Head of Gazprom Mezhregiongaz Sergey Gustov on gasification and debts for gas

Against the backdrop of declining exports, gas supplies to the domestic market are becoming an increasingly significant source of Gazprom’s revenue. About what points of growth in demand the company sees and how the problem with debts for gas in the North Caucasus is being solved, Kommersant was told by the general director of Gazprom Mezhregiongaz Sergei Gustov.

— What points of growth in gas consumption in the domestic market of the country do you see now?

— The main direction is the expansion of the gas infrastructure as part of the gasification and post-gasification program for 2021-2025. More than 977 thousand households and 4.7 thousand boiler houses in 5.7 thousand settlements will have access to natural gas, including beyond 2025. We forecast additional demand for gas by households and industrial enterprises at the level of 20 billion cubic meters.

If we talk about additional gasification – connecting households in already gasified settlements to gas networks – then network gas has been brought to the borders of almost 600 thousand households. Another direction is the development of the gas motor fuel market.

Another big block is gas consumption by industrial consumers, including the agricultural sector. For example, a milk production plant in the Leningrad Region was recently gasified. The economic effect is simple: the use of gas is much more profitable for an enterprise than diesel fuel. In addition to those included in the programs for the development of gas supply and gasification, we expect an increase in large promising projects that are likely to be implemented. This is about 13 billion cubic meters.

— What is the forecast for gas demand in 2023?

“Over the past five months, gas has been withdrawn in the planned contractual volumes; we do not expect significant fluctuations in the indicator as a whole at the end of the year. In detail, we expect some growth in agrochemistry, electric power, petrochemistry and the metallurgical industry.

In general, when analyzing the dynamics of gas supplies, we see stable demand. Indeed, we saw a slight decrease in gas consumption in 2020 when the pandemic began, however, domestic gas demand has been largely stable lately, accompanied by growth in a number of industries. Thus, in 2022, cement producers showed an increase in gas consumption – by 12.8%, while the agro-industrial complex grew by 2%.

— Will the volumes of financing or the parameters of the gasification program be revised, given how much the tax burden has increased and Gazprom’s revenues have fallen?

— The total amount of financing for gas supply and gasification development programs for 2021-2025 is more than 788 billion rubles. We haven’t had any financial difficulties before. There are none even now. The same applies to post-gasification measures.

— Do you need additional capacities for gasification of the Krasnodar Territory?

– In the Krasnodar Territory there are issues related to the limited capacity of gas distribution stations (GDS), but they are solved by modernizing the “locked” GDS and building new gas supply sources. Thus, within the framework of the program for 2021–2025, we will reconstruct 11 gas distribution stations and build two gas pipeline branches together with the gas distribution station. Plus, we are modernizing 28 gas distribution stations. Thanks to this, it will be possible to increase the volume of gas supplies to existing consumers and to connect new ones.

– A few years ago, Gazprom wanted to abandon gas sales and gas distribution in Dagestan by transferring this function to a single federal operator, leaving only gas supplies behind. What is happening with the infrastructure in the region now?

– Previously, only 16% of gas distribution networks in Dagestan belonged to Gazprom. Currently, active joint work is underway with the government of the republic on the design and consolidation of networks, and now we already have about 70% of gas distribution property on lease. It is important that each gas pipe has a person responsible for its operation and maintenance.

— Are similar schemes being considered in other regions of the North Caucasus Federal District? What’s with the debts?

– In other regions of the North Caucasus Federal District, the networks are mainly owned by Gazprom, five-year programs are being implemented there both in terms of the reconstruction of networks and in terms of the construction of new gas pipelines. With regard to overdue receivables in the North Caucasus Federal District, the situation is still difficult. The main difficulty so far is that there are many unrecorded houses, that is, an unaccounted subscriber base. Together with the authorities of the regions, we are gradually solving these problems.

A separate topic is the debts of heat supply organizations (TSOs). Returning to Dagestan: a single communal operator will operate in the republic, designed to unite the TSO of the subject. It is assumed that the consolidation of TCO property will take place in several stages and be completed by May 2024.

Initially, it was planned to include only six TSOs in the perimeter of a single heat supply operator, now the circuit has been expanded to 20. These TSOs accumulated 97% of the debt in the region earlier. It is assumed that the difference between the actually established tariff and the economically justified one will be compensated at the expense of the federal budget. In a few years, while the budget will compensate for this delta, the unified utility operator should get on its feet and begin to modernize the property.

A pilot project of such a plan was in the city of Izberbash, and the result is encouraging: in the fourth quarter of 2022 and the first quarter of 2023, we reached the level of 95% – an unprecedented percentage of payments for gas in the republic! I think we will deal with the accumulated debts and be able to “pull out” this sub-sector of heat supply for one hundred percent payment for current supplies.

Interviewed by Tatyana Dyatel