Gazprom Export Global Newsletter December 2016/ Vol

BLUE FUEL Gazprom Export Global Newsletter December 2016/ Vol. 9/ Issue 4

Interview with Thilo Wieland, Wintershall’s Head of E&P in Russia, North Africa and South America Page 5

Evaluation of aggregate costs of power generation Page 9

Impressions of visiting an LNG-fuelled ship Page 14

‘Imperial Capitals’ performance took place in St. Petersburg Page 20

www.gazpromexport.com | [email protected] +7 (812) 646-14-14 | [email protected] © Gazprom Export BLUE FUEL I n this issue Gazprom Export Global Newsletter December 2016/ Vol. 9/ Issue 4

To our readers...... 4

Interview with Thilo Wieland, Wintershall’s Head of E&P in Russia, North Africa and South America...... 5 Gazprom beats all-time daily export records...... 8 Gazprom Export’s 3rd gas auction successfully completed...... 8 Evaluation of aggregate costs of power generation...... 9 Gazprom sets up a new NGV company in Europe...... 13 Impressions of visiting an LNG-fuelled ship...... 14 Natural gas for transport is essential for Germany’s ‘Energiewende’...... 16

Reflections by an old oil rat after a visit in a gas fueled ship’s engine room...... 17 St. Petersburg Open ATP World Tour tournament...... 19 ‘Imperial Capitals’ performance took place in St. Petersburg...... 20

Publishers Contact Info: www.gazpromexport.com | [email protected] +7 (812) 646-14-14 | [email protected] December 2016/ Vol. 9/ Issue 4 BLUE FUEL To our readers «I look forward to more exciting and challenging projects with our Russian partners at Gazprom»

The autumn of 2016 was a season of big a greater flexibility of our exports bringing Interview with Mr. Thilo Wieland, Wintershall’s Head of E&P in Russia, North Africa and South America. records for Gazprom Group. In November natural gas to the consumption growth Gazprom harvested a series of absolute areas in North-Western Europe and THILO WIELAND, an industrial engineering and business records of daily supplies, reaching the Turkey. management graduate, has been a member of the Wintershall all-time maximum of 614.5 mcmd on Board of Executive Directors since December 2015 and is November 29th. Another achievement But will there be enough demand? responsible for Exploration & Production in Russia, North Africa was our historical monthly record – this At Gazprom we answer this question & South America. After studying industrial engineering at the November our exports grew to 17.6 bcm, pragmatically, but positively. Over the Technical University of Berlin, he began his career in 1999 at the figure which exceeds the annual gas last two years we have been witnessing Wintershall Erdgas Handelshaus in Berlin. Since then he has held consumption of Poland. We are also on a revival of natural gas sector in Europe. various positions within the Wintershall Group, among others as track to hit this year an absolute record There is no double-digit growth indeed, Head of Department Natural Gas Supply West at WINGAS. Until of annual gas exports both of Soviet rather a modest comeback of gas to 2013, he represented Wintershall’s shareholder interests in the times and the history of modern Russia. power generation.But big deals always Nord Stream and South Stream projects before becoming Moreover, the share of Gazprom’s gas start small. We believe that the European Vice President, Strategy and Portfolio Management, within the in Europe grows steadily and has almost climate policy could be a solid foothold Wintershall Group. As General Manager of Wintershall Libya, reached about 1/3rd in the European gas for the future dawn of natural gas. The Wieland has been responsible for the activities of Germany’s consumption. UK has already introduced the carbon largest internationally active oil and gas producer in the North tax, we have heard such discussions African country since 2014. What are all our records about? Aside taking place in France. We hope that the from the pricing environment (Gazprom’s recent ratification of the Paris Agreement Mr. Wieland, thank you for talking to “Blue Fuel”. You started Also the Severneftegazprom joint venture is developing contract prices were noticeably more by the EU will allow Brussels to figure a your career at Wintershall Erdgas Handelshaus. Since then you excellently. This year we have broken the 200 billion cubic attractive than hub prices this autumn) concrete set of measures to fight global have held various positions at Wintershall. You have devoted a meters mark. This is an important milestone. These are very good and weather conditions (which were warming, thus building a sustainable and lot of time to the natural gas trade. Could you please explain figures and we very much hope that we can move forward in pretty “normal” all over the year), secure energy system of the future. And the role that natural gas currently plays in Wintershall’s E&P future at a similar speed. The natural gas produced each year Gazprom remains the only supplier natural gas is destined by nature to take activities and trading business? by our joint ventures in Russia (around 30 billion cubic meters) a strategic place in it, paving the road able to securely provide significant would be enough to supply a third of all German households. for a wider use of at the moment heavily- Natural gas plays an important role for us – it comprises a additional volumes to its clients in Moreover, through our asset swap we have received 25% plus subsidized renewables. Europe. Surprisingly, the long-awaited substantial part of our total production volume. Incidentally, we a one share in blocks 4 and 5 of the Achimov formation in wave of LNG coming to Europe as the managed to increase our production last year by 13 percent to the Urengoy natural gas and condensate field. It is estimated We are confident that in trustworthy result of the vanishing “Asian premium” 153 mmboe, which was partly due to the growth at Achimgaz, that up to 274 billion cubic meters of gas and 74 million tons of dialog between the gas industry, didn’t happen. Instead, during the three our joint project with Gazprom in Western Siberia. condensate lie there. regulators and European policy-makers quarters of 2016 Gazprom’s exports grew In the coming years we want to continue expanding the we will give a birth to a truly golden age This clearly offers considerable potential. However, as you by impressive 11 bcm compared with production of oil and gas – to 190 million boe in 2018, mostly via of natural gas on European shores. And are aware, this project presents some challenges. Namely the same period of 2015, and the last the further development of Achimgaz but also our Norwegian we welcome new suppliers to Europe quarter even by the modest estimates will activities, as well as the Vega Pléyade gas project in Tierra since they spark interest towards natural increase this figure by half. Our capability del Fuego off the coast of Argentina, which commenced gas. As far as our ability to compete is to promptly react to demand fluctuations production in February 2016. is extremely important in times of the concerned – our record figures simply falling indigenous production in Europe speak for themselves. The course has thus been set for further growth at the source. and continuing inspections on ageing nuclear power plants. What role does Achimgaz play in Wintershall’s global E&P portfolio? Gazprom has huge production capacities Achimgaz is a German-Russian success story. Together with of more than 600 bcm per year and our partner Gazprom, we have been producing natural gas an extensive pipeline network, which and condensate in Novy Urengoy in Western Siberia for more means that Gazprom can easily double than 10 years. Since commercial production started in 2011, Wintershall in Argentina: Wintershall is the fourth-largest producer of its exports to Europe if there is a demand. we have jointly extracted more than 20 billion cubic meters of natural gas in Argentina with operations in Neuquén, Tierra del Fuego Our new pipeline routes will contribute to natural gas. and Mendoza provinces

4 www.gazpromexport.com | [email protected] | +7 (812) 646-14-14 | [email protected] 5 December 2016/ Vol. 9/ Issue 4 BLUE FUEL the development in adverse weather identify problems but also identify mostly on gas imports from Russia. Thus this country plays a Hence we are developing Wintershall in Argentina into conditions at the Arctic Circle, which opportunities and potential. We have special role in supplying the EU with natural gas. We are in the a competence center for unconventional resources: we demands substantial time and financial developed a problem-oriented strategy fortunate position that the majority of the world’s reserves lie at are an operator in the promising Vaca Muerta formation. resources. in this regard. We are saving, and we are pipeline distance to Europe. The expansion of the Nord Stream The formation is one of the largest shale gas and shale oil reducing costs. But we are also investing. formations worldwide: the Energy Information Administration We are confident however that with pipeline will further strengthen the security of supply. There is no contradiction here. Where we (EIA) estimates that the formation has recoverable reserves of our reliable partner Gazprom Dobycha see potential savings, expenses shall be 16.2 billion barrels of oil and 8.7 trillion cubic meters of gas. Urengoy we will be able to accomplish From your point of view, how has the fall in oil prices affected reduced significantly in 2016. To this end, such an ambitious goal. the current operating expenses will be the global development of conventional and unconventional How important for Wintershall is its energy collaboration with further optimized and the expenditure oil reserves? Gazprom? Some companies, like Shell for instance, for exploration, development and have started focusing more on natural The extremely volatile oil price has had obvious consequences Last year we celebrated what is now more than 25 years technology particularly reduced in gas than on oil for their future activities. for the entire industry. Planned projects have been reassessed of successful cooperation with Gazprom in the historic countries with a high cost environment. What is Wintershall’s position in this as to their economic viability, while planned investments have surroundings of the Chinese Palace in Lomonosov, near As a result, this is reducing the number of regard? How will natural gas and oil be been cancelled or postponed. This applies equally to the St. Petersburg. Over the past two decades Wintershall and exploration wells in the current year. The balanced at Wintershall in the future? production of conventional and unconventional hydrocarbons. Gazprom have contributed significantly to ensuring Europe’s already planned expenditure savings energy security and have supplied the continent with more As I said, natural gas currently accounts However, the conditions for the E&P industry are not the amount to 200 million euros for 2016. than 700 billion cubic meters of natural gas. We are currently for the majority of our production same in every country. For instance, in Germany, we have very successfully involved in the projects Achimgaz and volume. Experts believe that, in the long entirely different conditions than in the USA – especially in Wintershall produces gas and oil in Severneftegazprom. Both joint ventures are producing gas term, natural gas will replace oil as the regards to the production of unconventional hydrocarbons. different regions of the world: in deserts in and condensate in Western Siberia. Our engagement with dominant fuel in the global energy mix. For fracking plans in unconventional reserves, we have a de- the Middle East and Pampas in Argentina, Gazprom includes activities in the North Sea, in Libya as well as This does not mean that oil is becoming in the arctic tundra in Russia and in the facto moratorium which makes even the exploration nearly infrastructure projects such as the Nord Stream pipeline in the any less important – in particular the storming waves of the North Sea. What is impossible. The situation in the USA, on the other hand, looks Baltic Sea. We have a share in the world’s longest underwater demand for oil will rise, for instance, in Wintershall’s philosophy when choosing quite different. Despite the decrease in oil prices, the United pipeline, whose construction has set technological standards. the emerging countries – but given the an asset to develop in any specific States is producing substantial amounts of shale oil and gas. The partnership functions smoothly and I look forward to more underlying climate policy conditions it is region? And the International Energy Agency (IEA) expects even a exciting and challenging projects with our Russian partners at expected that the demand for gas will further increase in shale gas production. Gazprom! increase markedly in comparison. Overall We are focusing on growth at the source. however, we are sure of one thing: oil We will keep focusing on our core regions and gas do have a future! 50 percent of and keep investing in selected projects, the world’s demand for energy will still be especially in regions with favorable met by oil and gas in 2040. production conditions such as Russia and Argentina, where we maintain For us this means that we will continue strong partnerships as well as regional to work with a diversified portfolio that and technological expertise. Paired includes natural gas, condensate and oil with our operational excellence and of course. Accordingly, we are planning reliable partnerships, we will expand our to invest around 4.8 billion euros in the production and ensure further growth. next five years in our worldwide natural gas and oil production. What are the prospects for developing As the person responsible for Wintershall’s relatively mature hydrocarbon reserves international E&P activities, what are your in Europe? Which oil reserves could goals in this position? compensate for the declining domestic production in Europe? The market environment is tight owing to the currently quite low oil and gas prices. It’s no great secret that the European However, the oil and gas market has reserves are gradually depleting and the always been turbulent. And it will remain demand for imports will continue to rise. so. Continued low oil and gas prices will, The EU already meets its oil requirements quite naturally, be reflected in our 2016 almost entirely through imports. Here balance sheet. Russia is the most important supplier and will certainly continue to remain so. Given the current market conditions, our task is to precisely analyze the complex The same is true for the natural gas At Achimgaz In Siberia, one of the most remote regions in the world, our employees produce up to 18 million cubic meters of and changing business environment, provision. The European Union relies natural gas every day - in a region with 250 days of winter per year and in temperatures as cold as -40°C

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“We are satisfied with the results of the auction. The fact that was sold at the OPAL direction. It proves that OPAL pipeline Gazprom sets records in daily gas exports once again we have been able to sell additional gas volumes capacities are still demanded by nobody but Gazprom”. at the direction where we tested the first auction sales last to Europe year proves that this trading model worked not only once Gazprom Export carried out the first gas auction in September but is able to be used regularly. Gas sales on an auction basis 2015. Addressing the challenges of the evolving energy In November 2016 Gazprom set absolute At the beginning of December 2016, complements our deliveries within the long-term contracts. We market, the company tested a new mechanism of sales for gas daily records of natural gas supplies Gazprom Export beat the all-time are aimed at conducting gas auctions in the future.”, — said delivered via the Nord Stream pipeline. As a result over 40 lots to Europe overpassing the previous historical record set in 2013 (161.5 bcm). Elena Burmistrova, Director General of Gazprom Export LLC. were sold to 15 clients, with a total volume of over 1.2 bcm of gas. records which were established during «Demand for Russian gas is so high as if The auction for the gas supply to the Baltic States in the the bitter frosts of January 2008. Highest severe frosts have been set in Europe. “Gas auctions represent a good additional opportunity to 2nd, 3rd and 4th quarters of 2016 was held by Gazprom export volumes were recorded in several This is a further proof that Russian gas is market natural gas in Europe. In addition to traditionally Export in March 2016. At the auction more than 80 lots were consecutive days with the historical competitive and highly sought energy strong interest to Greifswald delivery point, during the sold to 6 clients with a total volume of more than 420 mcm maximum of 614.5 mcmd reached on source on the European market. And latest auction about one quarter of the total volumes of gas. The 3rd gas auction was announced on July 14, November 29th which is more than that the new gas transit routes for reliable was sold with a delivery to Austrian Baumgarten. — said enough to satisfy daily demand in energy supplies — the Nord Stream 2 and the Alexander Medvedev, Deputy Chairman of Gazprom’s 2016. The auction mechanism of export gas sales naturally of all European households . TurkStream — are needed by foreign Management Committee. — Interestingly, not a single lot complements our existing system of long-term contracts. consumers», — Alexey Miller, Chairman of Gazprom Management Committee said. Evaluation of aggregate costs of power generation by fuel types

Leonid Loginov, Leading specialist, Contract Structuring and Price Formation Directorate, Gazprom Export LLC

Although the principles of natural gas to a balancing fuel (see graph1). But this ranking electricity supply and demand order takes into consideration neither the consequences in Europe are market-based, of using one or another energy source for the society and they are based only on marginal environment (externalities or external costs), nor capital and production costs. Such an operating expenses (levelized cost of energy), nor additional approach narrows the role of support measures from regulators (subsidies). natural gas to a balancing fuel not taking into account capital and operational costs, externalities and subsidies. On the contrary, measured on the basis of aggregate electricity production costs, it becomes evident, that natural gas is less competitive only in comparison with geothermal energy, while enjoying relatively low external costs and high operational flexibility needed to Gazprom Export successfully completed meet peak demand. Potential growth in prices of CO2 emissions may result in even the third gas auction greater competitiveness of natural gas compared with coal, thus challenging the necessity of subsidizing renewable energy. From August 31st to September 2nd Like at the first ever auction held in Gazprom Export conducted the third gas September 2015, gas was offered at auction for gas supply to Europe. Following Greifswald, Gaspool and Olbernhau Electricity demand and supply equilibrium the action’s results, contracts with 11 delivery points. In addition to these on European markets is shaped by marginal customers for total volumes about 2 bcm points the customers were offered an production costs which form a merit order of gas were signed. Gas will be supplied to opportunity to take gas at Baumgarten curve. At the moment, ranking fuel types by clients during the winter season 2016/2017. and Arnoldstein. marginal costs only narrows down the role of Graph 1. Ranking fuel types by marginal costs (DIW 2013).

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When summing up marginal costs and externalities, the largest components of which are climate change stemming from a growth in CO2 emissions, dwindling energy resource base and an increase of particulate matters (NH3, SO2, NOx) in the atmosphere, the ranking order dramatically changes: natural gas becomes more competitive in comparison with coal in 2012 prices (see graph 2).

300 2012 250

200

150 Graph 5 . Forecasted demand curve in Germany at €80 per 1 ton of CO2 (THEMA Graph 4. Forecasted demand curve in Germany at zero CO2 prices (THEMA Consulting MWh / Consulting Group) Group) € 100

If measured by a levelized cost of 50 800 electricity production which takes 716 0 into account capital and operating 700 RES Nuclear Lignite Natural gas Anthracite Oil products expenses over the whole infrastructure 600 Short-term marginal costs External costs Base load Peak load lifecycle as well as installed capacity 500 utilization rate, it becomes clear that MWh / 400 Graph 2. Ranking fuel types by marginal costs adjusted for externalities (in 2012 prices). natural gas loses competition only to € coal (see graph 6)… 300 258 237 220 225 If calculated in 2015 prices and taking into account the deflator, natural gas becomes 195 200 140 205 even more competitive both against anthracite and lignite (see graph 3). When taking into account both 118 120 132 131 160 levelized cost of energy and 100

51 51 55 externalities, natural gas becomes 25 39 44 46 46 300 0 19 2015 more competitive than coal, however still preforming worse than some 250 Levelized cost of energy, €/MWh types of renewables (see graph 7)… Graph 6. Levelized cost of energy, 2nd half 2016 (for the comparing purposes is given with a deflator in 2012 prices) 200 … and finally, by aggregate costs 800 MWh / 716 € 150 of electricity production, including 700 cumulative effect of all three factors 100 (levelized cost of energy, externalities 600 and subsidies), natural gas loses out only 50 500

to geothermal energy (see graph 8). MWh /

€ 400 0 RES Nuclear Natural gas Lignite Anthracite Oil products 300 258 238 229 243 209 210 200 176 Short-term marginal costs External costs Base load Peak load 149 150 156 205 160 100 118 91 Graph 3. Ranking fuel types by marginal costs adjusted for externalities (in 2015 prices). 75 74 56 63 65 59 0 20

Different forecasts of electricity production costs in Germany, including different price levels for CO2 emissions, prove greater competitiveness of natural gas over Levelized cost of energy, €/MWh coal with an increase of CO2 prices (see graphs 4 and 5). Graph 7. Levelized cost of energy with externalities (in 2012 prices)

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800 Gazprom Group established a new company to develop gas for 716 700 transport business in Europe 600

500 Gazprom Group established the new company Gazprom conduct its business in full concordance with all the regulatory 433

MWh requirements of the German Energy Industry Act, which

/ NGV Europe which will focus on development of NGV sector € 400 in Europe. The new company is a wholly-owned subsidiary stipulates the separation of trade and transportation of natural 313 gas. 300 of Gazprom Germania GmbH with headquarters in Berlin. 253 267 258 230 289 210 Gazprom NGV Europe will continue the current CNG and LNG Mr Uwe Johann from Gazprom Marketing and Trading Ltd has 200 170 176 156 205 businesses of Gazprom Germania. Gazprom NGV Europe will been appointed as Managing Director of the new company. 160 143 100 122 137 89 91 98 63 0 34

Levelized cost of energy, €/MWh

Graph 8. Levelized cost of energy including externalities and subsidies (Incl subsidies for 2012 and the volume of historical direct subsidies – the subsidies introduced pre 2012 but preserving their effect in 2012).

Comparison of marginal costs of an optimal energy balance should electricity production with the level of be based on wider use of natural gas renewable energy subsidies brings to along with reduced share of coal a clear finding – the level of subsidies and a number of the most expensive of renewables equals to marginal alternative energy technologies. This production costs of electricity from is determined both by lower external natural gas. In other words, an effects and higher operational increase of subsidies above this level is flexibility of natural gas generation. not economically feasible. Moreover, The flexibility of electricity generation if measured by a levelized cost of is essential to meet peak demand energy, renewables already turn to and is of prime importance taking be more expensive energy source. CNG station in Bamberg (Bavaria, Germany) into account potential disruptions in supply of electricity derived from The above-mentioned allows renewables. The use of natural gas making two conclusions. Firstly, in power generation looks even subsidizing renewable energy is not more commercially feasible given an economically-feasible approach. Secondly, we can question the a possibility for emission prices to current principles of demand and increase up to €25-30 per ton of CO2 supply formation on European to 2030 in order to achieve climate markets, which don’t consider full- goals in the EU countries. cycle electricity production costs and, therefore, distort the real situation on Similar conclusions can be found in the market. expert gas consumption forecasts. Specifically, according to estimates From the point of view of aggregate of the leading industry analytical costs (which include both engineering centers, gas consumption in Europe in costs and public expenses) reflecting 2030 will grow by 23% in comparison competitiveness of energy sources, with 2014 and by 25% in 2035. Fueling a Solbus bus with LNG Fuelling a Mercedes-Benz B-Class with CNG

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better without the detergents. In the engine room, methane gas Excess heat from the boiler (steam), earlier used for heating Reflections by an old oil rat after a visit in combusts without particles which results in cleaner cylinders, HFO, can be used to produce electricity. exhausts, turbochargers, economizer and crank house (less or a gas fueled ship’s engine room no cleaning of exhaust boilers and turbochargers also reduced The owner’s perspective cleaning of lubrication oil separators if installed). It also leads Using methane as fuel has reduced the time spent in the office to less cleaning in engine room as there is no soot particles arguing with fuel suppliers about the quantity and quality of Klas Ljungmark in exhaust as you frequently have minor exhaust leaks on the the fuel last purchased, some owners spend a considerable exhaust systems expansion bellows and other parts. On top of Klas is Director of LEVA Ltd, London. Recently amount of time discussing these two items. this the noise level in the engine room is reduced at least when he was principal technical advisor at the using low pressure gas systems where the diesel engine in gas It also reduces down time due to breakdowns. Society for Gas as a Marine Fuel (SGMF), a non- mode runs as an Otto engine with lower ignition pressure. governmental organisation formed in 2013, Engine crew can be reduced due to the fact that much of based in London. At SGMF he was responsible Extended running hours between overhaul is also a result of the work earlier spent on fuel residuals and purifiers will be for among other things the development of their using methane as fuel. One company I have talked to has redundant, even the deck crews work will be more efficient bunkering safety guidelines for Gas as Marine extended main engine overhaul (pistons and liners) from 16.000 since much of the time spent on cleaning the ship will be Fuel. Before that, he spent nine years at the hours to 20.000 hours and is planning on further extension to reduced and possible to do with a hose without chemicals. The reduction in use of chemicals on board means less money Swedish Transport Agency (STA), working on 24.000 hours, and the exhaust boiler looks like new after three spent. regulatory questions about air emissions and and half years of continuous running. Lubrication oils can be alternative fuels, including LNG and methanol. used for longer periods and with lower total base number (TBN) Using Methane should result in lower insurance cost since the which means cheaper lower lube oil expenses. During his time at the STA he was responsible risk of an oil spill when bunkering, heating of tank and accidents for, among other projects, the regulatory part of Methane as fuel is also reducing the unplanned overhauls that has been greatly reduced. making the Viking Grace LNG bunkering possible and the Bit Viking LNG conversion. stem from bad quality fuel. And last but not least, using methane as fuel usually results in a He is a marine engineer and has spent 18 years at sea in different types of ship and 10 On board in general – bunkering and bunker tanks are reduction in fuel consumption due to better combustion and years as head of a mechanical maintenance department. associated with stricter safety measures, otherwise there isn’t cleaner systems which results in better fuel economy. much that the crew notice in daily work except for the nice Investing in a steam turbine can reduce running cost even white boiler suits without the oily smell that the engine crew is more since the steam produced in the exhaust boiler can be First of all let me explain, I have never The reduction of these three will have a wearing. The oil rat has disappeared. The captain and chief used to produce electricity worked in a methane fuelled ship, there great impact on human health in coastal mate has also noticed that they don’t need to get the sundeck wasn’t any around when I was an active areas. But the use of methane as fuel cleaned from soot every morning. On passenger ships there is The absence of sulphur and particles in the combustion will engineer. At least not in the companies I has more benefits, maybe not as big as no bill for cleaning passenger clothes from oily soot anymore. improve crew health. I have not seen any scientific evidence, sailed for. the three above but anyway. I’ll try to list some of them here. My first experience with methane as fuel was about ten years ago, a local road Ships perspective ferry in Norway, and the immediate reaction I had – I need to get a rag Personnel working in an engine room and moisten it in diesel oil as there was is not in contact with Heavy Fuel Oil something missing. The smell of fuel oil. (HFO) and as a consequence there are Then I noticed how extremely clean the no fuel oil separators to clean and no engine room was. Not one drop of oil heating of day and settling tanks which anywhere, well I did manage to find one also means no PAH (polycyclic aromatic little puddle of lubrication oil under the hydrocarbons) from the vent (you know shaft seal! that the lovely smell of heated HFO I have seen a few more since then and contains parts that can cause cancer). there are a few things with methane The absence of HFO separators means fuelled engines that makes me wish I could no sludge (generally you get 1.5 % of the start all over again in a gas fuelled ship. consumed HFO as sludge); no sludge First the main drivers for using methane gives you less troubles with authorities in gas as fuel – no sulphur, low NOx and best port (no need for a “magic pipe”), and of all no particles. Sulphur is regulated in no trace heating. The reduction of heat the North Sea, the Baltics as well as in US sources gives you a much better engine and Canadian waters. NO x is regulated room temperature and thus a better work in US and Canadian waters and will be environment. No HFO also means less or in the North Sea and the Baltics aimed no heavy duty cleaning detergents giving at new ships. Particles are not regulated you an easier job to clean your bilge but has been in the pipeline for a while. water as the bilge water separator works

14 www.gazpromexport.com | [email protected] | +7 (812) 646-14-14 | [email protected] 15 December 2016/ Vol. 9/ Issue 4 BLUE FUEL but just imagine the difference with no astounding according to recent science. the success of Germany’s energy transformation. According to reminded that «we all have the same objective» and called particles in the breathing air and no Probably some around 60.000 lives could invited experts from the worlds of business, academics and the for closer cooperation between all participants in order to PAH from heated oil and sludge will be spared globally according to the media, policymakers in Germany pay scant attention to these achieve a significant reduction in CO2 (carbon dioxide) and probably extend the life of the engine study «Mortality from Ship Emissions: A low-carbon, methane-containing energy sources. Participants NOX (nitrogen oxide) emissions. crew substantially. If combine this with Global Assessment». Corbett et all (http:// concluded that electromobility alone will not be enough to the reduced use of strong chemicals. I pubs.acs.org/doi/full/10.1021/es071686z). achieve the energy transformation in the transportation sector. The participants agreed on the necessity of a prompt remember cleaning scavenge air systems The reduced sound emitted from the Сurrently Germany is not achieving its climate protection goals, clarification of the legal framework in order to grant equal by hand and then using gasoil to get engines through water should give the warned Dr Timm Kehler from the Initiative Zukunft ERDGAS conditions to all alternative fuel types. «Policymakers should rid of the mixture of oily soot, and then e.V., a German association promoting natural gas as a motor recognize the indispensable role that natural gas can play in throwing away the soot and oil stained cetacean (aquatic marine mammals) a fuel. He said this was primarily due to the insufficient measures the success of the energy transformation, also in the transport white tshirt after being ashore a few hours better environment although the worst taken by mobility sector. He also pointed out that in 2016 there sector, and create a level playing field for all alternative fuels», somewhere in the hot Central American noise emitter is the propeller. were fewer new registered CNG vehicles in Germany than emphasized Uwe Johann, Managing Director of Gazprom night. Please note that what is voiced in this in the preceding years. «In order to make up for lost ground NGV Europe. Health effects from banning HFO and article is my personal opinion, which in and still achieve the climate protection goals in the future, it is using Methane as fuel in the merchant no way has been scientifically proven necessary to take action aimed at raising the attractiveness of navy on people ashore would be although it is common sense. natural gas as a fuel», Kehler concluded.

Matthias Maedge, General Secretary of the International Specialist Association NGVA Europe, stressed: if fair market conditions are created, by 2030 around 20 per cent of all newly registered vehicles in Europe will be operated with natural gas. He mentioned that in the EU natural gas is still an «unloved child» because when it comes to sustainability the focus is Natural gas as a motor fuel is essential to almost exclusively on electromobility. achieve Germany’s energy policy goals Kurt Sigl, President of the German Federal Association eMobilität e.V. aimed at the promotion of e-mobility, also underlined the advantages of a wider use of natural gas. He Delegates of the Energy Conference

The new Silk Way to be fueled with gas: Beijing hosts round table devoted to the role of natural gas for the region

The international Silk Way Rally ended in Beijing with a festive ceremony on 24th July. Gazprom acted as the main sponsor of the tour that connected capitals of Russia and China. It has been a challenging and fascinating route, as rated by the participants themselves. The variety of competitive stages Kurt Sigl, President of the German Federal Association eMobilität e.V. (left), called along the rally route required the drivers to show all their top for equality of opportunity for all alternative fuels during a discussion panel with Uwe qualifications to reach the final point. Johann (Managing Director Gazprom NGV Europe) and Reiner Mangold (Head of Sustainable Product Development AUDI AG) On the sidelines of the rally, the Saint Petersburg State University of Economics (the UNECON) with the support of Gazprom On the sidelines of the season finale of jointly held an energy conference that Export, held in Beijing a round table on the role that natural gas the German Touring Car Championship focused on the contribution which can play for the economies of the regions that form a “new Silk (DTM) in Hockenheim on October 14, natural gas, biomethane and synthetic, Way”. Leading Chinese academic institutions participated in 2016, Gazprom Germania and Audi renewable methane can make towards the gathering.

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In his opening speech, Stanislav Babich Chinese capital. of the UNECON stressed that with the “As the cleanest and most efficient St. Petersburg Open ATP World Tour International Tennis integration of the Eurasian economic fossil fuel natural gas turns out to be the union and the “New Silk Way economic fuel of choice to create a low-carbon Tournament belt, new transport corridors are economy in China”, stresses the head establishing within. And here, supporting of the Research institute for low carbon these routes with natural gas as a fuel economy at Tsinghua University, professor He Jiankun. He welcomed the Paris COP offers great opportunities. Using natural 21 agreements as an important step that gas as motor fuel can bring substantial marked the end of the old energy age environmental and economic benefits. globally. In the new energy system, which Vast gas reserves of Russia, Kazakhstan, will be based on renewable energy Uzbekistan, Turkmenistan, Azerbaijan and sources, the role of natural gas is destined Iran can create the resource base to fuel to increase significantly. Nowadays the these transport routes. The development share of natural gas in the primary energy of transport infrastructure and advance in mix of China is below 7%, but the new transportation technologies, that involve environmental policy of the government truck transport and potentially railroads, will allow it to reach 10% already by 2020 not only supports investment and creation and grow further. This would mean a of new jobs for the region, but also boosts corresponding increase in Chinese gas cooperation in the research and science imports. In parallel, the share of coal in of the countries involved. the fuel mix should decrease from the The 21st St. Petersburg Open, an Association of Tennis finalist Milos Raonic (Canada), Wimbledon 2010 finalist Tomáš current 64.4% to 60% in 2020, 50% in 2030, Professionals (ATP) World Tour international tennis tournament Berdych (Czech Republic), Roberto Bautista Agut (Spain), Alexander Zverev (Germany), and Viktor Troicki (Serbia). Being the most environmentally friendly and 30% by 2050. took place at St. Petersburg’s Sibur Arena concert and sports Three outstanding Russian tennis players were also in the fossil fuel, natural gas offers a unique mix complex on September 19-24, 2016. The tournament’s title Creating an impetus for energy reform is tournament: Andrey Kuznetsov, Mikhail Youzhny, and Evgeny of environmental safety and profitability. sponsor, for the second year in a row, was Gazprom Export. the core of Chinese policy for achieving Donskoy. It easily beats every competition. This is its commitments for lowering the CO2 what makes natural gas a fuel of choice Even before the tournament started, spectators were paying emissions, stressed the expert. special attention to the performance of reigning U.S. Open The final saw German player Alexander Zverev win his first ATP for the building of low-carbon economy champion Stan Wawrinka (Switzerland), since the St. Petersburg tournament, defeating Stan Wawrinka 6:2, 3:6, 7:5. Zverev won and for solving the pollution problems In view of increasing role the gas industry Open was his first competition since that triumphant victory. his first title at the third attempt, while Wawrinka lost afinal faced currently by urban residents of the plays in Russian-Chinese cooperation, match for the first time in his career. megacities in the Eurasian macroregion. the initiative of such round tables will Besides world No. 3 Wawrinka, other players delighting tennis This is an issue too well-known to the continue in the future. fans with their skill in St. Petersburg included Wimbledom 2016 The tournament’s 2016 prize fund amounted to $920,000.

(с) Silk Way Rally

18 www.gazpromexport.com | [email protected] | +7 (812) 646-14-14 | [email protected] 19 December 2016/ Vol. 9/ Issue 4 BLUE FUEL The ‘Imperial Capitals’ performance took place in St. Petersburg

The first event based on the Gazprom- OMV (Austria) Memorandum of Understanding on implementing a joint cultural project — a theatrical gala performance entitled Imperial Capitals: St. Petersburg-Vienna — took place on October 4, 2016 in the Grand Hall of the D. D. Shostakovich St. Petersburg Academic Philharmonia. This evening of music featured a musical performance bringing together various fields of the arts. Actors, musicians, and singers took the stage, with the whole production accompanied by visual light effects projected onto the walls and ceiling of the Philharmonia’s Grand Hall.

The concert participants included a The evening was organized by the number of leading Russian and Austrian Gazprom Export company. musicians, along with soloists from the Vienna State Opera, the Bolshoi Theater, A reciprocal cultural event based on the and the Mariinsky Theater, and many Memorandum will be held on December more. Yuri Bashmet, a People’s Artist 14, 2016 at the imperial Hofburg Palace of Russia award holder, in Vienna. welcomed the audience from the conductor’s podium of the Moscow Soloists chamber ensemble. The program included highlights from the works of Mozart, Tchaikovsky, Glazunov, Strauss, Mendelssohn, Rossini, and other composers.

Over a hundred children from various social service institutions in St. Petersburg and the Leningrad Region were invited to this event. All proceeds from the gala performance’s ticket sales will be donated to a charity fund which projects are aimed at helping children with grave illnesses.