Gazprom-AR2014

Risk Management
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Key Risk Factors
Strategic and country risks
Risks related to the growth of the global economy
An unfavourable economic environment can lead to a slowdown in the energy demand and to
increased borrowing costs.
Risk management/mitigation. To ensure growth of energy demand OAO Gazprom diversifies
its markets and sales channels and implements a debt management policy supporting
its financial sustainability, improving its financial position and optimising its debt portfolio.
European gas market risks
OAO Gazprom supplies natural gas to the European Union (EU) Member-States. However, the EU
pursues a policy of diversifying its gas supply sources and promoting exchange trade
in natural gas.
Risk management/mitigation. Business remains to be based on long-term contracts, which
ensure reliability and flexibility of supplies to consumers. A set of initiatives is implemented to both
build new infrastructures and bolster demand for gas, as well as strengthen the Company’s position
in the sectors with a potential of extra supplies.
Political risks
The situation in South-East Ukraine prompted the EU, the United States, and other countries
to impose limited economic sanctions on the Russian Federation and certain Russian companies.
However, if no progress is achieved in resolving the crisis in South-East Ukraine or if the conflict
worsens, the sanctions list and restrictive measures are very likely to be expanded.
Risk management/mitigation. Progressive expansion and diversification of sales markets.
Gas transit risks
Gas transit via the FSU countries, in particular Ukraine, is associated with the risk of the counterparties
defaulting on their transit obligations, which exposes Gazprom Group to the risk of improper
performance of its obligations under gas supply contracts.
Risk management/mitigation. The following steps are taken to reduce reliance on transit
countries:
— diversification of export routes;
— expanding access to UGSF abroad;
— development of LNG trade.
Russian regulatory risks for the gas industry
OAO Gazprom’s operations are regulated by the Federal Law On Natural Monopolies.
Risk management/mitigation. A dialogue with the government authorities is maintained with
a view to improve the pricing policy on gas sales in the domestic market.
Risks associated with unconventional gas development
Unconventional gas production is growing in some markets, such as North and South America,
and South-East Asia.
Risk management/mitigation. Feasibility and economic viability of unconventional oil and
gas production and sales in the global markets are being explored.
Risks associated with renewable energy development
Renewable energy output can be expected to grow in some countries, which may squeeze gas
consumption by importer countries.
Risk management/mitigation. The use of gas, inter alia, for power generation offers consumers
economic, technological and environmental benefits. In most cases, renewable energy
output supplements energy output from other sources, including natural gas.
OAO Gazprom Annual Report 2014