Foreign Trade
Transparency
Rebounding energy demand on the global stage marked 2023. Nonetheless, the global energy markets, above all gas, faced significant challenges due to geopolitical tumult, energy policies swayed by political agendas in certain nations, high energy security risks, and market price volatility — all exerting substantial adverse effects. These dynamics may reignite an energy crisis in the short to medium term. Despite this, natural gas is projected to increasingly contribute to the global energy mix in the long run across all market scenarios. Attributes such as natural gas lower carbon footprint, non-toxicity in transit and storage, and flexibility in electricity generation to promptly back up renewables like wind, solar, and hydro energy, underscore its consumer appeal.
The year’s energy sector disruptions, including the shutdown of industrial facilities, canceled investment programs, and heightened energy security concerns, particularly resonated across European markets. Preliminary data indicates a 35 bcm drop in gas consumption across European nations in 2023, with a cumulative two-year demand contraction surpassing 100 bcm. European gas production declined by 18 bcm by the year-end following a brief uptick in 2022. Norway, the region’s main producer, saw its output go down by 7.5 bcm. Conversely, the Asia-Pacific region observed a marked increase in gas demand, led by China.
Throughout the year, the Gazprom Group continued Russian gas exports to China. PJSC Gazprom’s pipeline gas exports increment accounted for over half of the Chinese market’s added gas imports in 2023. Transit via the Power of Siberia pipeline substantially grew by 47.6% compared to 2022, partly fueled by China’s request for additional gas quantities.
Gazprom Export’s Trading Results in 2023
- In 2023, Gazprom Export maintained natural gas supplies through its Electronic Trading Platform (ETP) and under the European Federation of Energy Traders (EFET) agreements, delivering a total of 737.5 mcm through these channels.
- Enhancements to the ETP this year included the integration of functionality with the IMS P Export accounting system, which facilitates the generation, electronic signature, and automatic counterparty notification of invoices.
- New functionalities in the Trading Support System encompassed the automated processing of energy market data and gas trading results. Mathematical models providing insight into contractual volume flexibility and a revised balance model were introduced.
- Collaborative efforts commenced with entities such as Gazprom Hydrogen, Gazprom VNIIGAZ, Gazprom Investproject, and VNIIGAZ-Certificate to explore carbon-neutral natural gas sales and potential carbon credit trading as part of the Gazprom Group’s operations.
A key focus for the Gazprom Group has been enhancing its gas industry cooperation with Central Asian nations.
Preliminary data for 2023 suggests that natural gas consumption in these countries reached over 110 bcm, while commercial production topped 150 bcm, with roughly a third of it exported. That said, productionconsumption imbalances and uneven regional demand have prompted certain Central Asian countries to increase their gas imports.
PJSC Gazprom’s supplies to Central Asia are set to boost regional economic growth over an extended period.
In 2023, PJSC Gazprom continued its active dialog with several African countries about prospective cooperation in the natural gas vehicle (NGV) fuel sector. Talks about potential NGV market development projects in Tanzania are ongoing. The NGV sector growth in Africa is expected to support both fuel availability for households and environmental efforts, as natural gas usage in transport can diminish greenhouse gas emissions and air pollution.
Reliable Gas Supply in Central Asia
2023 marked the inaugural Russian natural gas supplies to Uzbekistan through Kazakhstan’s territory. Utilizing the Central Asia — Center gas trunkline system, gas was supplied in reverse flow over a dedicated route. To this end, Central Asia — Center 4 and Central Asia — Center 5 gas pipelines were used in Kazakhstan. To enable this supply route, teams from the national gas companies of Kazakhstan and Uzbekistan, aided by Gazprom Group personnel, performed diagnostics, repairs, and built new gas infrastructures in line with tight timing. The collaborative project resulted in GTS upgrades in Kazakhstan and Uzbekistan, significantly bolstering regional energy security and ensuring a steadfast gas supply.
Digital Transformation in Foreign Trade
Information System for Collective Governance Bodies
A pilot project to deploy a domestic software-based information system for collective governance bodies in a foreign subsidiary of the Gazprom Group is completing in spring 2024. Key functionalities have been released and tested, and further process localization is in progress. Additionally, steps are being taken towards migrating the system to a Russian-made hardware and software package.
Foreign Trade Portal
In 2023, the Gazprom Group focused on the digital initiative titled Designing PJSC Gazprom’s Foreign Trade Portal.
This initiative is aimed at developing a suite of digital services to facilitate information and analytical exchanges among Gazprom Group’s entities involved in foreign trade. The goal is to establish a unified digital environment that integrates business processes.
In 2023, the project team evaluated the scope and formats of the information exchange and coordinated the list of reports to be sent. The description for the target business processes associated with receiving, processing, and synchronizing reporting forms was also prepared and approved. Functional requirements alongside a change request were drafted to prepare for the project implementation. Moreover, a mechanism for submitting reports to a designated shared email address, which enables the subsequent distribution of forms, was instituted. This new system was piloted using data from PJSC Gazprom’s international offices.
Collaboration with International Energy Organizations
Throughout 2023, the Gazprom Group engaged with multiple international energy organizations: the Global Gas Centre (GGC), Boao Forum for Asia (BFA), African Energy Chamber (AEC), International Business Congress (IBC), Gas Exporting Countries Forum (GECF), and the Russian-Chinese Energy Business Forum. Discussions at these global energy forums encompassed a broad spectrum of gas industry development topics.
Managing Sanction-Related, Price and Volume (Commodity) Risks on External Markets
- Ongoing monitoring is maintained over potential sanctions under the existing sanction laws, alongside tracking changes to or new enactments within the US and EU sanctions laws.
- PJSC Gazprom’s management is swiftly notified of new sanctions and related legislative moves.
- Amid geopolitical and economic restraints, efforts are directed at diversifying sales markets and channels, optimizing contract terms, identifying permissible transaction types, and financial instruments.
- Additionally, internal capabilities are under development to replace foreign suppliers and contractors.
For more details on the Gazprom Group’s relations with foreign energy market regulators, see Appendix.