Letter to Shareholders by the Chairman of PJSC Gazprom’s Board of Directors and the Chairman of PJSC Gazprom’s Management Committee
Dear Shareholders,
For many years, as a global energy company, PJSC Gazprom has been consistently committed to its mission of reliably and effectively supplying consumers with energy. In the longer term, demand for affordable and clean energy will rise as the global economy grows. The use of gas unlocks multiple opportunities, and its role will only continue to grow.
Our natural gas business is a key part of PJSC Gazprom’s operations. In 2021, the Company delivered record performance and strengthened its leadership in the global energy industry.
One of Gazprom’s key competitive advantages is its ability to rapidly ramp up its production volumes. In 2021, gas production in Russia grew by more than 60 bcm to about 515 bcm, a record high in the past 13 years. Accordingly, the increase in Gazprom’s gas output covered one third of the growth in global gas consumption in 2021. Considering the market environment, the Group has achieved the strongest financial performance in its history.
PJSC Gazprom highly values its reputation as a reliable supplier. In 2021, as always, the Company fully met all its obligations to customers. In particular, we ensured reliable gas supply to Gazprom’s priority domestic market amid soaring demand.
The Company continues to unlock the potential of Russia’s domestic market, consistently working on fully expanding the country’s gas infrastructure as far as this is technically possible. Over the past year, 342 more communities in Russia were connected to gas infrastructure.
The Company’s unrivalled expertise and capabilities, continuous development of the world’s largest resource base, and its large scale of operations drive its success in addressing current and long-term strategic objectives. These tasks heavily rely on technological advancement and the deployment of knowledgeintensive domestic solutions, digitisation of business processes, and environmental stewardship.
All production plans for 2021 were met. For example, gas reserves discovered by the Company in 2021 have once again, for the seventeenth year running, exceeded gas production volumes. The increase came mostly from the fields of the Yamal gas production hub, a key source of gas for the country in the 21st century. Bovanenkovskoye, Gazprom’s core field in Yamal, has passed an annual production milestone of 100 bcm of gas, in a first since commissioning. A number of fields, including Kharasaveyskoye, which is unique in terms of its reserves, are also scheduled for commissioning.
The Yamal hub is well positioned to handle gas flows going both westwards and eastwards. To leverage this advantage, Gazprom is working on the Power of Siberia 2 project.
Gazprom’s strong commitment to developing eastern Russia provides an impetus for the full-scale use of natural gas in the Eastern Siberian and Far Eastern regions of the country. The Company has also been building a major export channel for its supplies targeting China as the most promising foreign market.
In 2021, PJSC Gazprom took natural gas supplies to China via the eastern route, the Power of Siberia gas pipeline, to a new level – fully in line with the relevant bilateral long-term contract. The Company has proven to be a reliable supplier to its Chinese partners, especially during last autumn and winter, with another long-term contract signed in early February 2022 for exports via the Far Eastern route. The total annual amount of supplies is set to grow to 48 bcm. Considering Russia’s Power of Siberia 2 gas pipeline and its extension that will run across Mongolia – the Soyuz Vostok gas pipeline, annual gas exports to China can be ramped up by another 50 bcm.
Another important segment of Gazprom’s business is the conversion of natural gas components into valuable products that are in high demand in the gas chemical and other industries. Our 2021 highlights included the commissioning of the Amur Gas Processing Plant and the launch of construction for the Ethane-Rich Gas Processing Complex project on the Baltic Sea coast. These facilities are among the world’s largest projects, prioritised by the Company to drive its business diversifi cation agenda.
Gazprom’s oil and power generation businesses are also rapidly evolving. In a milestone for the Group, Gazprom Neft achieved its strategic target of over 100 mm tonnes of oil equivalent in annual hydrocarbon production in 2021. OOO Gazprom Energoholding also ramped up its electricity and heat generation, with its heat supply hitting a record in 2021.
PJSC Gazprom will continue to leverage all opportunities and competitive advantages to achieve its goals while maintaining its commitment to strong corporate social responsibility. Gazprom works to improve the well-being of society and the energy security of Russia.