Gazprom to Boost Production as Demand Recovers

Russia’s Gazprom plans to increase natural gas production by almost 10% this year, as global demand recovers in the wake of the Covid-19 pandemic. The company expects to add more reserves this year through exploration as well, to match the planned production. The state-controlled giant expects to produce 496.9 Bcm this year, up from 453.5 Bcm in 2020, Deputy CEO Vitaly Markelov told an in-house magazine last week. Last year, output fell some 9% from slightly above 500 Bcm in 2019, mainly due to a drop in exports. This year, Gazprom has increased domestic gas sales and exports, mainly due to the cold winter. Exports to Europe, its key overseas market, were additionally supported by weaker competition from LNG, which was mostly redirected to higher-priced Asian markets (NC Apr.22'21). Gazprom expects to add 497.2 Bcm in gas reserves as a result of exploration this year, 2.6% more than it added in 2020, or 484.6 Bcm. Gazprom plans to add 8.6 million metric tons in gas condensate and oil reserves this year, down from 14.3 million tons added last year. The planned gas reserves increment is almost as much as Gazprom plans to produce this year, meaning that its reserves replacement rate is expected to fall to 100.1% from 107% last year. Gazprom’s gas reserves are now estimated at around 35 Tcm, under Russian classification, which the company says accounts for 71% of Russia’s total gas reserves and 16% of the world’s reserves. The biggest reserves increment is expected in the Kara Sea and in West Siberia this year, Gazprom said. The company plans to drill one well in each of the Skuratovsky and Leningradsky Blocks in the Kara Sea this year. In the West Siberian Arctic, Gazprom plans to continue drilling at the giant operating Bovanenkovskoye field, as well as at the Kharasaveiskoye field and the Tambei cluster comprising the giant Tambei and satellite Malyginskoye fields. Arctic offshore exploration in the Kara Sea was the key driver for Gazprom’s reserves growth last year, when the company discovered the 202.4 Bcm 75 Let Pobedy (75 Years of Victory) gas field and a new deposit at the Leningradskoye field.