OREANDA-NEWS. August 19, 2015.

Published in corporate Gazprom Magazine Issue 6, the interview was taken by Eduard Kulikov

Yury Vazhenin, Director General of Gazprom Pererabotka answers questions from Gazprom Magazine

Mr. Vazhenin, what are the year-end results of Gazprom Pererabotka?

The last year was the year of a strength test for the whole gas industry. Gazprom, having faced an actually discriminatory attitude towards its business on the part of European partners, kept on expanding the sales markets in a consistent manner. A major contract was signed with China. A number of other Asia-Pacific countries are showing interest in cooperation. All this suggests that Gazprom will step up gas production in the medium term.

In Western Siberia this goal can be achieved through further development of the Achimov deposits in gas and condensate fields. Therefore, there is still much work to do to develop the processing sector. The interim results of the company’s production and economic activities also demonstrate a steady growth. As of the end of 2014, several key performance indicators reached the all-time highs.

The Novy Urengoy Condensate Treatment Plant processed 11.5 million tons of hydrocarbon feedstock, thus attaining the highest results in the entire period of its existence. The greatest amount of hydrocarbons since the plant commissioning, i.e. 9.7 million tons, was processed to supply to the Surgut Condensate Stabilization Plant (CSP) through the Urengoy – Surgut condensate pipeline. In general, the planned production figures were fully met in 2014.

The Novy Urengoy Condensate Treatment Plant processed 11.5 million tons of hydrocarbon feedstock, thus attaining the highest results in the entire period of its existence. The greatest amount of hydrocarbons since the plant commissioning, i.e. 9.7 million tons, was processed to supply to the Surgut Condensate Stabilization Plant (CSP) through the Urengoy – Surgut condensate pipeline.

Condensate and APG

How is the project on ramping up condensate processing going on?

In October a new condensate stabilization unit (8th and 9th process trains) was put onstream at the Surgut CSP, thereby having increased the design output of the plant from 8 to 12 million tons a year. Some upgrade activities enabled to deliver extra feedstock to the condensate processing plant having raised its output to 4 million tons a year. This has paved the way for Gazprom to increase gas production volumes at northern fields of Western Siberia. Besides, we are currently completing our facilities on hydrocarbon feedstock transmission from Urengoy to Surgut. The 80 kilometers of the Urengoy-Surgut condensate trunkline under construction to be put onstream this year and the remaining line of 181 kilometers – in 2017.

How are you progressing with a Lukoil’s associated petroleum gas (APG) treatment unit at the Sosnogorsk gas processing plant (GPP)?

Gazprom Pererabotka met all its obligations. Today the plant is ready to take APG from northern fields of Lukoil in the Komi Republic. This February our company and Gas-Oil Trading, the project operator on behalf of Lukoil, contracted in to process APG of Lukoil-Komi at the Sosnogorsk GPP. In 2015 around 0.4 billion cubic meters of APG will be supplied, and later on Lukoil is going to raise the annual supplies to 0.7 billion cubic meters. In order to bring APG to the Sosnogorsk GPP, a number of additional facilities have to be built with a focus on gas supply to the Komi Republic consumers. As soon as these facilities are put onstream, APG will come to the Sosnogorsk GPP. For all I know, their commissioning will not occur until this June at the earliest.

Salavat

What are the plans concerning Gazprom Neftekhim Salavat?

Last year the company ramped up hydrocarbon feedstock processing up to 7.5 million tons, in particular, the refinery processed nearly 2.5 million tons of gas condensate showing an 11 per cent increase as compared to 2013. In the same year the Class C5 motor gasoline complying with Technical Regulations of the Customs Union came into mass production. Today the complex is steadily developing due to Gazprom’s efforts. The output of refined products and petrochemicals is growing, the plants upgrading is underway and several new facilities are under construction.

Gazprom Neftekhim Salavat has developed an extensive investment program: in the next four years alone the company is going to utilize over RUB 70 billion of capital investments.

Gazprom Neftekhim Salavat has developed an extensive investment program: in the next four years alone the company is going to utilize over RUB 70 billion of capital investments. The funds will be used for upgrading the process flow of the refinery in order to ramp up production capacities and fulfill obligations to the government. During the next two years we plan to put into operation an isomerization unit and a catalytic cracking unit. The upgrade of a pyrolysis facility is at the design stage, underway is the construction of an acrylic acid production center.

How are you going to consolidate processing facilities in Orenburg and Astrakhan?

Actually, we have started the consolidation of these processing assets. This decision was made this March by the Gazprom Board of Directors. It has already been submitted for registration with tax authorities. In the short term we are going to deal with a number of issues related to management and social guarantees for the employees of the mentioned companies. We already have successful experience of such kind and will keep on moving towards this goal.

Eastern Program

What are you planning to do within the gas processing plant construction in the Amur Region?

As part of the Eastern Program, Gazprom provides for the construction of the Amur Gas Processing Plant including helium extraction unit. This ambitious project will be run by newly established company – Gazprom Pererabotka Blagoveshchensk. Early this year Gazprom approved the share of Gazprom Pererabotka in Gazprom Pererabotka Blagoveshchensk to amount to 99.99 per cent of its equity capital. Our colleague, Igor Afanasyev, was appointed Director General of the company.

In January 2015 the basic design concepts of the project were approved by Gazprom. The project documentation is worked out for the first stage of the Amur GPP construction – Pilot Facilities. A project on gas processing technology is completed, the documents drawn up by the global leaders – Linde Engineering and Air Liquide – is under consideration. After reviewing the proposed design concepts the relevant decisions will be made for further design. The plant construction will be based on the relatively new practice for Gazprom – EPC contract, i.e. on the turn-key basis. Currently, its main provisions are being discussed and the contractor will set to pre-developing the construction site in July.

The gas and helium processing plant in the Amur Region will produce up to 48 billion cubic meters of marketable gas, 3.4 million tons of ethane, 2 million tons of liquefied petroleum gas and 60 million cubic meters of helium. Ethane will be delivered to the SIBUR gas chemical facility for production of polyethene.

How will these projects influence the socioeconomic climate of the region?

They have a lot of benefits for the region. The plant construction will engage around 6 thousand workers and engineers. Roughly the same number of professionals will be required for the operation of process facilities. While solving the staffing issue we are going to give priority to local residents and educational establishments. In September 2014, we coordinated with the Amur Region authorities an action plan for training the Amur GPP personnel.

We made a list of vacancies and the regional ministry of education and science defined a number of educational institutions with nine specialties for higher professional education and thirteen specialties for the secondary vocational education.

By now Gazprom Pererabotka has signed a strategic partnership agreement with the Amur State University. The company cooperates in the same way with regional institutions of secondary vocational education. This January a teleconference was held for high school pupils and parents of graduates from Blagoveshchensk, Belogorsk, Svobodny and the Svobodnensky District, in which over 600 people took part. We went into every detail about our plans, shared information on the specifics of interaction with educational institutions and requirements to graduates.

On a number of technical disciplines the graduates will be trained at Gazprom’s basic universities: National Research Tomsk Polytechnic University, Kazan National Research Technological University and Gubkin Russian State University of Oil and Gas. As usual, we support universities located in the regions of the company’s activity. A special chemistry laboratory will soon be opened in the Amur State University.

We are going to build new motorways and railways, as well as upgrade the existing transportation infrastructure in the Amur Region. It is planned to construct waste water treatment and sewage treatment facilities. The city of Svobodny will have a new housing estate consisting of low-rise buildings for 5 thousand people. It’s also worth mentioning that full gasification of the region will be carried out in the long term. This will make the area more attracting for investments and give rise to the emergence of new industries and diversity of services.