Gazprom says Power of Siberia, TurkStream to boost Russia's position as gas supplier

Russian gas monopoly Gazprom closely follows the ongoing developments and takes the necessary measures to mitigate a number of adverse factors affecting the suppliers today, Elena Burmistrova, deputy chairman of the Gazprom Management Committee and director general of Gazprom Export, said at Gazprom’s 15th Investor Day in New York on 11 February.
By commissioning its ambitious pipeline projects, for example Power of Siberia and TurkStream, Gazprom is further enhancing its position as the world’s largest supplier of natural gas, Burmistrova was quoted as saying in a Gazprom press release.
According to Gazprom, the company remains the leading exporter in Europe. Despite the weather factor and growing liquified natural gas (LNG) supplies to European countries, Gazprom’s pipeline exports to countries beyond the former Soviet Union, including China, were maintained near the record highs at 199.3 billion cubic metres in 2019. According to provisional data, Gazprom’s share in the gas consumption of Europe and Turkey stands at 35.6%.
Burmistrova described the tools being used by Gazprom to meet the new challenges and trends in the global gas market. These include the promotion of e-trading via the Electronic Trading Platform. More than 16.5 billion cubic metres of gas has been sold through the ETP since September 2018.
Burmistrova paid special attention to the issues of pricing and the export contract model, Gazprom said, adding that the company’s contract model offers favourable prices coupled with reliable and flexible supply conditions, which makes Russian pipeline gas the most competitive in the market. The pricing mechanism embedded in Gazprom’s export contracts can be easily adjusted to European market changes. Low operating costs, efficient gas pipeline routes, and Gazprom’s vast resources guarantee profitability even amid low prices, she said.
Famil Sadygov, deputy chairman of the Gazprom Management Committee, outlined the key results of the implementation of Gazprom’s financial strategy, stressing that Gazprom’s financial performance was consistent in the previous year despite unfavourable market conditions. According to estimates, the Group’s net profit in 2019 exceeded $21 billion, revenues surpassed $120 billion, and the free cash flow remained positive. Such results were produced, inter alia, through continuous optimisation of operating and investment costs, as well as rigorous cost control.
Gazprom said the company will continue on reducing operating costs, with the ultimate goal of bringing them down by 2% per year. In addition, a substantial contribution to Gazprom’s strong financial performance will come from the new and yet-to-be-implemented projects of the Company, namely Power of Siberia, TurkStream, Nord Stream 2, the Amur Gas Processing Plant, and theintegrated complex for gas processing and liquefaction in Ust-Luga. According to Gazprom’s estimates, these projects, when running at their full capacity, will add a total of $9 billion per year to Gazprom’s EBITDA.