bn through competitive
procurements accessible exclusively to SMEs. SMEs accounted for more
than half (59%, or 13.6 thousand) of the total number of Gazprom Group’s
suppliers of goods, works and services contracted in 2019.
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
199199
PJSC Gazprom Annual Report 2019
Procurement Performance
PJSC Gazprom’s 2019 annual report on procurement of goods, works and services by
certain types of legal entities from SMEs has been duly published in the Unified
Information System (information is available in Russian only)
www.zakupki.gov.ru
and on PJSC Gazprom’s website (information is available in Russian only)
www.gazprom.ru
The list of goods, works and services procured by PJSC Gazprom from SMEs has
been published in the UIS (information is available in Russian only)
www.zakupki.gov.ru
For more details on the One-Stop System see PJSC Gazprom’s website (information
is available in Russian only)
www.gazprom.ru
For more details on the procurement system at PJSC Gazprom and its subsidiaries
see Gazprom Group’s Sustainability Report published on an annual basis
200
PJSC Gazprom Annual Report 2019 Ensuring Compliance of Operations
with Legal Requirements
Legal support of PJSC Gazprom’s operations is inextricably
linked to relevant legal regulation and is focused on the
Company’s objectives:
— Achieving efficient financial and business performance
— Ensuring the completeness, timeliness and fairness of all
types of accounting and reporting at PJSC Gazprom, as
well as other information to be disclosed under applicable
laws
— Complying with applicable laws;
— Preventing and countering corruption
— Protecting PJSC Gazprom’s assets (including data assets)
Legal regulation is exercised in accordance with the Consti-
tution of the Russian Federation, Federal Law No. 69-FZ On
Gas Supply in the Russian Federation, dated 31 March 1999;
Federal Law No. 116-FZ On Industrial Safety of Hazardous
Production Facilities, dated 21 July 1997; Federal Law No. 7-FZ
On Environmental Protection, dated 10 January 2002; Federal
Law No. 174-FZ On Ecological Expertise, dated 23 November
1995; Federal Law No. 256-FZ On Safety of the Fuel and Energy
Complex, dated 21 July 2011, and other federal laws and
regulations of the Russian Federation, as well as international
laws, treaties and agreements.
Anti-Corruption Efforts
PJSC Gazprom has developed and adheres to the anti-
corruption framework while effective local regulations adopted
as part of anti-corruption measures help foster negative
sentiment towards corrupt conduct, prevent or resolve conflicts
of interest, and prevent unlawful behaviour.
Key legal efforts of PJSC Gazprom and its subsidiaries and entities
— Protection of rights and legitimate interests in administrative and
judicial proceedings
— Contract work and legal protection of PJSC Gazprom’s trademarks
in the Russian Federation and abroad, accounting and disclosure of
information about the Company affiliates
— Legal support of international business
—
— Legal support of the activities of PJSC Gazprom’s governing bodies
Improvement of the legislative and regulatory framework
and of interaction between PJSC Gazprom and its subsidiaries
and other entities in respect of which the Company has proprietary
and corporate rights
— Legal support of dedicated projects to protect interests and
reputation during mergers and acquisitions, restore and strengthen
corporate control over property investments, as well as in
interactions with law enforcement agencies
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
201201
PJSC Gazprom Annual Report 2019
Ensuring Compliance of Operations
with Legal Requirements
Russian anti-corruption statutory regulations
guiding PJSC Gazprom
— Federal Law No. 273-FZ On Combating Corruption, dated
25 December 2008 (the new version dated 16 December 2019)
— Federal Law No. 79-FZ On Prohibiting Certain Categories of Persons
from Opening and Keeping Bank Accounts (Deposits), Keeping
Cash and Securities with Foreign Banks Outside the Russian
Federation, and Possessing and/or Using Foreign Financial
Instruments, dated 7 May 2013 (the version dated 1 May 2019)
— Federal Law No. 230-FZ On Control over Expenditures of Public
Officials and Other Persons to Match Their Income, dated
3 December 2012 (the version dated 3 August 2018)
— Federal Law No. 432-FZ On Amending Certain Laws of the Russian
Federation to Improve Russian Anti-Corruption Law dated
16 December 2019
— Presidential Decree No. 557 On Approving the List of Positions
within the Federal Public Service Requiring Disclosure by Federal
Public Servants of Information on Their Income, Property and
Property Liabilities, as well as on Income, Property and Property
Liabilities of Their Spouses and Underage Children, dated 18 May
2009 (the version dated 31 December 2019)
— Presidential Decree No. 378 On the National Plan to Combat
Corruption for 2018–2020, dated 29 June 2018
International anti-corruption regulations
PJSC Gazprom has committed to
— United Nations Convention against Corruption (ratified by Federal
Law No. 40-FZ dated 8 March 2006)
— United Nations Convention against Transnational Organized Crime
(ratified by Federal Law No. 26-FZ dated 26 April 2004)
— Criminal Law Convention on Corruption of the Council of Europe
and non-member states (ratified by Federal Law No. 125-FZ dated
25 July 2006)
PJSC Gazprom’s anti-corruption practices comply with the
main international and Russian regulations.
Set of PJSC Gazprom’s anti-corruption documents
Documents approved by PJSC Gazprom’s Board of Directors
— Anti-Corruption Policy of PJSC Gazprom — PJSC Gazprom’s primary
anti-corruption document
— Code of Corporate Ethics of PJSC Gazprom
— Risk Management and Internal Control Policy of PJSC Gazprom
Documents approved by instructions and orders of PJSC Gazprom
— Regulations on the Corporate Ethics Commission of PJSC Gazprom
— Regulations on the Hotline for Fighting Fraud, Corruption and
Embezzlement at Gazprom Group
— Procedure for a Conflict of Interest Disclosure and Conflict of
Interest Resolution
— Procedure for reporting offences with signs of corruption committed
by employees, counterparties or third parties, which have become
known to an employee, and for dealing with allegations of
corruption
— Procedure for reporting cases when an employee is incited to
commit offences, and for reviewing such reports
— Procedure for protecting whistle blowers who have reported
offences relevant to the Company’s operations
The Board of Directors and executive bodies of PJSC Gazprom
are involved in preventing and combating corruption.
The process of preventing and revealing corrupt practices
at Gazprom Group is being improved. The Company imple-
ments the Anti-Corruption Plan for 2018–2020 approved by
PJSC Gazprom’s Board of Directors (Resolution of the Board
of Directors No. 3194 dated 18 December 2018).
Anti-corruption is a constant focus for PJSC Gazprom’s
management
Responsibilities of PJSC Gazprom’s governing bodies in preventing and combating corruption
PJSC Gazprom’s
Board of Directors
— Organises and is responsible for the general supervision of PJSC Gazprom’s activities in preventing
and combating corruption
— Regularly reviews reports from the Company’s executive bodies on corruption prevention and combating
activities
Chairman
of the Management Committee
— Allocates powers, responsibilities and accountability for preventing and combating corruption between
Deputy Chairmen of the Management Committee and the Company’s business units
— Ensures measures aimed at implementing the principles and requirements of the Anti-Corruption Policy,
including appointments of persons responsible for the development, implementation and supervision
of anti-corruption procedures
— Prepares proposals on enhancing anti-corruption internal controls at PJSC Gazprom
Audit Committee
of the Board of Directors
202
PJSC Gazprom Annual Report 2019
Ensuring Compliance of Operations
with Legal Requirements
Compliance with Corporate Ethics
PJSC Gazprom has adopted its Code of Corporate Ethics
developed with due account for Russian and international
corporate governance best practices.
The document details PJSC Gazprom’s corporate
values and determines the fundamental rules of business
conduct stemming from such values, which rule out any
conflicts of interest or corrupt practices and, in particular,
impose restrictions on nepotism, employee engagement
with PJSC Gazprom’s competitors, their serving on elected
government bodies, acceptance of gifts.
The Code specifies the procedure to be followed
by employees in the event of a conflict of interest, declares
zero tolerance for corrupt conduct, and establishes the
obligation of managers and employees to notify the employer
of any corrupt offers made to them. The Code also affirms
environmental responsibility and non-discriminatory principles,
and establishes implementation and supervision practices
on compliance with corporate ethics standards.
Employee penalties for non-compliance
with the Code of Corporate Ethics of PJSC Gazprom
— Social condemnation
— Public censure
— Forfeiture of bonuses (in line with internal documents)
— Disciplinary sanctions (if there are signs of a disciplinary offence)
The Code provisions are mandatory for PJSC Gazprom’s
employees and legal entities under its control and optional
for employees of PJSC Gazprom affiliates which are not
under its control, and for PJSC Gazprom’s counterparties.
In 2019, the Code was amended to cover members of
PJSC Gazprom’s Board of Directors in order to promote
the enhancement of corporate governance and introduce
the best practices of the Russian financial market. The
Regulations on the Board of Directors of PJSC Gazprom were
supplemented by provisions on identifying and preventing
conflicts of interest of Board members (Clause 5.5, Article 5
of the Regulation). The amendments to the Regulations
were approved by the Resolution of PJSC Gazprom’s
Annual General Shareholders Meeting dated 28 June 2019
(Minutes No.1). In addition, the standards of corporate ethics
were extended to members of boards of directors at entities
controlled by PJSC Gazprom.
203203
The Code compliance clause for the PJSC Gazprom’s
contracts with counterparties was drafted
In the reporting year, measures were taken to implement
codes of corporate ethics in controlled entities of the second
and subsequent levels of ownership (through controlled
companies of the first level of ownership). According to the
reporting data from subsidiaries, codes of corporate ethics
have been introduced in their subordinate investees.
In 2019, over 300 companies were involved
in introducing codes of corporate ethics across
PJSC Gazprom controlled entities
PJSC Gazprom and its subsidiaries organise regular aware-
ness days to communicate to their employees the effective
rules of business, including anti-corruption corporate ethics.
In 2019, employees of PJSC Gazprom’s Administration were
enrolled in the Corporate Ethics at PJSC Gazprom online
training course followed by final knowledge tests.
The standing Corporate Ethics Commission of
PJSC Gazprom, which also considers cases of employee
conflicts of interest, is responsible for the implementation of
the Code of Corporate Ethics, which is one of the Company’s
anti-corruption standards.
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
PJSC Gazprom Annual Report 2019
Ensuring Compliance of Operations
with Legal Requirements
Corporate Ethics Commission’s performance in 2019
Focus areas
Performance highlights
Reviewing reports on an ongoing basis as required by the applicable
Russian laws with the involvement of dedicated business units and
subsidiaries, if required
Revealing the signs of a conflict of interest in sole executive bodies of
entities controlled by PJSC Gazprom, and making recommendations on
preventing and/or mitigating possible negative effects of identified conflicts
of interest
Arranging annual activities to ensure that the Company’s management,
including employees who are members of PJSC Gazprom’s Board
of Directors and Management Committee, sign written commitments
to comply with the Code provisions in the prescribed form
During the reporting period the Commission held 7 meetings
and reviewed 18 matters, including those related to queries
made by employees of PJSC Gazprom and its subsidiaries.
The Commission’s performance is reported to the
Chairman of PJSC Gazprom’s Management Committee on an
annual basis. The Chairman of PJSC Gazprom’s Management
Committee may impose sanctions stipulated by the Code at
his own initiative or at the Commission’s suggestion, or at the
initiative of the violator’s immediate superior.
In 2019, no conflicts of interest were identified
for members of the Board of Directors, Management
Committee or the Chairman of the Management
Committee of PJSC Gazprom
Updates regarding the Code and the Commission are promptly
posted on PJSC Gazprom’s intranet server.
All the reports received by the Commission were reviewed
at meetings held in the reporting year
New heads of 40 companies controlled by PJSC Gazprom were
asked to fill in a conflict of interest questionnaire. The survey results
were reviewed at a Commission meeting
The Commission identified one nepotism-related conflict of interest
with the head of an entity controlled by PJSC Gazprom. The conflict
of interest situation was resolved
All relevant managers of PJSC Gazprom have signed and submitted
to the Commission for safekeeping written commitments to comply
with the Code
Preventing and Revealing Corrupt Practices
PJSC Gazprom’s Corporate Security Service and corporate
security departments of PJSC Gazprom’s subsidiaries prevent
and reveal corrupt practices at Gazprom Group as prescribed
by Russian laws and regulations of PJSC Gazprom. This
work relies on an ongoing cooperation with departments
responsible for internal audit, procurement, asset management
and corporate relations, PJSC Gazprom’s risk management
and internal control unit and with law enforcement agencies
of the Russian Federation.
Since November 2014, PJSC Gazprom has operated
a Hotline to report incidents of perceived fraud, corruption
and embezzlement in Gazprom Group. Similar arrangements
are in place at several PJSC Gazprom’s key subsidiaries.
Employees of PJSC Gazprom’s Corporate Security Service
and corporate security departments of subsidiaries review
the received information (via digital communication channels,
telephone or post, as well as reports made in person),
including anonymous, to reveal preconditions for, and
instances of, corruption at Gazprom Group.
204
PJSC Gazprom Annual Report 2019
Ensuring Compliance of Operations
with Legal Requirements
Performance of the Corporate Security Service’s Hotline in 2019
— More than 900 reports were received (mainly via e-mail), of which
most reports were not directly related to the purpose and objectives
of the Hotline and only 81 reports concerned possible violations
of Russian laws at Gazprom Group
— The majority of reports concerned possible violations
of procurement rules; complaints related to gas sales to end
consumers (primarily, households); possible fraudulent activities
by third parties and other violations
— Following the investigation of these reports the Service did not
identified any instances of corruption (as defined by Article 1
of Federal Law No. 273-FZ On Combating Corruption, dated
25 December 2008, as amended and supplemented)
Investigation results were communicated to relevant business units
of PJSC Gazprom, the Company’s subsidiaries and entities
—
Contact details of the Hotline for fighting fraud, corruption and embezzlement
at Gazprom Group are available on PJSC Gazprom’s website
www.gazprom.com
PJSC Gazprom adheres to the key principles of combating
corruption, fraud and elimination of conflicts of interest in
procurement, and takes measures to prevent relevant
violations. As part of enhancing the uniform procurement
system PJSC Gazprom approved the Programme to Improve
the Procurement Management in 2019, the implementation
of which provides, inter alia, for ongoing review of members
of tender committees for their affiliation with bidders and
possible private gain from certain tender results, including at
the stage of compiling a list of possible committee members.
Anti-corruption framework for preventing
and avoiding bad procurement practices
— Anti-corruption clauses of procurement contracts provide for
disclosing counterparties’ ultimate beneficiaries
— The annual procurement plan is publicly available
— A dedicated collective body, the Tender Committee, is established
to summarise the competitive bidding and marketing research
results. Gazprom Group closely monitors the membership of the
Tender Committee to avoid any conflict of interest. Members of the
Tender Committee who have vested interests in the procurement
process results or are bidders’ employees or management shall
withdraw (with a corresponding entry made in the minutes) and
abstain from voting on the matter. Votes of the interested Tender
Committee members are not taken into account when counting the
votes following the procurement procedure. The Tender
Committee’s decisions on the winning supplier (contractor, service
provider) are guided by the principles of fair, equal and objective
treatment of the bidders based on the bid assessment and
comparison criteria set out in the tender documentation (a request
for quotation notice)
— Corporate entities and officers engaged in arranging and
conducting procurements bear administrative liability for violating
the procedure for procuring goods, works and services, as
prescribed by Article 7.32.3 of the Russian Federation Code of
Administrative Offences
In order to protect the rights of bidders to challenge the actions of
the customer (organiser) pursuant to the Federal Law On
Procurement, the Provisions on Procurement provide for a 10-day
period during which no contract may be awarded following a tender
—
— Bidders have the right and opportunity to propose to PJSC Gazprom
(including anonymously) improvements to bidding procedures,
comments and complaints regarding actions/omission of customers,
organisers and/or their officers, inform about unreasonable
requirements to procurement items, suppliers (service providers),
deadlines and terms of delivery of goods (performing work,
rendering services) in the tender documentation, as well as about
other unreasonable restrictions of competition during the
procurement process. The feedback form for potential bidders is
available in the Tenders section of PJSC Gazprom’s official website
Subsidiaries gather and consolidate information on measures
taken to comply with the requirements and restrictions
established by codes of corporate ethics regarding the
amount of entertainment expenses, business gift expenses,
charity and other activities involving corporate risk exposure.
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
205205
PJSC Gazprom Annual Report 2019
PJSC Gazprom’s Board of Directors approved a new version
of the Regulations on Monitoring Compliance with Laws on
Countering the Illegal Use of Insider Information and Market
Manipulation at PJSC Gazprom in 2019 (Resolution No. 3338
dated 19 November 2019). The document provides for the
duty of the responsible unit to monitor compliance with laws
on countering the illegal use of insider information and
market manipulation.
In 2019, no violations of insider information laws
involving the Company or its employees were
identified
Development of insider information protection safeguards will
continue into 2020.
Plans for 2020 to improve safeguards protecting insider information
— Draft and approve a new version of the Regulations on Access
to Insider Information of Joint Stock Company Gazprom and
Maintaining its Confidentiality, incorporating instructions and
recommendations of the Bank of Russia
— Develop and approve internal controls to identify and prevent illegal
use of insider information and/or market manipulation in pursuance
of Russian laws
All information required to perform the duties of preventing illegal use of insider
information and market manipulation, as well as information on the legal
consequences of illegal use of PJSC Gazprom’s insider information by an insider and/
or market manipulation is available on PJSC Gazprom’s website
www.gazprom.com
Ensuring Compliance of Operations
with Legal Requirements
Corporate security departments of subsidiaries send quarterly
reports on anti-corruption efforts and any revealed cases with
indirect signs of corruption to PJSC Gazprom’s Corporate
Security Service and inform the Service of decisions made
following the investigation of such cases.
The Anti-Corruption Policy of PJSC Gazprom is available on PJSC Gazprom’s
website
www.gazprom.com
Countering the Illegal Use of Insider Information
and Market Manipulation
Under Russian statutory requirements, PJSC Gazprom
counters the illegal use of insider information, has the rules
regulating access to its insider information and protection of
confidentiality of such information, and determines the
framework of monitoring compliance with the relevant laws.
PJSC Gazprom has a business unit responsible for com-
pliance with insider laws and regulations.
Duties of the business unit responsible for insider information
— Monitors changes in the laws on countering the illegal use of insider
information and market manipulation
— Updates the Company’s local regulations
— Updates relevant sections of PJSC Gazprom’s website
— Updates insider lists
— Communicates with the Bank of Russia as regulator and with stock
exchanges; sends updated insider lists to market operators as
requested
— Notifies individuals of their inclusion in and removal from the
—
Company’s insider list
Informs insiders, including PJSC Gazprom’s employees, of the
applicable legal requirements on a regular basis; sends Information
for Insiders, which is updated in line with changes in legislation
and/or PJSC Gazprom’s local regulations, to the individuals
included in PJSC Gazprom’s insider list
— Monitors compliance with the laws on countering the illegal use
of insider information
206
PJSC Gazprom Annual Report 2019
Share Capital and Securities Market
The steps taken in 2019 to enhance corporate governance
and dividend policy were recognised by the investment
community. At year-end, the US dollar-denominated
price of the Company shares increased by 87% and
PJSC Gazprom became the No. 1 company in the Russian
stock market in terms of capitalisation. Creating conditions
for capitalisation increase, strengthening and developing
a constructive dialogue with shareholders and investors are
our top near-term priorities.
Shareholding Structure
PJSC Gazprom’s charter capital is RUB 118,367,564,500 divided
into 23,673,512,900 ordinary registered shares with a par value
of RUB 5 each. State registration number of the issue is
1-02-00028-A. The state registration date is 30 December 1998.
The Company has no preferred shares.
As the major shareholder of PJSC Gazprom, the Russian
Federation holds a more than 50% controlling stake (including
direct and indirect ownership). The Russian Federation does
not have a special right to manage PJSC Gazprom’s affairs
(a “golden share”).
PJSC Gazprom’s shareholding structure, %
As at 31 December
2018
As at 31 December
2019
The Russian Federation
represented by the Federal Agency
for State Property Management
AO ROSNEFTEGAZ*
AO Rosgazifikatsiya*
ADR holders**
Other registered holders
38.37
10.97
0.89
24.13
25.64
38.37
10.97
0.89
19.70
30.07
* As at 31 December 2018 and 31 December 2019, the cumulative share in PJSC Gazprom
directly or indirectly controlled by the Russian Federation totals 50.23% and is owned
through the full ownership of AO ROSNEFTEGAZ which also holds a 74.55% stake
in AO Rosgazifikatsiya.
** The Bank of New York Mellon issued ADRs on PJSC Gazprom shares.
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
207207
PJSC Gazprom Annual Report 2019
Share Capital and Securities Market
The Memorandum of Intent of the Russian Federation as the Major Shareholder of
PJSC Gazprom regarding PJSC Gazprom shares is available on PJSC Gazprom’s
website
www.gazprom.com
According to the Memorandum of Intent of the Russian
Federation as the Major Shareholder of PJSC Gazprom, the
Planned Forecast (Programme) for the Privatisation of Federal
Property and the 2020–2022 Federal Property Privatisation
Guidelines (approved by Decree of the Russian Government
No. 3260-r dated 31 December 2019), there are no plans to
dispose of any PJSC Gazprom shares owned by the federal
government. In 2019, the Company received no information
on any special agreements between PJSC Gazprom’s
shareholders.
472,162 shareholders
included in the list of persons entitled to participate
in PJSC Gazprom’s Annual General Shareholders
Meeting in 2019
As at 31 December 2019, there were no PJSC Gazprom shares
the title to which was transferred to the Company. At the
same time, as at the said date, PJSC Gazprom subsidiaries
held 29 million ordinary shares in the Company representing
0.1% of the total number of ordinary shares of PJSC Gazprom.
The key reason behind the reduction of the ADR holders’
stake in PJSC Gazprom in 2019 was the conversion of ADRs
into ordinary shares through the sale of the Company quasi-
treasury shares in November 2019. Moreover, the reduction of
the ADR stake was influenced by the increasing appetite of
global investors for shares in Russian companies, largely
driven by infrastructure improvements in the Russian securities
market and by most international funds buying shares of
public Russian companies having obtained direct access to
trading on the Moscow Exchange.
Sale of PJSC Gazprom quasi-treasury shares in 2019
In July and November 2019, PJSC Gazprom subsidiaries divested 2.93%
and 3.59% of their shares in PJSC Gazprom (in the form of ordinary
shares and ADRs) through the Moscow Exchange trading platform, for
total amounts of RUB 139 bn and RUB 188 bn, respectively. The chosen
transaction profiles made it possible to avoid share price correction,
which is typical for a standard secondary offering. For example, the
deviation of the offering price from the weighted average bookbuilding
price when a block of shares was sold in November 2019 was only 1.8%,
which is a strong showing.
While Gazprom share prices continued to grow in 2019, both
transactions were carried out in view of increasing the Company’s
capitalisation. As a result of the offering, the free float of the Company
shares increased, which is confirmed by the valuation of the Moscow
Exchange and is a positive signal for the market.
The sale of 3.59% of PJSC Gazprom shares
in November 2019 became the largest secondary
offering in the Russian market since 2007
Stock Market and Capitalisation
PJSC Gazprom shares are included in the first (top) level
quotation list of the Moscow Exchange and the Saint
Petersburg Exchange.
50 %
PJSC Gazprom shares in free float as at 6 February
2020 (according to the Moscow Exchange)
In October 1996, the Company listed depositary receipts on
the London Stock Exchange (LSE). The ADRs certifying the
rights to PJSC Gazprom ordinary shares under foreign law
were issued by The Bank of New York Mellon as depositary
bank. An ADR stands for two PJSC Gazprom shares. ADRs
on PJSC Gazprom shares are traded on the London, Berlin
and Frankfurt exchanges, the Moscow Exchange, the
US OTC market, and on the Singapore OTC market among
qualified institutional buyers (QIBs). The London Stock
Exchange accounts for the bulk of trade in PJSC Gazprom
ADRs. PJSC Gazprom explores opportunities to expand
on Asia Pacific exchanges.
208
PJSC Gazprom Annual Report 2019 Share Capital and Securities Market
PJSC Gazprom’s market capitalisation in 2019 increased
significantly to RUB 6.1 tn as at 31 December 2019, or USD 98 bn
(RUB 3.6 tn or USD 52.3 bn as at 31 December 2018).
2019 saw a notable increase in the average daily trading in
PJSC Gazprom ordinary shares on the Moscow Exchange
and in ADRs on PJSC Gazprom ordinary shares on the London
Stock Exchange. PJSC Gazprom’s capitalisation dynamics
and the volume of trading in shares and ADRs on the Company
shares were largely driven by increased dividend payouts and
the announcement of a new Dividend Policy being drafted to
provide for the payout ratio of 50% of the adjusted IFRS net
profit of Gazprom Group. In addition, investors followed
other events related to the Company’s operations, including
progress in the construction of export gas pipelines and
the sale of two blocks of shares in PJSC Gazprom owned by
its subsidiaries.
PJSC Gazprom share price growth in 2019 largely
outperformed the MOEX Russia Index over the same
period
PJSC Gazprom’s market capitalisation in 2019,
RUB tn
Main indices of Russian exchanges which include the stock
of PJSC Gazprom
Index
MSCI Russia
MSCI Emerging Markets
FTSE Russia IOB
MOEX Russia Index
(IMOEX)
MOEX Blue Chip Index
(MOEXBC)
MOEX Broad Market Index
(MOEXBMI)
MOEX Oil and Gas Index
(MOEXOG)
RTS Index (RTSI)
RTS Oil and Gas Index (RTSOG)
MOEX — RSPP Responsibility
and Transparency Index
MOEX — RSPP Sustainability
Vector Index
PJSC Gazprom’s share and DR index
weight as at 31 December 2019
18.04%
0.71%
19.57%
14.37%
17.69%
14.38%
14.54%
14.37%
14.54%
15.00%
4.90%
7.0
6.0
5.0
4.0
3.0
01
02
03
04
05
06
07
08
09
10
11
12
Note. Market capitalisation is calculated as the daily rouble-denominated closing share
price on the Moscow Exchange multiplied by the total number of PJSC Gazprom shares
issued.
The total shareholder return was 0.783 in 2019, due to an
increase in the market value of the Company shares.
PJSC Gazprom shares are on the list of underlying
securities for stock indices, including the MSCI Russia,
MSCI Emerging Markets, FTSE Russia IOB, STOXX All Europe
100, as well as indices of leading Russian stock exchanges.
PJSC Gazprom ordinary share price performance
and daily trading volumes on the Moscow Exchange in 2019
250
225
200
175
150
01
02
03
04
05
06
07
08
09
10
11
12
Share price, RUB
Trading volume, mm shares
PJSC Gazprom ADR price performance
and daily trading volumes on the LSE in 2019
8
7
6
5
4
250
200
150
100
50
50
40
30
20
10
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
01
02
03
04
05
06
07
08
09
10
11
12
ADR price, USD
Trading volume, mm shares
209209
PJSC Gazprom Annual Report 2019
Share Capital and Securities Market
Dividend Policy
In 2019 PJSC Gazprom’s Board of Directors approved a new
Dividend Policy of PJSC Gazprom (Resolution of the Board of
Directors No. 3363 dated 24 December 2019). The document
harmonises the interests of the Company’s major shareholder,
the Government of the Russian Federation, minority share-
holders, and the Company’s development priorities. One of
its key principles is a transparent dividend calculation method,
with the new formula based on the Group’s IFRS net profit
adjusted for five non-cash items.
The approval of the PJSC Gazprom’s
new Dividend Policy is one of the most significant
corporate events of 2019
The new Dividend Policy provides for a gradual increase of the
lowest dividend payout ratio from 30% to 50% within a three-
year period. In addition, a leverage threshold has been set,
which, if reached, may trigger a decision by the Company’s
Board of Directors to reduce dividends. This threshold, which
is introduced to maintain financial stability, is 2.5x of the
Adjusted Net Debt/Adjusted EBITDA ratio.
Items adjusting the IFRS profit for the year
attributable to shareholders of PJSC Gazprom,
used in determining the basis for dividend calculation
(Clause 3.1 of PJSC Gazprom’s Dividend Policy)
— Foreign exchange gain (loss) included in finance income and
expenses
— Foreign exchange rate differences on operating items
—
Impairment loss (reversal of impairment loss) on fixed assets and
construction in progress
Impairment loss (reversal of impairment loss) on investments in
associates and joint ventures
—
— The difference between the share in profits of associates and joint
ventures and proceeds from associates and joint ventures
50 %
of the adjusted IFRS net profit
will be paid to shareholders for 2021
PJSC Gazprom’s dividend history in 2015–2019
Dividend per share*, RUB
Dividend payout ratio, share of PJSC Gazprom’s net profit under RAS (parent company), %
Dividend payout ratio, share of Gazprom Group’s IFRS profit attributable to the owners of PJSC Gazprom, %
PJSC Gazprom’s dividend yield**, %
2015
2016
7.89
8.0397
46
24
5.8
46
20
5.2
2017
8.04
190
27
6.2
2018
16.61
42
27
10.8
2019
15.24
55
30
5.9
* Recommended dividend shown for 2019.
** Dividend yield for the relevant period is calculated as a ratio of total dividend paid per share for the relevant year to the share price as at 31 December.
For 2019, PJSC Gazprom’s Board of Directors recommended
to distribute dividends of RUB 15.24 per share. Dividend
payouts will total RUB 360.8 bn.
Therefore, dividends on PJSC Gazprom shares recom-
mended for distribution for 2019 will amount to 30% of Gazprom
Group’s IFRS profit for the year attributable to the owners of
PJSC Gazprom. Due to the negative impact on the dividend
calculation basis of adjustments for non-cash items provided
for by the new Dividend Policy, it was decided not to take
them into account in calculating the 2019 dividends.
The Company’s full dividend history is available on PJSC Gazprom’s website
www.gazprom.com
210
PJSC Gazprom Annual Report 2019 Share Capital and Securities Market
PJSC Gazprom’s dividends paid in 2019 for 2018 as at 31 December 2019
Total
including dividends on shares:
Accrued,
RUB thousand
Paid,
RUB thousand
Unpaid,
RUB thousand*
Unpaid to accrued,
%
393,217,049
392,565,849
651,200
0.17
held by the Russian Federation represented by the Federal Agency for
State Property Management
held by individuals and corporate entities whose rights to shares are
accounted for in the register
held by individuals and corporate entities whose rights to shares are
accounted for by the depositary maintaining a nominee holder account
in the issuer’s register**
held by unidentified persons
150,890,965
150,890,965
–
55,982,946
55,612,794
370,152
186,342,826
186,062,090
280,736
312
–
312
–
0.66
0.15
100.00
* No dividend payouts were made to individuals or corporate entities who had failed to provide clear payout details as per clauses 8 and 9 of Article 42 of Federal Law No. 208-FZ
On Joint Stock Companies dated 26 December 1995. Dividends accrued on shares held by unidentified persons are paid out as soon as the title to securities is established.
** PJSC Gazprom paid out RUB 186,342,826 thousand in dividends to nominee holders on 1 August 2019 in execution of the Annual General Shareholders Meeting’s resolutions on
dividend payouts based on PJSC Gazprom’s 2018 results, which was held on 28 June 2019. As at 31 December 2019, the amount of dividends nominee holders failed to transfer as
prescribed by the securities laws of the Russian Federation for reasons beyond their control (clauses 8 and 9 of Article 42 of Federal Law No. 208-FZ dated 26 December 1995)
totalled RUB 280,736 thousand.
PJSC Gazprom’s dividends paid in 2019 for 2015–2017, RUB thousand
Shareholder category
Corporate entities*
Individuals*
Nominee holders**
Holders unidentified as at the time of accrual***
Unpaid as at
1 January 2019
Paid in 2019
Reinstated in 2019
as retained
earnings upon
expiry of the
limitation period
Unpaid as at
31 December 2019
4,803
531,429
343,645
418
61
20,063
58,908
–
1,457
166,007
86,209
119
3,285
345,359
198,528
299
547,471
Total
880,295
79,032
253,792
* No dividend payouts were made to individuals or corporate entities who had failed to provide clear payout details as per Federal Law No. 208-FZ On Joint Stock Companies dated
26 December 1995.
** The nominee holders who failed to transfer dividends as prescribed by the securities laws of the Russian Federation for reasons beyond their control (clauses 8 and 9 of Article 42
of Federal Law No. 208-FZ dated 26 December 1995).
*** Dividends accrued on shares held by unidentified persons are paid out as soon as the title to securities is established.
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
211211
PJSC Gazprom Annual Report 2019
Share Capital and Securities Market
Credit Ratings
Credit ratings assigned to PJSC Gazprom by Standard & Poor’s
and Fitch, are comparable with sovereign foreign currency
ratings of the Russian Federation, while Moody’s rating is one
notch above the sovereign rating.
The Company provides rating agencies with access to
all information necessary for a comprehensive and reliable
evaluation of Gazprom Group’s creditworthiness and possible
risks.
In 2019, Moody’s and Fitch upgraded their credit ratings
for PJSC Gazprom, while the rating assigned by Standard
& Poor’s remained unchanged.
Gazprom Group companies are reliable borrowers in
the domestic and international capital markets, able to raise
funds on favourable terms.
PJSC Gazprom has investment grade ratings
from three international agencies — Standard & Poor’s,
Moody’s and Fitch
For more details on PJSC Gazprom’s credit ratings see PJSC Gazprom’s website
www.gazprom.com
Credit ratings of PJSC Gazprom
Rating agency
Standard & Poor’s
Fitch Ratings
Moody’s
Dagong
ACRA
Borrowing on International
and Russian Capital Markets
Long-term foreign currency rating
Rating date
BBB− (stable outlook)
BBB (stable outlook)
Baa2 (stable outlook)
AAA (stable outlook)
AAA (stable outlook)
27 February 2018
15 August 2019
12 February 2019
30 October 2018
2 February 2018
The borrowing market capacity driven by international and
Russian capital markets can meet PJSC Gazprom’s needs in
debt financing, which are aligned with the Investment
Programme developed to incorporate major strategic projects.
In December 2019, Gazprom Group project financing
for construction of the Amur GPP in the total amount of
EUR 11.4 bn.
The EMTN Programme is a revolving multi-currency credit
line for up to USD 40 bn (the maximum outstanding principal
amount).
As at 31 December 2019, there were 21 Eurobond issues
outstanding for the total amount of USD 9.05 bn, EUR 5.75 bn,
CHF 1.75 bn and GBP 1.35 bn. The issuer is Gaz Capital S.A.
(Luxembourg), a special-purpose vehicle. The JBIC-guaran-
teed JPY 65 bn bond issue was made in 2018, has a maturity
of 10 years and a 1.01% coupon rate. The issuer was GazAsia
Capital S.A. (Luxembourg), a special-purpose vehicle.
PJSC Gazprom raises funds in the international capital
PJSC Gazprom foreign currency-denominated bonds
markets through the EMTN (Euro Medium Term Note)
Programme. Additionally, the Company places rouble bonds.
are historically purchased by a wide range of investors with
different country and institutional backgrounds.
212
PJSC Gazprom Annual Report 2019 Share Capital and Securities Market
Major loans raised by PJSC Gazprom in 2019
Type
Loan
Club loan
Loan
Transaction date
Amount
Interest rate or coupon
Maturity date
27.12.2018*
21.02.2019
03.07.2019
EUR 500 mm
EUR 500 mm
EUR 1,500 mm
EURIBOR+1.6%
EURIBOR+1.65%
EURIBOR+2.1%
27.12.2023
21.02.2024
30.06.2024
* Withdrawal made in January 2019.
PJSC Gazprom’s outstanding Eurobond issues placed under the EMTN Programme as at 31 December 2019
Amount
USD 1.2 bn
USD 1.3 bn
USD 1.25 bn
USD 0.6 bn
USD 1.0 bn
USD 0.8 bn
USD 0.9 bn
EUR 1.0 bn
EUR 0.5 bn
GBP 0.5 bn
EUR 0.75 bn
EUR 1.0 bn
CHF 0.5 bn
USD 0.75 bn
GBP 0.85 bn
CHF 0.5 bn
EUR 0.75 bn
CHF 0.75 bn
EUR 0.75 bn
EUR 1.0 bn
USD 1.25 bn
Placement date
28.04.2004
07.03.2007
16.08.2007
23.11.2011
19.07.2012
06.02.2013
06.02.2013
21.03.2013
21.03.2013
25.09.2013
26.02.2014
17.11.2016
30.11.2016
23.03.2017
06.04.2017
19.07.2017
22.11.2017
06.03.2018
21.03.2018
16.11.2018
11.02.2019
Maturity date
28.04.2034
07.03.2022
16.08.2037
23.01.2021
19.07.2022
06.02.2020
06.02.2028
20.03.2020
21.03.2025
25.09.2020
26.02.2021
17.11.2023
30.11.2021
23.03.2027
06.04.2024
19.07.2022
22.11.2024
06.03.2023
21.03.2026
24.01.2024
11.02.2026
Coupon, %
ISIN
8.625
6.51
7.288
5.999
4.95
3.85
4.95
3.389
4.364
5.338
3.6
3.125
2.75
4.95
4.25
2.25
2.25
1.45
2.5
2.949
5.15
XS0191754729
XS0290580595
XS0316524130
XS0708813810
XS0805570354
XS0885733153
XS0885736925
XS0906946008
XS0906949523
XS0974126186
XS1038646078
XS1521039054
CH0346828400
XS1585190389
XS1592279522
CH0374882816
XS1721463500
CH0404311711
XS1795409082
XS1911645049
XS1951084471
PJSC Gazprom’s outstanding Eurobond issues placed outside the EMTN Programme as at 31 December 2019
Amount
JPY 65 bn
Placement date
18.02.2018
Maturity date
18.02.2028
Coupon, %
1.01
ISIN
JP90B0049BP6
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
213213
PJSC Gazprom Annual Report 2019
Share Capital and Securities Market
PJSC Gazprom rouble bonds outstanding as at 31 December 2019
Size, RUB bn
Placement date
Maturity date
Callability
Coupon, %
Registration number
Issuer
15.0
15.0
15.0
15.0
5.0
5.0
10.0
10.0
10.0
15.0
15.0
15.0
15.0
27.11.2013
21.10.2043
27.11.2013
21.10.2043
If the coupon rate
reaches or exceeds
10%
If the coupon rate
reaches or exceeds
10%
Calculated by issuer
with formula*
Calculated by issuer
with formula*
4B02-19-00028-A
PJSC Gazprom
4B02-20-00028-A
PJSC Gazprom
15.02.2017
03.02.2027
07.02.2024
15.02.2017
03.02.2027
07.02.2024
27.02.2018
15.02.2028
18.02.2025
27.02.2018
15.02.2028
18.02.2025
27.02.2018
15.02.2028
18.02.2025
27.02.2018
15.02.2028
18.02.2025
8.9
8.9
7.15
7.15
7.15
7.15
4B02-05-36400-R
4B02-06-36400-R
4B02-01-36400-R
4B02-02-36400-R
4B02-03-36400-R
4B02-04-36400-R
OOO Gazprom
capital**
OOO Gazprom
capital**
OOO Gazprom
capital**
OOO Gazprom
capital**
OOO Gazprom
capital**
OOO Gazprom
capital**
31.07.2018
31.07.2018
31.07.2018
06.06.2019
12.07.2033
23.06.2048
23.06.2048
02.06.2022
18.07.2019
11.07.2024
22.07.2025
22.07.2025
8.10***
8.10***
4B02-07-00028-A
PJSC Gazprom
4B02-22-00028-A
PJSC Gazprom
22.07.2025
8.10***
4B02-23-00028-A
PJSC Gazprom
–
–
7.99
7.80
4B02-01-36400-R-
001P
OOO Gazprom
capital**
4B02-02-36400-R-
001P
OOO Gazprom
capital**
* Ki = (CPI − 100%) + 1%, where:
Ki means the interest rate for the ith coupon period, but not less than 0.01% per annum
CPI means the consumer price index calculated for the Russian Federation and expressed as percentage year-on-year
** Special-purpose subsidiary for raising funds in the Russian financial market.
*** The interest rate is for the 1st to 14th coupon period. Starting from the 15th coupon period, the interest rate is determined according to paragraph 9.3 of the Resolution on Securities
Issue.
For more details on PJSC Gazprom’s bond issues see PJSC Gazprom’s website
www.gazprom.com
214
PJSC Gazprom Annual Report 2019 Share Capital and Securities Market
Shareholder and Investor Relations
PJSC Gazprom securities are among the most liquid financial
instruments in the Russian market. The Company’s investor
base comprises several thousand institutional investors,
including major foreign investors, such as investment funds,
pension funds, banks, and insurance companies, as well as
private investors. Investors based in the United States, the
UK, and mainland Europe remain the largest minority holders
of PJSC Gazprom shares and ADRs.
PJSC Gazprom uses numerous tools to maintain its
shareholder and investor relations. This is a systematic effort
balanced by event format, accessibility for a wide range of
investors and geographic diversification.
Largest Russian and foreign investment banks publish regular
analyst reports on PJSC Gazprom shares. As at the end of 2019,
all analysts recommended to “buy” (“over-weight”) or “hold”
(“neutral”).
PJSC Gazprom intends to further streamline its relations
with existing and potential investors and shareholders to
develop a meaningful dialogue with the investment commu-
nity, increase the Company’s capitalisation, and reduce the
cost of new borrowings.
Geography of institutional investors in PJSC Gazprom shares and ADRs as at December 2019, %
.
.
.
.
.
.
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
Source: Investor Update
215215
PJSC Gazprom Annual Report 2019
Share Capital and Securities Market
Measures aimed at maintaining relations with the investment community
— Gazprom Investor Day, the largest annual event for investors
— Conference calls dedicated to the publication of Gazprom Group’s
IFRS consolidated financial statements involving the Company’s
management (based on the publication of quarterly and annual
IFRS statements)
— Meetings of Gazprom’s management and authorised representatives
with investors and shareholders in the Company’s offices in Moscow
and Saint Petersburg
— Daily interfaces with investment bank analysts, shareholders and
investors to keep them informed about the most important
provisions of the development strategy adopted by PJSC Gazprom
and its major subsidiaries and the situation and performance in key
markets, as well as to provide information and answers to their
questions
Investment community visits to Gazprom Group’s production
facilities
—
— Participation of the Company’s representatives in international
— Round tables attended by representatives of Gazprom Group,
investor conferences held in Russia and abroad and organised by
leading investment banks (according to the annual Investor and
Shareholder Relations Plan approved by the Chairman of
PJSC Gazprom’s Management Committee)
— Targeted investor meetings (roadshows) in the regions with the
highest concentration of existing and potential investors — holders
of PJSC Gazprom ADRs and shares, and investors in debt
instruments (held on a regular basis and timed to coincide with
major Company events)
independent international experts and analysts as well as investors
— Meetings of independent members of Gazprom’s Board of Directors
with the Company’s major shareholders in Russia and abroad
— Targeted meetings and conference calls with investors on
environmental protection, industrial safety and corporate
governance
— Annual final meeting of the Company’s management with investment
analysts to summarise the preliminary results for the reporting year
2019 highlights in shareholder and investor relations
Event
Investor Day in Hong Kong (26 February) and Singapore (28 February)
Publication of PJSC Gazprom’s 2018 RAS Financial Statements
Publication of the 2018 Annual Financial Report under FSA requirements, including the 2018 IFRS Financial
Statements, a conference call with investors
Publication of PJSC Gazprom’s Q1 2019 IFRS Financial Statements, a conference call with investors
Press briefings of PJSC Gazprom’s top management on the 2018 results
Publication of PJSC Gazprom Annual Report 2018
PJSC Gazprom’s Annual General Shareholders Meeting
Investor and analyst visits to TurkStream facilities in Anapa (Russia) and Kiyikoy settlement (Turkey), a roundtable
discussion on the European gas market
Publication of PJSC Gazprom’s Q2 2019 IFRS Financial Statements, a conference call with investors
Publication of Gazprom Group’s Sustainability Report 2018
Publication of PJSC Gazprom’s Q3 2019 IFRS Financial Statements, a conference call with investors
Meeting of the Coordinating Committee for Shareholder and Investor Relations
Meeting of PJSC Gazprom’s management with investment analysts to summarise the 2019 preliminary results
Date
February
1 April
29 April
30 May
May–June
6 June
28 June
July
29 August
26 September
29 November
17 December
20 December
216
PJSC Gazprom Annual Report 2019 Share Capital and Securities Market
Guidance for PJSC Gazprom shares in 2019
Company
Alfa-Bank
ATON
BCS
Veles Capital
VTB Capital
Gazprombank
Uralsib
Bank of America Merrill Lynch
Deutsche Bank
Citigroup
Goldman Sachs
HSBC
JP Morgan
Morgan Stanley
Raiffeisenbank
Renaissance Capital
Sberbank CIB
SOVA Capital
UBS
Wood & Company
Guidance, end of 2018
Guidance, end of 2019
–
Buy
Buy
Hold
Buy
Buy
Buy
Hold
Buy
Buy
Buy
Buy
Hold
Buy
Buy
Buy
Buy
Buy
Hold
Buy
Buy
Buy
Hold
Buy
Hold
Hold
Buy
Buy
Termination of coverage
Buy
Buy
Hold
Buy
Buy
Hold
Buy
Hold
Hold
Hold
Buy
Contact details of investment analysts regularly covering PJSC Gazprom are available
on PJSC Gazprom’s website
www.gazprom.com
Change
–
No adjustments
Downgrade
Upgrade
Downgrade
Downgrade
No adjustments
Upgrade
–
No adjustments
No adjustments
Downgrade
Upgrade
No adjustments
Downgrade
No adjustments
Downgrade
Downgrade
No adjustments
No adjustments
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
217217
PJSC Gazprom Annual Report 2019
Appendices
218
PJSC Gazprom Annual Report 2019
PJSC Gazprom Annual Report 2019 Major and Interested Party Transactions 220
Disposal of Non-core Assets
by PJSC Gazprom and Subsidiaries 221
Implementation of Presidential and Governmental
Directives and Instructions 222
Energy Consumption by PJSC Gazprom
and its Actual Cost 228
Additional Information for the Annual Report available
on PJSC Gazprom’s Corporate Website 229
Glossary 230
Contacts 234
219
219
i
s
e
c
d
n
e
p
p
A
PJSC Gazprom Annual Report 2019 Major and Interested Party Transactions
In 2019, PJSC Gazprom closed no transactions treated as
major transactions under the applicable laws of the Russian
Federation.
For details of transactions closed by PJSC Gazprom in
the reporting year and treated as interested party transactions
under the applicable laws of the Russian Federation see the
Report on PJSC Gazprom’s Interested Party Transactions in
2019 approved by Resolution of PJSC Gazprom’s Board
of Directors No. 3435 dated 21 May 2020 and available on the
web pages used by PJSC Gazprom for information disclosure:
www.gazprom.com and www.e-disclosure.ru.
The Report on PJSC Gazprom’s Interested Party Transactions in 2019 is available
on PJSC Gazprom’s website
www.gazprom.com
The Report on PJSC Gazprom’s Interested Party Transactions in 2019 is available
on PJSC Gazprom’s page on the website of Interfax — Centre for Corporate
Information Disclosure (information is available in Russian only)
www.e-disclosure.ru
220
PJSC Gazprom Annual Report 2019 Disposal of Non-core Assets
by PJSC Gazprom, its Subsidiaries and Entities
Actual proceeds from non-core asset disposal by
PJSC Gazprom, its subsidiaries and entities in 2019 totalled
RUB 336.61 bn, including VAT (excluding intra-group
transactions — RUB 333.47 bn), including:
—
those owned by PJSC Gazprom — RUB 5.59 bn
(excluding intra-group transactions — RUB 3.61 bn)
those owned by PJSC Gazprom’s subsidiaries and
entities — RUB 331.02 bn (excluding intra-group
transactions — RUB 329.86 bn).
—
221
i
s
e
c
d
n
e
p
p
A
PJSC Gazprom Annual Report 2019 Implementation of Presidential and Governmental
Directives and Instructions
On Submitting Information on Holding Assets Located
in the Russian Federation Through Foreign Legal Entities
by Joint Stock Companies to the Russian Ministry
of Economic Development
(Russian Government Directives No. 5945p-P13 dated
25 August 2017)
Pursuant to the Directives and the letter by the Russian
Ministry of Economic Development, information was provided
to the Ministry regarding PJSC Gazprom’s holding of assets
located in the Russian Federation through foreign legal entities
as at 31 December 2018.
On Creating Unified Treasury Offices of Parent
Companies, Subsidiaries and Associates
(Russian Government Directives No. 1796p-P13 dated
26 March 2015)
Letters were sent to the Russian Ministry of Finance and
Federal Service for Financial Monitoring containing the
findings of a review towards creating unified treasury offices
of PJSC Gazprom, its subsidiaries and associates.
Disclosure of Information on Ownership Structures,
including Beneficiaries, by Counterparties
under Existing Contracts
(Instruction of Prime Minister of the Russian Federation
Vladimir Putin No. VP-P13-9308 dated 28 December 2011,
Instruction of Deputy Prime Minister of the Russian
Federation Igor Sechin No. IS-P13-80 dated 12 January 2012)
From 1 January 2019 to 31 December 2019, PJSC Gazprom
informed the Russian Ministry of Energy, Federal Tax Service
and Federal Service for Financial Monitoring (Rosinfomoni-
toring) of:
— 59,546 existing contracts (with 3,695 contracts signed
by PJSC Gazprom and 55,851 contracts signed by
subsidiaries or associates directly and/or indirectly
controlled by PJSC Gazprom by more than 50% in total)
— changes in the ownership structure and/or executive
bodies of PJSC Gazprom’s counterparties
— changes in the ownership structure and/or executive
bodies of the counterparties of subsidiaries and associ-
ates directly and/or indirectly controlled by PJSC Gazprom
by more than 50% in total.
On Developing (Updating) Internal Documents
that Govern KPI Setting and Remuneration
for PJSC Gazprom’s Management
(Russian Government Directives No. 9054p-P13 dated
2 October 2019)
PJSC Gazprom’s Board of Directors passed Resolution
No. 3358 dated 24 December 2019. The employment agree-
ment with the Chairman of PJSC Gazprom’s Management
Committee was amended to include provisions on personal
accountability for untimely or inaccurate disclosure of infor-
mation on the implementation of the Russian Government
Directives.
222
PJSC Gazprom Annual Report 2019 Implementation of Presidential and Governmental
Directives and Instructions
On Developing the Rules of Non-discriminatory Access
to Gas Transportation Services and Rules of Connection
to Trunk Gas Pipelines
(Instructions of the Government of the Russian Federation
No. P9-29283 dated 29 May 2019, No. P9-41395 dated
25 July 2019)
Pursuant to the Instructions, comments and proposals were
submitted in due time to the Federal Antimonopoly Service
and the Department of Industry and Infrastructure of the
Government of the Russian Federation on draft Resolution
of the Russian Government On Approval of the Rules of Non-
Discriminatory Access to Trunk Pipeline Gas Transportation
Services, Rules of Non-Discriminatory Access to Under-
ground Gas Storage Services, Rules of Connection (Techno-
logical Tie-In) to Trunk Gas Pipelines, and on Repealing
Some Acts of the Government of the Russian Federation.
The draft rules of access to trunk gas pipelines developed
by PJSC Gazprom were also updated.
On Establishing Engineering Units and R&D Centres
on Russky Island (Vladivostok)
(List of Instructions of President of the Russian Federation
Vladimir Putin No. Pr-1849 dated 10 October 2018 issued
following the Eastern Economic Forum held on
11–13 September 2018)
A lease contract was signed between OOO Gazprom 335 and
the Far Eastern Federal University for the premises located
at 10 Ajax Bay, bld. P, Russky Island, Vladivostok, the Primorye
Territory, to accommodate the engineering centre.
Charitable Funds and Sponsorship Support
(Instruction of President of the Russian Federation Vladimir
Putin No. Pr-250 dated 9 February 2018 on providing
RUB 150 mm financial support to build a block of apartments
for rehousing families from ramshackle homes in the
Elshanka village, Saratov Region)
Pursuant to the Instruction, PJSC Gazprom channelled
RUB 75 mm in 2018 and a further RUB 75 mm in 2019 under
a donation agreement to build a block of apartments with
integrated and attached premises located at 2 Moskovskoye
Shosse, Saratov, Saratov Region, for rehousing families
from ramshackle homes in the Elshanka village in Saratov’s
Leninsky District.
223
(Instruction of Deputy Prime Minister of the Russian
Federation Vitaly Mutko No. VM-P9-70pr dated 3 August
2019 (minutes of the meeting in Tulun, Irkutsk Region)
On Assisting in Restoration of Areas Affected by the Flood
in the Irkutsk Region in 2019)
PJSC Gazprom provided charitable support in the amount of
RUB 20 mm to purchase training equipment and laboratory
training equipment for teaching STEM subjects for ungraded
municipal schools affected by floods in the Irkutsk Region in
2019.The funds were channelled under a donation agreement
to the Irkutsk regional branch of the All-Russia Non-Govern-
ment Organization “Russian Red Cross”.
At the meeting in Irkutsk on 6 September 2019, the
Government of the Irkutsk Region approved the construction
of a fitness and health facility with an ice rink and a multi-
purpose sports hall in Tulun instead of the sports facility with
a swimming pool in Nizhneudinsk mentioned in the minutes
of the meeting dated 3 August 2019. A report was sent to
Deputy Prime Minister of the Russian Federation Vitaly Mutko
(No. 01-677 dated 10 October 2019) on the readiness to
construct the facility (estimated commissioning time — Q3
2021), with funding to be provided by PAO Gazprom Neft.
(Instruction of Prime Minister of the Russian Federation
Dmitry Medvedev No. DM-P8-7713 dated 10 September
2019 on financial assistance to Turkmen-Russian general
education school named after Alexander Pushkin in
Ashgabat)
To assess the possibility of assistance, PJSC Gazprom sent
a request to the school administration dated 24 September
2019 to obtain a cost estimate for the major remodelling,
information on the amount and prices of computer equipment
to be purchased and the cost of subsequent scheduled
refurbishment. The requested information had not been pro-
vided to PJSC Gazprom in 2019, and this was communicated
in a report dated 7 October 2019 sent to Prime Minister of
the Russian Federation Dmitry Medvedev. The charitable
support will be provided to the school in 2020.
i
s
e
c
d
n
e
p
p
A
PJSC Gazprom Annual Report 2019 Implementation of Presidential and Governmental
Directives and Instructions
(Instruction of President of the Russian Federation Vladimir
Putin No. Pr-438 dated 13 March 2019 as regards the
construction of a fitness and health facility in the village
of Tissi-Akhitli, Tsumadinsky District, Republic of Daghestan)
A report dated 10 October 2019 was sent to Minister of Sports
of the Russian Federation Pavel Kolobkov on PJSC Gazprom’s
readiness to construct in 2020 a (larger) multifunctional sports
facility according to the design agreed with the administration
of the Tsumadinsky District, Republic of Daghestan. The
Russian Ministry of Sports supported PJSC Gazprom’s
decision in its letter dated 22 October 2019. In accordance
with the letter of the Executive Office of the Government of
the Russian Federation dated 11 March 2020, PJSC Gazprom
will report to the Russian Government on the implementation
of the Instruction by 23 November 2020.
Procurement
(Russian Government Directives No. 584p-P13 (DSP)
dated 26 January 2019)
PJSC Gazprom’s Board of Directors passed Resolution
No. 3262 dated 14 May 2019 On Updating the Corporate Import
Substitution Plans With Respect to Radiation, Chemical and
Biological Protective Equipment, pursuant to paragraph 1
of which PJSC Gazprom’s Board of Directors in its Resolution
No. 3337 dated 19 November 2019 approved respective
amendments to the Regulations on the Procurement of
Goods, Works and Services by PJSC Gazprom and Gazprom
Group Companies.
(Russian Government Directives No. 4111p-P13 dated
08 May 2019)
PJSC Gazprom’s Board of Directors passed Resolution
No. 3300 dated 7 August 2019 On Expanding the Use of
Factoring in the Performance of Contracts for the Supply of
Goods (Performance of Works, Provision of Services),
pursuant to which PJSC Gazprom’s Board of Directors in its
Resolution No. 3337 dated 19 November 2019 approved
respective amendments to the Regulations on the Procure-
ment of Goods, Works and Services by PJSC Gazprom and
Gazprom Group Companies.
(Russian Government Directives No. 1519p-P13 dated
20 February 2019)
PJSC Gazprom’s Board of Directors passed Resolution
No. 3257 dated 14 May 2019 On Developing Programmes to
Improve the Procurement Management, pursuant to which:
— PJSC Gazprom’s Programme to Improve the Procure-
ment Management was approved
— Communication of the Directives to PJSC Gazprom’s
subsidiaries was undertaken
— PJSC Gazprom’s subsidiaries approved their Pro-
grammes to Improve the Procurement Management.
On Signing a Concession Agreement for Financing,
Construction and Operation of Obskaya–Salekhard–
Nadym Common Access Railway Transport
Infrastructure
(Sub-paragraph v, paragraph 4 of Russian Government
Decree No. 1663-r dated 8 August 2018)
PJSC Gazprom signed a coordination agreement with the
Federal Agency for Rail Transport.
Gas Infrastructure Expansion and Gas Supply to Regions
(Paragraph 3 of Instruction of President of the Russian
Federation Vladimir Putin No. Pr-2579 dated 29 December
2016 on taking measures to supply the required amount
of PJSC Gazprom’s natural gas to the Far Eastern
Petrochemical Complex)
PJSC Gazprom approved a List of Activities to align the
commissioning of production, transportation and distribution
capacity of the Sakhalin gas production hub. As part of its
implementation work is ongoing to carry out the Sakhalin–
Khabarovsk–Vladivostok Trunk Gas Pipeline project (Phase 1)
with construction to be completed in 2021.
224
PJSC Gazprom Annual Report 2019
Implementation of Presidential and Governmental
Directives and Instructions
(Instruction of President of the Russian Federation
Vladimir Putin No. Pr-94 dated 20 January 2014 on including
revamps of the Dedilovskaya, Novotulskaya, Yasnogorsk
and Severo-Zadonskaya gas distribution stations (GDS) into
PJSC Gazprom’s GDS Revamp and Retrofit Programme for
2014–2017 and construction of two new GDS in the Uzlovsky
and Zaoksky districts of the Tula Region starting in 2014)
Work to revamp the Novotulskaya, Severo-Zadonskaya and
Yasnogorsk GDS and construct two new GDS in the Uzlovsky
and Zaoksky districts of the Tula Region has been arranged.
The 2020 capital construction plan has the following capital
expenditures limits by facilities:
— Yasnogorsk GDS — RUB 464.88 mm for start of con-
struction
— Severo-Zadonskaya GDS — RUB 550.64 mm for partial
commissioning.
Construction of the Novotulskaya GDS Phase 1 has
been completed, start-up and testing is under way. The
Dedilovskaya GDS revamp is not feasible, as gas supply to
the Uzlovaya industrial park is to be provided through
construction of a gas pipeline from the Novomoskovskaya-1
GDS according to the general plan of gas supply in the Tula
Region developed based on proposals from the region’s
administration.
Construction of two new GDS in the Uzlovsky and
Zaoksky districts of the Tula Region is carried out under
OOO Gazprom mezhregiongaz’s Investment Programme.
(Instruction of President of the Russian Federation Vladimir
Putin No. Pr-2609 dated 5 November 2011 on including
the Connection Pipeline and GDS in Balakovo project into
PJSC Gazprom’s Investment Programme)
The Connection Pipeline and GDS in Balakovo (Saratov
Region) project was included into PJSC Gazprom’s Invest-
ment Programme for 2020 with planned commissioning
in 2022.
(Paragraph 3 of the List of Instructions of President of
the Russian Federation Vladimir Putin No. Pr-2281 dated
2 November 2015 on including the construction and
commissioning of the Connection Pipeline and Uglegorsk
GDS project into PJSC Gazprom’s Investment Programme
for 2017)
Implementation of the Connection Pipeline and Uglegorsk
GDS project is under way since 2019, with works to be
completed by Q3 2020 according to the project plan.
225
Pricing in the Russian Gas Market
(Instruction of Deputy Prime Minister of the Russian
Federation Dmitry Kozak No. DK-P9-218pr dated
14 November 2019)
As part of implementation of the Instruction, the Company
continued with efforts aimed at maintaining the status quo
in the regulation of PJSC Gazprom’s business, resisting
regulation of the Company’s investment activities (draft law
On Amending the Federal Law On Natural Monopolies and
Article 29 of the Federal Law On Power Generation), and
excluding from the draft Federal Law On the Framework of
Government Regulation of Prices (Tariffs) the provisions that
would have a negative regulatory effect on the Company’s
business.
(Instruction of Deputy Prime Minister of the Russian
Federation Dmitry Kozak No. DK-P9-6882 dated 11 October
2018 on the government regulation of tariffs for gas
transportation by trunk pipelines (connection pipelines))
Work continued with the federal authorities to amend
paragraphs 4 and 7 of the Framework of Gas Pricing and
Government Regulation of Gas Prices, Gas Transportation
Service Tariffs and Fees for Technological Connection of Gas
Equipment to the Gas Distribution Networks in Russian
Federation, approved by Resolution of the Russian Govern-
ment No. 1021 dated 29 December 2000, to eliminate the
ambiguity of tariff setting approaches for regulated entities
with regard to trunk pipeline gas transportation services.
i
s
e
c
d
n
e
p
p
A
PJSC Gazprom Annual Report 2019 Implementation of Presidential and Governmental
Directives and Instructions
Implementation of the Programme to Dispose
of PJSC Gazprom’s Non-core Assets
(Sub-paragraph v, paragraph 2 of Decree of President of the
Russian Federation Vladimir Putin No. 596 dated 7 May 2012)
Pursuant to sub-paragraph v, paragraph 2 of Decree of
President of the Russian Federation Vladimir Putin No. 596
dated 7 May 2012, PJSC Gazprom has an ongoing initiative of
non-core asset optimisation and disposal.
Pursuant to Russian Government Directives No 4863p-P13
dated 7 July 2016 and No. 6604p-P13 dated 18 September
2017, and Russian Government Decree No. 894-r dated
10 May 2017, as well as to improve non-core asset disposal,
PJSC Gazprom adopted the Programme to dispose of
PJSC Gazprom’s Non-core Assets (Resolution of the Board
of Directors No. 2810 dated 27 September 2016, Minutes of
the Board of Directors’ meeting No. 1098 dated 27 September
2018, and Resolution of the Board of Directors No. 3066 dated
16 January 2018, Minutes of the Board of Directors’ meeting
No. 1180 dated 16 January 2018).
In 2019, PJSC Gazprom was disposing of non-core assets
as part of this Programme, Action Plan for the Disposal of
PJSC Gazprom’s Non-Core Assets for 2019 (versions approved
by resolutions of the Board of Directors No. 3204 dated
28 December 2018 and No. 3367 dated 26 December 2019) as
well as the Register of PJSC Gazprom’s Non-Core Assets
(versions approved by resolutions of the Board of Directors
No. 3204 dated 28 December 2018 and No. 3367 dated
26 December 2019).
The Register of PJSC Gazprom’s Non-Core Assets
has a List of PJSC Gazprom’s Non-Core Assets Subject to
Disposal section and three subsections: Long-Term Financial
Investments, Real Property, and Movable Property (Motor
Transport, Special Vehicles, Equipment, etc.).
The information on PJSC Gazprom’s non-core
assets subject to disposal and included in the Register of
PJSC Gazprom’s Non-Core Assets contains, among other
things: the asset list, quantity; information on each non-core
asset — asset description, type of activity associated with
the asset, its book (depreciated) value, initial selling price
(equal to its market value as assessed by an independent
valuator), method of sale (primarily an auction), and
encumbrances.
Implementation of the Programme, Action Plan, and Register of PJSC Gazprom’s Non-Core Assets in 2019
No. Asset
Inventory number
(if applicable)
Balance sheet item containing
the asset as at the reporting
date prior to the asset
disposal
Balance sheet item (analytics
included), containing asset
disposal income and expense
(91.1xxx/91.2xxx)
1
99.9918% of shares in OAO Centrgaz
–
1170
911902/914702
807,067.01
1,906,000.00
1,098,932.99
The asset disposed through an auction with a starting price
Facilities of a gas pressure and flow control station
(10 inventory items), located at Block 196, Nogliki Forestry
Area, Nogliki Municipal District, Sakhalin Region
10 inventory items
1150
911110/914101
107,275.84
198,305.08
91,029.24
The asset disposed through an auction with a starting price
1150
1150
1150
1150
1210
911110/914101
911110/914101
911110/914101
911110/914101
901910/903910
77,991.43
24,000.00
−53,991.43
The asset disposed after several rounds of a competitive
Book value of asset
,
RUB thousand
RUB thousand
(inclusive of VAT)
Actual realised value
,
Actual realised value
vs book value
,
RUB thousand
Reason for difference between the actual realised value and book value
12,715.85
49,999.20
37,283.35
Result of pre-sale preparation and disposal of assets
105,906.78
122,877.62
16,970.84
Each asset disposed through a competitive process with
629,113.33
115,000.00
−514,113.33
The asset disposed after several rounds of a competitive
5,841.00
6,450.00
609.00
The asset disposed through a competitive process with
not less than its market value as assessed by an independent
not less than its market value as assessed by an independent
valuator
valuator
a starting price not less than its market value as assessed by
an independent valuator
process with a starting price not less than its market value
as assessed by an independent valuator
a starting price not less than its market value as assessed
by an independent valuator
process with a starting price not less than its market value
as assessed by an independent valuator
no less than their market value as assessed by an independent
valuator
1,746,659.60
2,455,094.95
708,435.35
149 items of movable property (motor transport
and special vehicles)
Total for 2019
149 inventory items
1150
911110/914101
748.36
32,463.05
31,714.69
The assets disposed through an auction with a starting price
Premises, located at 2 Polyustrovsky avenue, bld. A,
Saint Petersburg
005652
19 apartments of PJSC Gazprom (18 in Moscow
and 1 in Velsk, Arkhangelsk Region)
19 inventory items
5
Gazpromshelf replenishment tanker
351789
550958
5-bedroom detached house, plot No. 127a, without
a garage, for maintenance staff in an accommodation
camp
Assets under construction — 64 residential houses and
utility infrastructure located at Saratovskaya rural locality,
Goryachy Klyuch town, Krasnodarsky Region
–
2
3
4
6
7
8
226
PJSC Gazprom Annual Report 2019 Implementation of Presidential and Governmental
Directives and Instructions
The approval of the Programme, Register, and Plan was
disclosed by PJSC Gazprom in the manner prescribed by the
law by publishing appropriate open access information on
its website. The current Programme and Register are also
available on a dedicated website for Gazprom Group’s non-
core asset disposal, www.gazpromnoncoreassets.ru, the link
to which is available on PJSC Gazprom’s website in the
Asset Disposal section.
Pursuant to the Russian Government Directives and under
the Programme to dispose of PJSC Gazprom’s Non-core
Assets, the Board of Directors reviewed and took into account
quarterly reports on the disposal of PJSC Gazprom’s non-core
assets in 2019 (resolutions of the Board of Directors No. 3256
dated 14 May 2019, No. 3285 dated 18 June 2019, No. 3311
dated 21 August 2019, and No. 3345 dated 29 November 2019).
The actual realised value of PJSC Gazprom’s non-core
assets disposed of in 2019 under the Programme, Action
Plan for the Disposal of PJSC Gazprom’s Non-Core Assets,
and Register of PJSC Gazprom’s Non-Core Assets was
RUB 2,455,094.95 thousand (inclusive of VAT). Pre-sale
preparation and disposal of non-core assets resulted in
the actual realised value exceeding the book value by
RUB 708,435.35 thousand.
Implementation of the Programme, Action Plan, and Register of PJSC Gazprom’s Non-Core Assets in 2019
No. Asset
1
99.9918% of shares in OAO Centrgaz
–
Inventory number
(if applicable)
Balance sheet item containing
Balance sheet item (analytics
the asset as at the reporting
included), containing asset
date prior to the asset
disposal income and expense
disposal
1170
(91.1xxx/91.2xxx)
911902/914702
,
Book value of asset
RUB thousand
Actual realised value
,
RUB thousand
(inclusive of VAT)
Actual realised value
,
vs book value
RUB thousand
807,067.01
1,906,000.00
1,098,932.99
2
Facilities of a gas pressure and flow control station
10 inventory items
1150
911110/914101
107,275.84
198,305.08
91,029.24
Reason for difference between the actual realised value and book value
The asset disposed through an auction with a starting price
not less than its market value as assessed by an independent
valuator
The asset disposed through an auction with a starting price
not less than its market value as assessed by an independent
valuator
12,715.85
49,999.20
37,283.35
Result of pre-sale preparation and disposal of assets
5
Gazpromshelf replenishment tanker
351789
629,113.33
115,000.00
−514,113.33
105,906.78
122,877.62
16,970.84
8
149 items of movable property (motor transport
149 inventory items
1150
911110/914101
748.36
32,463.05
31,714.69
901910/903910
77,991.43
24,000.00
−53,991.43
5,841.00
6,450.00
609.00
1,746,659.60
2,455,094.95
708,435.35
227
Each asset disposed through a competitive process with
a starting price not less than its market value as assessed by
an independent valuator
The asset disposed after several rounds of a competitive
process with a starting price not less than its market value
as assessed by an independent valuator
The asset disposed through a competitive process with
a starting price not less than its market value as assessed
by an independent valuator
The asset disposed after several rounds of a competitive
process with a starting price not less than its market value
as assessed by an independent valuator
The assets disposed through an auction with a starting price
no less than their market value as assessed by an independent
valuator
i
s
e
c
d
n
e
p
p
A
(10 inventory items), located at Block 196, Nogliki Forestry
Area, Nogliki Municipal District, Sakhalin Region
Premises, located at 2 Polyustrovsky avenue, bld. A,
005652
Saint Petersburg
19 apartments of PJSC Gazprom (18 in Moscow
19 inventory items
and 1 in Velsk, Arkhangelsk Region)
3
4
6
5-bedroom detached house, plot No. 127a, without
550958
a garage, for maintenance staff in an accommodation
camp
7
Assets under construction — 64 residential houses and
–
utility infrastructure located at Saratovskaya rural locality,
Goryachy Klyuch town, Krasnodarsky Region
and special vehicles)
Total for 2019
911110/914101
911110/914101
911110/914101
911110/914101
1150
1150
1150
1150
1210
PJSC Gazprom Annual Report 2019 Energy Consumption by PJSC Gazprom
and its Actual Cost
Energy resource
Natural gas
mmcm
RUB mm (inclusive of VAT)
Electricity
thousand MWh
RUB mm (inclusive of VAT)
Heat
thousand Gcal
RUB mm (inclusive of VAT)
Motor gasoline
mm litres
RUB mm (inclusive of VAT)
Diesel fuel
mm litres
RUB mm (inclusive of VAT)
2017
2018
2019
5.8
37.4
6.5
8.2
43.5
55.4
58.8
64.1
77.6
315.0
357.9
447.5
78.3
77.5
69.4
143.8
158.8
148.9
0.9
1.4
1.3
33.9
56.4
57.9
0.6
1.1
1.1
20.4
43.2
50.7
Note. The reported data are for facilities managed by PJSC Gazprom. Power consumption by facilities placed under third parties’ management is not taken into consideration. PJSC Gazprom
consumes no other energy resources in significant quantities.
228
PJSC Gazprom Annual Report 2019 Additional Information for the Annual Report available
on PJSC Gazprom’s Corporate Website
— Meetings of PJSC Gazprom’s Board of Directors in 2019
— Meetings of the Audit Committee of PJSC Gazprom’s
Board of Directors in 2019
— Meetings of the Nomination and Remuneration
Committee of PJSC Gazprom’s Board of Directors
in 2019
— Debt Recovery Litigations Pending as at 31 December
2019
— List of Entities in which PJSC Gazprom Holds Shares
(Interest) as at 31 December 2019
The information is provided on PJSC Gazprom’s corporate website
www.gazprom.com
229
i
s
e
c
d
n
e
p
p
A
PJSC Gazprom Annual Report 2019 Glossary
Name
Definition
A
ADR of PJSC Gazprom
American Depositary Receipt issued for PJSC Gazprom shares
AEPS
AI-92-K5
APG
Asia Pacific
B
BCS
Brent
C
CCGT plant
Central Asia
CGTU
CHPP
CNG
CS
CSA
E
EAEU
EBITDA
EMS
ETP-GPB
EU
Automated Electronic Procurement System
Grade of gasoline
Associated petroleum gas
The Asia-Pacific region, which includes countries of mainland Asia, America and Pacific Ocean Area
Booster compressor station
Benchmark grade of crude oil produced in the North Sea
Combined cycle gas turbine plant
Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan
Comprehensive gas treatment unit
Combined heat and power plant
Compressed natural gas
Compressor station
Capacity supply agreement
Eurasian Economic Union
The sum of operating profit, depreciation, impairment loss or reversal of impairment loss on financial
assets and non-financial assets, less changes of allowance for expected credit losses on accounts
receivable and impairment allowance on advances paid and prepayments
Environmental Management System
Electronic Trading Platform of Gazprombank
European Union
European far abroad countries
25 EU countries (excluding Latvia, Lithuania, and Estonia), such non-EU countries as Turkey, Norway,
and Switzerland, and the Balkan states of Albania, Bosnia and Herzegovina, North Macedonia, and
Serbia
F
FCC
FAR
Far abroad countries
FAS of Russia
FSU countries
FTS of Russia
G
GAZP
GCF
GHG
GOST R ISO 26000:2012
(Russian standard)
GPP
GRES
GRF
230
Fluid catalytic cracking
Fatal accident rate
Foreign countries other than FSU countries, comprising the geographic segment Europe and other
countries as defined in PJSC Gazprom’s IFRS consolidated financial statements
The Federal Antimonopoly Service of Russia
Former Soviet Union republics, except for the Russian Federation
The Federal Customs Service of Russia
Gazprom ticker, the Moscow Exchange
Gas condensate field
Greenhouse gases
Social responsibility standard
Gas and/or condensate processing plant
State district power station
Gas recovery factor
PJSC Gazprom Annual Report 2019 Glossary
Name
G
H
GTS
Hydrocarbon reserves
(categories A+B1+C1)
Definition
Gas transportation system
Explored reserves under Russian classification of reserves with a high degree of geological
exploration, which correspond to the previously accepted categories A+B+C1 (for oil, gas and gas
condensate reserves there is a recovery factor calculated on the basis of geological and
technological factors)
I
IFRS
International Financial Reporting Standards
ISO 14001
ISO 26000
ISO 45001
ISO 50001
ISO 9001
K
L
KPIs
LNG
LPG
LSE
International Organisation for Standardisation, the international environmental management standard
International Organisation for Standardisation, the international standard providing guidelines for
social responsibility
International Organisation for Standardisation, the international standard for management systems of
occupational health and safety
International Organisation for Standardisation, the international standard for Energy Management
Systems
International Organisation for Standardisation, the international quality management standard
Key Performance Indicators
Liquefied natural gas
Liquefied petroleum gas
London Stock Exchange
M MARPOL
The International Convention for the Prevention of Pollution from Ships
MENA
MET
NGV fuel
OGCF
OGZD
N
O
Middle East and North Africa region
Mineral extraction tax
Natural gas vehicle fuel
Oil and gas condensate field
Gazprom ticker, the London Stock Exchange
OHSAS 18001:2007
Occupational Health and Safety Management Systems, the international standard for occupational
health and safety management systems
P
PRMS
PSA
R
R&D
RAS
REACH
S
SME
SPIMEX
SPTs
Petroleum Resources Management System, an international standard for hydrocarbon reserve
classification and reporting
Production sharing agreement
Research and Development
Russian Accounting Standards
EU regulation Registration, Evaluation, Authorisation and Restriction of Chemicals
Small and medium enterprises
Saint Petersburg International Mercantile Exchange
Strategic Performance Targets
T
The Eastern Gas Programme
The programme of building an integrated gas production, transportation, and supply system in
Eastern Siberia and the Far East, taking into account potential gas exports to China and other Asia-
Pacific countries, approved by Order of the Ministry of Economic Development of the Russian
Federation No. 340 dated 3 September 2007
toe
TPP
U
UES
UGSF
UGSS
UIS
UOHSMS
USD
V
VAT
231
Tonne of oil equivalent
Thermal power plant
Unified Energy System
Underground gas storage facility
Unified Gas Supply System of Russia
Unified Information System of public procurement of goods, works and services for state
and municipal needs
Unified Occupational Health and Safety Management System
United States (US) dollars
Value added tax
i
s
e
c
d
n
e
p
p
A
PJSC Gazprom Annual Report 2019 Name
cu m of gas
BTU
tonne of oil
Definition
Conversion ratios
A cubic metre of natural gas measured at 1 Pa
pressure and 20°C, with a calorific value
of 8,850 kcal per cu m
1,000 cu m of gas = 6.49 barrels of oil equivalent
= 0.885 tonnes of oil equivalent
British thermal unit
Tonne of oil
Glossary
Units of Measurement and Conversion Table
tonne of gas condensate
Tonne of gas condensate
Conventions
Sign
–
0.0
Meaning
Not observed
Value less than 0.05
List of Foreign Companies Mentioned in the Report
Full name
ZAO Gazprom Armenia
OsOO Gazprom Kyrgyzstan
OAO Gazprom transgaz Belarus
OOO Gas Transmission System Operator
of Ukraine
AO Uzbekneftegaz
Allseas Group S.A.
Bank of America Merrill Lynch
Bloomberg L.P.
Blue Stream Pipeline Company B.V.
BP p.l.c.
China National Petroleum Corporation
Chevron Corporation
Citigroup Inc.
ConocoPhillips
Short name
–
–
–
–
–
Allseas
–
Bloomberg
–
BP
CNPC
Chevron
Citigroup
–
Dagong Global Credit Rating Company Limited
Dagong
Daqing Oil
DeGolyer and MacNaughton
–
–
Deutsche Bank AG
Deutsche Bank
ENGIE S.A.
Eni SpA
Equinor ASA
ENGIE
Eni
Equinor
Exxon Mobil Corporation
ExxonMobil
Fitch Ratings
GASTRANS d.o.o. Novi Sad
N.V. Nederlandse Gasunie
GazAsia Capital S.A.
232
–
–
Gasunie
–
1 mm BTU = 0.028 mcm of LNG
= 0.021 tonnes of LNG
= 7.33 barrels of oil
= 7.33 barrels of oil equivalent
= 1 tonne of oil equivalent
= 8.18 barrels of gas condensate
= 8.18 barrels of oil equivalent
= 1 tonne of oil equivalent
Country
Armenia
Kyrgyzstan
Belarus
Ukraine
Uzbekistan
Switzerland
USA
USA
The Netherlands
United Kingdom
China
USA
USA
USA
China
China
USA
Germany
France
Italy
Norway
USA
USA
Serbia
The Netherlands
Luxembourg
PJSC Gazprom Annual Report 2019 Glossary
Full name
Gaz Capital S.A.
Gazprom EP International B.V.
Short name
–
–
Gazprom NGV Europe GmbH
Gazprom NGV Europe
HSBC Holdings plc
HSBC
International Business Machines Corporation
IBM
IHS Markit Ltd.
Investor Update Limited
IHS Markit
Investor Update
Japanese Bank for International Cooperation
JBIC
JP Morgan Chase & Co
Moody’s Investors Service
JP Morgan
Moody’s
Morgan Stanley International Limited
Morgan Stanley
MSCI Inc.
Naftna Industrija Srbije a.d.
National Iranian Oil Company
Nord Stream AG
Nord Stream 2 AG
OMV Aktiengesellschaft
MSCI
NIS
NIOC
–
–
OMV
Perenco Cameroon S.A.
Perenco Cameroon
PetroChina Company Limited
Petróleo Brasileiro S.A.
Qatar Petroleum
PetroChina
Pertobras
–
Raiffeisen Bank International AG
Raiffeisen Bank
Renaissance Capital Limited
Renaissance Capital
Royal Dutch Shell plc.
Shell
Sakhalin Energy Investment Company Ltd.
Sakhalin Energy
Siemens AG
Sonatrach Group
South Stream Transport B.V.
SOVA Capital Limited
Standard & Poor’s
The Bank of New York Mellon
Siemens
Sonatrach
–
SOVA Capital
–
–
The Goldman Sachs Group, Inc.
Goldman Sachs
TOTAL S.A.
UBS Group AG
Uniper SE
Verbundnetz Gas
Total
UBS
Uniper
VNG
Country
Luxembourg
The Netherlands
Germany
United Kingdom
USA
United Kingdom
United Kingdom
Japan
USA
USA
USA
USA
Serbia
Iran
Switzerland
Switzerland
Austria
Cameroon
China
Brazil
Qatar
Austria
United Kingdom
United Kingdom
Bermuda
Germany
Algeria
The Netherlands
United Kingdom
USA
USA
USA
France
Switzerland
Germany
Germany
Westwood Global Energy Limited
Westwood Global Energy
United Kingdom
Wintershall AG
–
Wintershall Dea GmbH
Wintershall Dea
Wintershall Noordzee B.V.
Wintershall Noordzee
WIROM GAS S.A.
–
Wood & Company Financial Services, a.s.
Wood & Company
Yacimientos Petroliferos Fiscales Bolivianos
YPFB
Yamal Trade Pte. Ltd.
Yamal Trade
233
Germany
Germany
The Netherlands
Romania
Czech Republic
Bolivia
Singapore
i
s
e
c
d
n
e
p
p
A
PJSC Gazprom Annual Report 2019 Contacts
Full Name
Contact for Shareholders
Phone:
+7 812 609 7657
(for shareholders of PJSC Gazprom)
Contact for Investors
Phone:
+7 812 609 4129
Fax:
+7 812 609 4334
E-mail:
ir@gazprom.ru
Auditor
Limited Liability Company Financial and Accounting
Consultants (OOO FBK) OOO FBK is a member
of the self-regulated organisation of auditors Auditor
Association Sodruzhestvo.
Location:
44/1 Myasnitskaya St., Bld. 2 AB, Moscow,
101990, Russian Federation
Phone:
+7 495 737 5353
Website:
www.fbk.ru
Registrar
Joint Stock Company Specialised Registrar —
Register Keeper for Gas Industry Shareholders (AO DRAGa)
Location and postal address:
71/32 Novocheryomushkinskaya St., Moscow,
117420, Russian Federation
Phone:
+7 495 719 4044
Website:
www.draga.ru
Public Joint Stock Company Gazprom
Abbreviated Name
PJSC Gazprom
Location
Moscow, Russian Federation
Address
16 Nametkina St., GSP-7, Moscow,
117997, Russian Federation
Postal address:
BOX 1255, Saint Petersburg,
190900, Russia
Delivery address:
156 Moskovsky Av., Bld. A, Saint Petersburg,
196105, Russian Federation
Phone:
+7 495 719 3001
Fax:
+7 495 719 8333, +7 812 413 7333
Website
www.gazprom.com
E-mail
gazprom@gazprom.ru
Certificate of entry into the Unified State Register
of Legal Entities
by the Moscow Department of the Ministry of Taxation
dated 2 August 2002
OGRN 1027700070518
Taxpayer Personal Identification Number (INN)
7736050003
234
PJSC Gazprom Annual Report 2019 This Annual Report is approved
by PJSC Gazprom’s annual General Shareholders Meeting
(Minutes No. dated June ),
pre-approved
by Resolution of PJSC Gazprom’s Board of Directors
No. dated May
(Minutes No. dated May ).
Chairman of PJSC Gazprom’s
Management Committee
A.B. Miller
Chief Accountant
of PJSC Gazprom
M.N. Rosseev
PJSC Gazprom Annual Report 2019
www.gazprom.com