Dec 26, 2024
Gazprom approves a $15 billion investment strategy to enhance gas production capacity.
.jpg)
The board of directors of Russia's major company Gazprom has approved the firm’s anticipated investment program and budget for the upcoming year, set at RUB 1.52 trillion (almost $15.22 billion), marking a roughly 7% decrease compared to the planned spending of RUB 1.64 trillion (nearly $16.43 billion) for 2024.
In announcing that the board has sanctioned its investment program and budget for 2025, Gazprom emphasized that the RUB 1.52 trillion will fund essential projects, including the further development of gas production centers in eastern Russia and the Yamal Peninsula, enhancement of gas infrastructure in Russian regions, expansion of the Power of Siberia gas pipeline capacity, and the company's gas processing facility. This also includes the implementation of the Eastern Gas Supply System project and others intended to maintain gas balance during peak periods.
"The approved financial plan is balanced; it guarantees the achievement of the company's strategic objectives and ensures full coverage of its obligations without any deficit. Decisions on debt financing within the borrowing program will be made based on market conditions, liquidity, and Gazprom’s funding requirements," the Russian gas giant emphasized.
Famil Sadygov, Deputy Chairman of Gazprom's Management Committee, described Gazprom's performance in 2024 as robust, estimating that gas sales will generate RUB 4.6 trillion (about $46.1 billion), which is RUB 155 billion (around $1.6 billion) more than originally anticipated in the financial plan. Sadygov also noted that the company’s EBITDA is expected to be one of the highest in its history, with conservative estimates placing it at over RUB 2.8 trillion (approximately $28.1 billion).
"The structure of capital expenditures will see no significant changes in 2025: a substantial portion of funds will be allocated toward essential projects that guarantee steady gas supplies to both domestic and foreign markets, as well as the expansion of gas infrastructure throughout Russian regions. In 2025, we will also persist with our strict policy to contain operational costs," Sadygov added.
According to Gazprom’s board of directors, the principal outcome of 2024 is a continued increase in demand for traditional energy sources amid an unpredictable geopolitical climate and heightened focus on energy security matters. The board highlighted a surge in oil, gas, and coal consumption, believed to have reached historic highs. Initial estimates suggest that global gas consumption increased by over 100 billion cubic meters in 2024, largely driven by Russia, China, and India.
The company asserts that Russian gas plays a crucial role in ensuring reliable gas supplies to China, with daily supplies via the Power of Siberia pipeline reaching the highest contractual level on December 1, 2024. The project for gas deliveries via the second, Far Eastern route is reported to be on track, as China’s gas consumption is expected to continue rising rapidly in the long term.
Gazprom also noted an uptick in gas usage in Central Asian nations, such as Kazakhstan, Uzbekistan, and Kyrgyzstan, which are strengthening energy partnerships with the company for Russian pipeline gas imports. According to the firm's assessment, Europe is the only global region experiencing a decline in gas consumption, a trend observed in the European Union (EU) and the United Kingdom (UK).
The Russian company stated: "These nations are implementing measures aimed at artificially diminishing gas demand to the detriment of their economies. Due to EU policies, gas consumption has continued to fall, causing some energy-intensive industries to shut down and production facilities to relocate to other regions.
"Europe's gas consumption is expected to decline further. The rate of decline will depend, among other factors, on future political decisions. Additionally, Europe’s gas production is not anticipated to rise in the long term, considering the depletion of its domestic resource base."
Gazprom’s perspectives on the energy situation in the EU and the UK follow the agreement of 12 European nations, including the UK, on measures in Estonia to hinder the operations of Russia’s shadow fleet. This came after the European Council adopted its 15th sanctions package against Russia, reinforcing the EU's position regarding the country’s so-called dark fleet and signaling ongoing efforts to address sanctions evasion.
Recently, the UK also imposed sanctions on 20 shadow fleet vessels carrying Russian oil, raising the total number of sanctioned ships to over 100, allegedly used for transporting Russian energy, including 93 oil tankers. Reports indicate that Russia employs older, usually uninsured tankers to transport its crude oil and petroleum products globally, despite the multitude of sanctions imposed by the EU, G7, and other international entities.
Meanwhile, Gazprom, which regards natural gas as an effective and environmentally friendly energy source, has reiterated its commitment to progressively develop its gas reserves in line with the prevailing trends in the global energy market.
"Energy systems reliant on natural gas and long-term contracts have demonstrated stability, which is particularly valuable amidst the ongoing market changes. Looking ahead, natural gas will play a central role in the global energy sector," concluded the Russian firm.
In announcing that the board has sanctioned its investment program and budget for 2025, Gazprom emphasized that the RUB 1.52 trillion will fund essential projects, including the further development of gas production centers in eastern Russia and the Yamal Peninsula, enhancement of gas infrastructure in Russian regions, expansion of the Power of Siberia gas pipeline capacity, and the company's gas processing facility. This also includes the implementation of the Eastern Gas Supply System project and others intended to maintain gas balance during peak periods.
"The approved financial plan is balanced; it guarantees the achievement of the company's strategic objectives and ensures full coverage of its obligations without any deficit. Decisions on debt financing within the borrowing program will be made based on market conditions, liquidity, and Gazprom’s funding requirements," the Russian gas giant emphasized.
Famil Sadygov, Deputy Chairman of Gazprom's Management Committee, described Gazprom's performance in 2024 as robust, estimating that gas sales will generate RUB 4.6 trillion (about $46.1 billion), which is RUB 155 billion (around $1.6 billion) more than originally anticipated in the financial plan. Sadygov also noted that the company’s EBITDA is expected to be one of the highest in its history, with conservative estimates placing it at over RUB 2.8 trillion (approximately $28.1 billion).
"The structure of capital expenditures will see no significant changes in 2025: a substantial portion of funds will be allocated toward essential projects that guarantee steady gas supplies to both domestic and foreign markets, as well as the expansion of gas infrastructure throughout Russian regions. In 2025, we will also persist with our strict policy to contain operational costs," Sadygov added.
According to Gazprom’s board of directors, the principal outcome of 2024 is a continued increase in demand for traditional energy sources amid an unpredictable geopolitical climate and heightened focus on energy security matters. The board highlighted a surge in oil, gas, and coal consumption, believed to have reached historic highs. Initial estimates suggest that global gas consumption increased by over 100 billion cubic meters in 2024, largely driven by Russia, China, and India.
The company asserts that Russian gas plays a crucial role in ensuring reliable gas supplies to China, with daily supplies via the Power of Siberia pipeline reaching the highest contractual level on December 1, 2024. The project for gas deliveries via the second, Far Eastern route is reported to be on track, as China’s gas consumption is expected to continue rising rapidly in the long term.
Gazprom also noted an uptick in gas usage in Central Asian nations, such as Kazakhstan, Uzbekistan, and Kyrgyzstan, which are strengthening energy partnerships with the company for Russian pipeline gas imports. According to the firm's assessment, Europe is the only global region experiencing a decline in gas consumption, a trend observed in the European Union (EU) and the United Kingdom (UK).
The Russian company stated: "These nations are implementing measures aimed at artificially diminishing gas demand to the detriment of their economies. Due to EU policies, gas consumption has continued to fall, causing some energy-intensive industries to shut down and production facilities to relocate to other regions.
"Europe's gas consumption is expected to decline further. The rate of decline will depend, among other factors, on future political decisions. Additionally, Europe’s gas production is not anticipated to rise in the long term, considering the depletion of its domestic resource base."
Gazprom’s perspectives on the energy situation in the EU and the UK follow the agreement of 12 European nations, including the UK, on measures in Estonia to hinder the operations of Russia’s shadow fleet. This came after the European Council adopted its 15th sanctions package against Russia, reinforcing the EU's position regarding the country’s so-called dark fleet and signaling ongoing efforts to address sanctions evasion.
Recently, the UK also imposed sanctions on 20 shadow fleet vessels carrying Russian oil, raising the total number of sanctioned ships to over 100, allegedly used for transporting Russian energy, including 93 oil tankers. Reports indicate that Russia employs older, usually uninsured tankers to transport its crude oil and petroleum products globally, despite the multitude of sanctions imposed by the EU, G7, and other international entities.
Meanwhile, Gazprom, which regards natural gas as an effective and environmentally friendly energy source, has reiterated its commitment to progressively develop its gas reserves in line with the prevailing trends in the global energy market.
"Energy systems reliant on natural gas and long-term contracts have demonstrated stability, which is particularly valuable amidst the ongoing market changes. Looking ahead, natural gas will play a central role in the global energy sector," concluded the Russian firm.