YEAR’S RESULTS: Modest results and record demand for Gazprom this year

MOSCOW. Dec 29 (Interfax) – The gas sector in 2012 will be noted for peak demand, which gas companies dealt with honorably. It was also characterized but modest results, which only slightly topped the daily results posted during the first wave of the financial crisis.

PRODUCTION

According to Interfax’s calculations based on the Central Dispatching Department of the Fuel and Energy Complex (CDU TEK) statistics, gas production this year will total 656.5 billion cubic meters after 670.544 bcm in 2011. Gazprom’s unconsolidated gas output came to 483.8 bcm (509.664 bcm in 2011). Gazprom’s consolidated output (under which the monopoly publishes its results) might come to 487 bcm-489 bcm (313.2 bcm in 2011).

Although Gazprom’s gas output this year was significantly under the initial plan of 528.6 bcm, this is nonetheless above the crisis’ lowest point, 461.5 bcm in 2009. Gazprom (RTS: GAZP) was very interested in preventing a decrease in production below 500 bcm. Therefore, Gazprom announced in September that it was halting purchased of gas from independent products. But this decision was disowned in a few days and the measure did not have an impact on independent output.

The company acted heroically during the surprise cold at the start and end of the year. In January and February, the company was able to avoid restrictions on gas delivery to Russian consumers (schedule N1) even when gas Europe had no more gas. In February, collections from Russian underground storage reached a record of 638.7 million cubic meters compared to a planned average for the period set at 522.1 mcm a day. However, not much gratitude was shown to gas companies. Instance, at a government meeting on the results for the winter, departing

Energy Minister Sergei Shmatko credited the success to its own ministry.

On December 20, Russian underground storage facilities hit a new record in daily productivity at 670.7 mcm.

EXPORT

Gazprom’s non-CIS exports in 2012 came to 139.8 bcm. A round-off figure was not produced owing to the warm weather throughout Europe in the first ten days of December. For instance, New Year’s in Berlin will be between plus five and nine degrees. Nonetheless, the result is somewhat better than the worst year of the decade (138.6 bcm in 201) and less than 150 bcm in 2011.

However, the warmer weather in Europe will probably not curse Gazprom as it helped Russian gas companies save face when Russia experienced heavy frost at the start of December. The gas sector in the final days of the cold snap reached their end of their options and if European consumers had not reduced their demand because of the warm weather, Gazprom would have had to justify the lack of resources for the European market (as in February of this year).

Gazprom still presents a TV commercial, stating it was the most profitable company in the world in 2011. This year has shown that this profit was contracted for debt with European gas consumers. Gazprom has drawn out the gas contract revisions but later came to terms with its partners in hindsight.

Gazprom Group’s profit in 2011 came to $44 billion. However, only in the first half of 2012 did the company return $4.4 billion in overpayment to European importers. Negotiations for revising contracts continued throughout the entire year and this revision, in addition to Europe’s warm weather and economic decline, has contributed to the decrease in exports.