Gazprom Reports both Project Synchronization and Colossal Spare Capacity
Gazprom Annual Report 2015 informs about the synchronized development of gas production and transmission projects.
"Expansion of PJSC Gazprom’s gas transportation capacities is planned in tandem and close coordination with the development of gas production and storage facilities, and will also take into account the degree of readiness to receive gas shown by new consumers, as well as export projects. ... This approach helps prevent introducing excessive capacities, make an efficient and flexible use of PJSC Gazprom’s investments, and optimise gas transportation costs," the report says.
Notably, Gazprom CEO Alexey Miller believes the company has "colossal" excessive capacity.
"Gazprom has constructed production and transmission capacities exceeding the take-or-pay volumes. The created volumes provide for supplying annual contracted amounts of gas to our consumers in Europe. A question arises then: who pays for it? The answer is: Gazprom does, because we continuously bear the costs of operating these capacities. Their current volumes are colossal," said Mr Miller.
Last year, Gazprom commissioned the Southern Corridor gas pipeline that was designed to feed South Stream. Southern Corridor investment in 2013-2015 is reported at above $13 Billion.
The Russian business daily Vedomosti estimated that Gazprom, under Miller, may have spent 2.4 trillion rubles ($40 billion) on unnecessary expansion.
As Victor Chernomyrdin used to say, we wanted to do it better, but it turned out as always...
Mikhail Korchemkin
East European Gas Analysis
Malvern, PA, USA