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The Last Ditch: Gazprom Accelerates Yamal Development

This is an abridged version. The full text is avaiable to subscribers to The Russian Energy weekly.

Russia’s production of natural gas will dwindle unless reserves of the Yamal Peninsula are brought on stream quickly. They are the last large source capable of replacing the dying upstream projects of the Soviet era. To tap these reserves, Gazprom has had to make significant efforts.

Traditional Optimism

Gazprom is again claiming it intends to boost gas production. Its Deputy Chairman Alexander Ananenkov predicts that the company will produce 519 bcm of gas this year, 521 bcm in 2012, and 549.2 bcm in 2013— almost as much as in the pre-crisis years of 2007-2008. In 2014, he says, production is to grow to 570 bcm. An earlier forecast of Gazprom envisaged the 2011 volume at 505.6 bcm.

Fields on the Yamal Peninsula play a noticeable role in these plans. According to Ananenkov, gas transportation from the peninsula is to total 280-315 bcm a year by 2013, and all this gas will pass through the new Bovanenkovo-Ukhta route. The route is scheduled to become operational in late 2012.

The figures are blatantly unrealistic. To begin with, only one field, Bovanenkovo, is being developed on Yamal, and Gazprom expects it to be able to yield 115 bcm a year in the peak period. Moreover, the field will produce only 7.9 bcm a year at the first stage, as Gazprom officially predicts. It is a mystery where the volumes quoted by Ananenkov are going to come from.

The future pipeline from Bovanenkovo to Ukhta is to reach its ultimate annual capacity of 140 bcm only by 2015. Perhaps the Gazprom manager meant overall production of the whole Yamal-Nenets Autonomous District and the capacity of the existing pipelines as well—or he could be making predictions for 2030 rather than 2013. Minister of Energy Sergei Shmatko said in December that gas production from Bovanenkovo might reach 45 bcm a year by 2013.

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