Gazprom-AR2014

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49 The growth of coal consumption and increasing substitution of gas with coal in the European energy sector after 2011 was for the most part driven by coal prices dropping to their extreme lows due to the excessive coal supply that had accumulated on the global market over the previous years. In an attempt to diversify their fuel mix, many European countries are consistently pursuing a policy to promote renewable power technologies, including through government subsidies. Economic and industrial growth hovered just above zero, sometimes going negative, almost in all major European countries in 2014, with only Turkey and UK showing positive growth. Industry as a whole had no impact on gas consumption in the period under review. The share of Russian gas in European consumption, including Turkey, was 30.2% and in imports — 64.1%, in line with the previous year. Exports of non-Russian gas to the European market kept falling. European LNG imports went down by 0.7 bcm (by 1.3%). LNG spot prices in the Asia-Pacific fell to three-year lows by the end of 2014 offsetting the Asian premium, but regained some of the lost ground owing to the negative price trends on European trading hubs. Natural gas supplies to Europe, 2010–2014, bcm 2010 2011 2012 2013 2014 Supplies by major gas exporters OAO Gazprom (long-term contracts) 138.6 150.0 138.8 161.5 146.6 Algeria (incl. LNG) 57.3 52.4 46.5 36.6 31.7 Libya (including LNG) 10.3 2.5 6.7 5.7 6.5 Qatar 32.9 43.9 31.3 24.4 23.7 Nigeria 13.5 18.1 12.1 7.0 6.0 Supplies by major European producers Norway 115.4 109.4 121.4 114.7 116.8 Netherlands 76.5 72.9 72.6 77.7 63.1 UK 64.5 51.1 43.8 41.2 41.2 Other 100.8 56.6 73.5 71.5 50.4 Total 609.8 556.9 546.7 540.3 486.0 Note. Data for 2010–2013 may differ from data in Annual Report 2013 due to amendments to international statistics. European far abroad countries’ own gas production output dipped by 16.0 bcm to 266.7 bcm, i.e. a 5.6% decline y-o-y. The Netherlands accounted for the larger share, with its output dropping by 14.6 bcm as a result of the government’s policy of resource conservation. OAO Gazprom Annual Report 2014
50 Trends and Developments on Oil and Gas Markets Consumption and own production in European far abroad countries, 2005–2014, bcm 600 590.5 584.7 583.2 599.8 609.8 565.5 556.9 546.7 500 540.3 486.0 400 300 317.2 309.4 297.0 325.0 307.3 311.3 290.3 292.2 282.7 266.7 200 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Gas consumption Own gas production Note. Calculated on the base of International Energy Agency data, natural gas volumes converted to Russian standards (calorific value of 8,850 kCal/SCM at 20°C). Data for 2005-2013 may differ from data in Annual Report 2013 due to amendments to international statistics. The declining petroleum product prices were accompanied by dropping natural gas quotes on European trading hubs. In 2014, average annual month-ahead indices at the Dutch TTF dropped by 17.9% in US dollar terms y-o-y, with the German NCG seeing a 17.6% fall to USD 298.75 per mcm and USD 301.86 per mcm, respectively. TTF and NCG month-ahead natural gas quotes, 2005–2014, USD/mcm 600 500 400 300 200 100 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 TTF NCG Source: Intercontinental Exchange. Europe is now using a hybrid pricing model to gradually turn gas prices at gas trading hubs into an industry-wide pricing standard. Hubs are trading through term contracts. With the development of trading hubs, wholesale prices began to follow the gas supply and demand curve, although they never came to reflect the balance on the European gas market since they still depend on the prices of the prevailing long-term contracts which follow another pricing model. While this dependence persists, long-term contract prices will keep setting caps for hub prices due to the excessive volume of contractual commitments on the European gas market: the aggregate firm commitments of suppliers under long-term contracts are much higher than the actual gas consumption since the majority of these contracts were signed before the 2008 crisis, led by expectations of a constantly growing consumption. OAO Gazprom Annual Report 2014
Page 1 and 2: OAO Gazprom Annual Report 2014 The
Page 3 and 4: Contents 4 Statement of OAO Gazprom
Page 5 and 6: 4 Statement of OAO Gazprom’s Chai
Page 7 and 8: 6 Major results Gazprom Group Resul
Page 9 and 10: 8 Company Information OAO Gazprom
Page 11 and 12: 10 Company Information OAO Gazprom
Page 13 and 14: 12 Company Information Track Record
Page 15 and 16: 14 Company Information Gazprom Grou
Page 17 and 18: 16 Company Information Operations a
Page 19 and 20: 18 Business Development Prospects S
Page 21 and 22: 20 Business Development Prospects G
Page 23 and 24: 22 Business Development Prospects E
Page 25 and 26: 24 Business Development Prospects T
Page 27 and 28: 26 Business Development Prospects E
Page 29 and 30: 28 Business Development Prospects P
Page 31 and 32: 30 Business Development Prospects U
Page 33 and 34: 32 Business Development Prospects S
Page 35 and 36: 34 Board of Directors and Managemen
Page 43 and 44: 42 Board of Directors’ Report on
Page 49: 48 Trends and Developments on Oil a
Page 53 and 54: 52 Trends and Developments on Oil a
Page 55 and 56: 54 Performance Results Exploration
Page 57 and 58: 56 Performance Results Distribution
Page 59 and 60: 58 Performance Results Distribution
Page 61 and 62: 60 Performance Results The company
Page 63 and 64: 62 Performance Results Hydrocarbon
Page 65 and 66: 64 Performance Results Transportati
Page 67 and 68: 66 Performance Results Gas transpor
Page 69 and 70: 68 Performance Results Gas Infrastr
Page 71 and 72: 70 Performance Results Hydrocarbon
Page 73 and 74: 72 Performance Results Gazprom, on
Page 75 and 76: 74 Performance Results OAO Mezhregi
Page 77 and 78: 76 Performance Results Major invest
Page 79 and 80: 78 Performance Results European gas
Page 81 and 82: 80 Performance Results In accordanc
Page 83 and 84: 82 Performance Results Oil and gas
Page 85 and 86: 84 Performance Results Sales of ref
Page 87 and 88: 86 Innovations In 2014, the budget
Page 89 and 90: 88 Innovations — produced a techn
Page 91 and 92: 90 Innovations 14 meetings of coord
Page 93 and 94: 92 Environment and Social Responsib
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100 Environment and Social Responsi
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110 Corporate Governance OAO Gazpro
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112 Corporate Governance Corporate
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114 Corporate Governance Summary of
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116 Corporate Governance Remunerati
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118 Corporate Governance In additio
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120 Corporate Governance Liability
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122 Corporate Governance Audit Comm
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124 Corporate Governance The intern
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126 Corporate Governance Efficient
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128 Corporate Governance Stock Mark
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130 Corporate Governance Dividend P
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132 Risk Management Gazprom has con
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134 Risk Management Customs, curren
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136 Glossary ADR of OAO Gazprom APG
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138 Corporate Governance Units of M
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140 Additional information List of
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142 Additional information 11. Adde
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144 Additional information 27. Bank
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146 Additional information 45. Adde
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148 Additional information 59. Trad
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150 Additional information 68. Trad
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152 Additional information 84. Cont
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154 Additional information 96. Volu
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156 Additional information Inclusio
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158 Additional information Improvem
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160 Additional information These ef
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162 Addresses and Contact Details F
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