Gazprom Coordinates Meeting to Boost Natural Gas Fuel Uptake in Russia

| Russia, Moscow

Natural gas vehicles line up outside Gazprom headquarters in Moscow.

At Gazprom’s headquarters in Moscow last week, Alexey Miller, Chairman of the Gazprom Management Committee, moderated an inter-disciplinary meeting on boosting the use of natural gas vehicle (NGV) fuel. The meeting participants addressed the key aspects of the NGV fuel market advancement in Russia. Special attention was paid to production of gas motors and commercial output of vehicles running on natural gas, the role of oil companies in expanding the gas filling stations network as well as to the significance of vehicles conversion to gas for Russian regions.

Taking part in the meeting were senior officials from specialized Russian ministries, leading oil companies such as Rosneft and LUKOIL, large producers of motor vehicles: KAMAZ, GAZ Group, Machinery & Industrial Group, Yo-AUTO and Russian Railways, executive authorities of Russian constituents, structural units and subsidiaries of Gazprom.

The meeting emphasized the environmental and economic benefits generated by use of natural gas as a motor fuel.  Conversion of vehicles from gasoline to natural gas reduces polluting emissions by approximately five times. This is especially important for big cities, where motor vehicles cause most of the air pollution.

The cost of natural gas fuel for Russian consumers is regulated by law. For instance, the average Russian price of one cubic meter of NGV fuel (roughly commensurate with one liter of conventional fuel) is nowadays around RUB 9 (USD 0.27). Large-scale conversion of motor vehicles to natural gas will lead to reduction of road transport costs due to the difference in the value of gas and gasoline, which will bring about cost reduction in all sectors of economy and community life, trigger industrial growth and improve living conditions.

Gazprom challenged meeting participants to significantly expand the NGV business in Russia and create a huge gas sales market on its basis to be fed with Gazprom’s gas.

Alexey Miller at exhibition of natural gas vehicles

Speaking at the meeting Alexey Miller said: “Russia is number one country on the global scale by gas reserves, but it, unfortunately, takes only the 20th place by the use of NGV fuel. Gazprom has a track record of dealing with NGV fuel in Russia through its subsidiaries, but the priority nowadays should be given to building a system for developing the NGV fuel market that would cover the entire country by uniting the efforts of all stakeholders. We believe there are all preconditions for that.

Wider use of NGV fuel in Russia will be a part of the Russian Regions Gasification Program, and Gazprom has established business ties with nearly all of the Russian constituents within this Program. We propose signing with them Programs for Gasification and Gas Supply starting from 2013, and these programs will include a mandatory provision on NGV fuel. Thus, we could achieve a new quality of NGV fuel market development in Russia starting from 2013. First of all, the development efforts should be taken in the regions having cities with millions of people.”

While discussing the organizational and financial measures of NGV fuel promotion the meeting participants emphasized that it was high time to shape the relevant legal framework for state regulation of motor vehicles conversion to natural gas and secure synchronized construction of a gas filling network to be accompanied by an expanded marketing of refined products.

Based on the meeting results, Gazprom’s specialized structural units were tasked to shortly draft the Russian Regions Gasification Program’s typical section concerning the NGV fuel market development.

An order was also given to hold a similar inter-disciplinary meeting this autumn to discuss the issues of the NGV market development in Russian regions.

Prior to the meeting the participants visited an exhibition of natural gas vehicles at Gazprom’s premises. The exhibition displayed 17 units of motor vehicles: LIAZ and MAN buses, a KAMAZ dump truck, Volkswagen Caddy EcoFuel, Mercedes E 200, Yo-Concept, Yo-Crossover passenger cars as well as equipment for a natural gas filling station.

Russia’s current NGV status

Today there are approximately 242 compressed natural gas (CNG)  filling stations are operating in 58 Russian regions, with 207 owned by Gazprom. Besides, another CNG filling station is being built in the Kaliningrad Region.

In 2011, 361.6 million cubic meters of compressed natural gas was sold through Russian CNG filling stations, which is 16.6 million cubic meters more than in 2010 (approx. 5% growth) and accounts for only 18 per cent of the design capacity of Russian CNG filling stations.

The most developed regional markets are in the Stavropol and Krasnodar Territories, the Sverdlovsk, Chelyabinsk, Rostov and Tula Regions and the Republic of Bashkortostan: they accounted for 52.1 per cent of the total CNG sales in Russia for 2011.

Gazprom has entered into cooperation agreements on natural gas use as a motor fuel with the Kaluga, Orel and Penza Regions. Regional regulatory acts aimed at developing local CNG markets have been adopted in Moscow, the Stavropol Territory, the Sverdlov, Tambov, Kaluga and Saratov Regions and the Republic of Tatarstan.

At present, gas filling capacities are being promoted in Eastern Siberia and the Far East. CNG filling stations have been built in Bratsk. A methane filling station is being designed in Petropavlovsk-Kamchatsky. In the future, CNG filling stations will be built in Khabarovsk, Blagoveshchensk, Vladivostok and Yuzhno-Sakhalinsk.

The Yo-Mobile features a hybrid drivetrain – a generator and an internal-combustion engine that can burn both gasoline and compressed natural gas (CNG). Gazprom is interested in this vehicle in view of the NGV fuel market development as well as the gas use for production of composite materials for this vehicle.

In 2007 Gazprom approved the Targeted Comprehensive Program for CNG Filling Network and NGV Fleet Development over 2007 to 2015. The Program stipulates commissioning of at least 200 CNG filling stations in various regions of Russia and building up gas filling capacities to 2.6 billion cubic meters annually. It will increase the number of CNG powered motor vehicles and agricultural equipment by more than 50 thousand units before 2015. Annual CNG sales in Russia will grow to 700 million cubic meters. This will cut greenhouse gas emissions into the atmosphere by more than 1 million tons of CO2 equivalent.

(This article compiled using information from a Gazprom press release)

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