Gazprom’s Production and Operations

Write an essay on Introduction to Oil and Gas Environment.

The thesis statement focus on Gazporm’s management structure, the company’s contributing to the local community. The Gazprom is one of the leading and renowned companies in oil and the gas across the globe.  The company owns huge reserves, which gives them the status of being leader in the sector and having huge production of the natural gas which is nearly around 15%. In Russia, Gazprom is the largest in terms of gas production as they are providing 70% of the total supply and nearly 10 percent of the oil supply is taken over by them. They are not limited only with the production; even this group owns the largest gas shipping network across the globe. It covers the transportation covering the stretch of more than 161 thousand kilometers, catering to Russian and European market on a wider scale.

Gazprom’s owns nearly half of the Russian’s gas processing business and nearly 15.5% of oil refining. This makes Gazprom as the dominant supplier due to the reason they cater maximum of the Russian customers of the gas market. Their operations are being spread with a network of nearly 1600 stations of fuel altogether in Russia, FSU and on Balkans. They are involved in generation of electricity as well by providing 17% electricity generation in Russia.

The resources of natural gas available with Gazprom are among the world’s best resources.

Since 1992, Gazproms has been approved by the Russian Federation President’s Decree for the following commitments:

• Gazprom’s for providing good and decent gas supply to Russian Federation (Gazprom Team, 2015).
• Export of the gas within the state has as per the intergovernmental agreements.
• Build and finance the gas branches of high pressure for supply to rural areas.
• Helping other producers as well.

The Gazprom management system works in alliance with the Russian Law. It works under the code of corporate Governance which are supported by the Russian Federal Securities Commission 

Next is the level, the panel including all the directors of the company. They are meant for all the strategic management of the company, responsible to keep a check on the value of the company’s share. They are completely managing all the executive bodies of the company by keeping a regular check on them and keenly observing their performance (The Gazprom Group, 2011).

This comprises the top level of the company’s executives, who are actually responsible for the operating business.  The CEO chief executive officer of the company mainly functions in this category. He is the person, who is the Chairperson of the management board, who holds the complete authority.

This administrative body is elected by the General Shareholders meet. The Audit commission has to continuously monitor complete business activities by keeping an eye on company’s financial matters. The Audit commission has to regularly conduct the Audit in order to analyze the financial position of the company. Audit commission observes the internal matter very minutely and they check for any risk which may possibly occur because of any recent decision taken by the management. Audit commission are required to check for all legal matters of the company either in alliance with other companies, with Govt. or in other transactions, which are taking place within the company (RusEnergy agency, 2013).

Gazprom’s Management Structure

The role of the external Auditor is to mainly audit companies, assess the financial decisions annually and to develop reporting in line and compliance with the Russian Accounting Standards (RSBU) and International Financial Reporting Standards (IFRS). The audit committee has to be approved by the General Shareholders meet, which is initiated by the panel of the board members (Gazprom Neft, 2016).

The structure, responsibilities, organization committee, Gazprom Neft’s management and regulatory bodies are being determined by the Company’s Corporate Charter and internal documents of the Company. 

The Gazproms group of company holds a unified strategy which is focused on having strong and established leaders having a top position in the company and who are experienced enough to take the decision for the welfare of the company. The company has played in the global market and regular focuses on increasing their base across the globe in the oil market (Victor, 2008). In order to hold the same position in the global market, the company has taken various steps: –

Upstream: Exploration

The company Gazprom possesses unique mineral resources accumulated predominantly in Russia; the Group’s share of natural gas accounts for around 17 % of global reserves and 72 % of Russian reserves. As of December 31, 2010, the Groups hydrocarbon reserves abroad were less than 1 % of the Group’s reserves in Russia (categories A+B+C1 ).

The department facilitates the required pre-project and project work to establish gas chemical and gas refining services in Eastern Siberia and Far East regions post liasioning with foreign partners. The upstream understand Creating, developing and then introducing new technology is critical for attaining regular success of every business. That is why modernization & innovation is part of the fabric of Gazprom Neft. The exploration division focus on specialists primarily focuses and responsible for enhancing the efficiency of oil production from depleted reservoirs in conventional areas, exploring new regions in Yamal and Eastern Siberia along with Offshore exploration or development including in the Arctic Region;

With to enhance efficiency of exploration and to facilitate precise forecasting of the reservoir development. The Gazprom Exploration Team considers the following methods of demonstrating within the fields areas with the intricate permafrost circumstances which would possibly lead to issues related to construction and development; modernization expertise in forecasting development related to oil-and-gas bearing collector base on field modelling, which are

• Implementing international projects of exploration;
• Creating eccentric hydrocarbon reserves;
• Diminishing the impact on the environment and enhancing energy efficiency. 

Downstream:  Development and production

 The division is responsible to systematize supplementary geographical exploration, employment at Kirinsky, Vostochno-Odoptinsky, and Ayashsky block on the shelf of “Sakhalin” and “Zapadno Kamchatsky” shelf along with the subsoil Krasnoyarsk and Irkutsk region

Roles and Responsibilities of Gazprom’s Divisions

In order to enhance the efficiency of fields expansion inclusive of new gas production regions, the Group development comprises a technology of low temperature severance and refinement of hydrocarbons in gas condensate areas; a multi-site surveillance well design for concurrent monitoring of overstrain pressure in numerous development targets of multilayer oil-gas condensate fields; a expertise to create thin oil fringes under gas cap by the use of bilateral and multi-functional digs and initiation of the vertical oil displacement by the operational fluid and mainly responsible for exploring different models for gas production and field operation as a amalgamated thermal-and-hydraulic system along with piping and fittings specifically for the field underwater and land pipelines

By the year 2025, more than 50% of the Company’s oil would be produced by the use of   new technology and method. Based on year 2014 results, the % of wells which have been drilled through the modern technology method was 40%. This ratio has been recorded for the Russian oil and gas sector. In the year 2014-2015, Gazprom Neft has been able to develop the code for enduring technical evolution in production and development.

Gazprom Neft production & Development specialists have identified 10 core areas in the field of technological development, which would possibly create an impact on all the areas oil production process, from ecological exploration towards development management. An indulgence of the organization’s new prospects and their growth potential is critical for the potential growth.

The operations associated with the development of the Group’s oil reserves are consolidating within Gazprom Neft and are mostly accepted in the Yamalo-Nenets and Khanty-Mansi sovereign along with regions of Tomsk, Omsk, and Irkutsk regions

Gazprom is a global energy company which focus on the worldwide production, transportation and exploration inclusive of processing, sales of gas, condensate and oil. Gazprom views its operation to ensure a consistent, well-organized and unbiased supply of the natural gas, other energy resources and their imitative to the consumers. The Russian government has made an agreement with the Gazprom for providing the gas to the Russian residents who are economically weak and doesn’t get the gas meter installed at a reasonable price.The Gazprom follows the ethical way of working. The company works in full cooperation for the well being of the society. With all this, the company has the policy not to disturb the cultural tradition. Gazprom on whole believes in order to have effective functioning; a company should have a productive and strong cooperation with the local governing body and the local people in order to have smooth operations.  This helps in developing strong alliances with the community which in turn will certainly lead to have favorable conditions in the healthy social environment and attaining company’s success.

Upstream: Exploration

The company manages to have one to one conversation with the local people, regarding the environmental safety issues and the company even discusses and explores various solutions regarding regional growth and development. The Gazprom is involved through social development in:

• Azprom for Children
• Supporting Cultural Projects
• Supporting Sports
• Trade Union
• Energy of Victories

Gazprom intends to fulfill the commitment of keeping sustainable development as an essential component for retaining the competitive advantage and attaining leadership in the world’s energy market .On the grounds of Social development, the company has always kept Sustainable development and social responsibility as major key under their Neft’s business strategy.

Gazprom Neft comprehends and tried to preserve and balance the natural environment. The company’s Neft branch is dedicatedly and constantly working to recover and progress in the area of industrial safety, environmental protection and health and safety standards. In year 2014, they have invested around RUB 3.8 billion in the area of environmental protection. The company is also committed to ensure the secure and protected creation of their products and subsequently, safeguarding the health and welfare of their workforce through implementation of Health & safety policies in the organization as per Industrial modern era practices and in-line with the Industries regulations. Gazprom Neft endeavors for minimizing the pessimistic ecological impact of oil production and refinement while making sure that their products fulfills the current high ecological standards.

• Biodiversity and ecosystems
• Energy saving
• Environmentally friendly fuel
• Efficient use of APG
• Reports
• Ratings
• Environmental Policy
• Energy saving concepts and programs
• Kyoto Protocol
• International activities

Gazprom established that it has been able to attain the high-quality results still with the low hydrocarbon prices. The Company has administered to maintain the fast rapidity in implementing the effective production programs. The company has increased our reserve base and boosts up the production capacities and increased their gas exports and oil production volumes across Europe. The company has inveterate the financial sustainability of their trade business and has been able to maintain the work on largescale projects. 

Conclusion 

The Gazprom has progressed at a constant rate; it has continuously achieved all the strategic goals. The world’s largest oil resources base and has well developed framework with the Gazprom. Because of this, the company has expanded well versed not only in complete Russia, but diversified their base in Europe and various Asian countries as well. With this, the company successfully fetched handful revenue by exporting its oil and other products.

Major revenue of Gazprom is being generated by exporting gas to Europe, thus they have barged their major profit by selling them at nearly five times more than the price which is for the Russian people. Gazprom has their major focused on the way of doing business by giving importance to export of all the oil products. As Gazprom charge exorbitant from the customers, who are outside of Russia. Thus they are expanding the businesses to Europe and other countries at exorbitant prices (Smith, 2010). On the other hand, Gazprom is forced to supply a maximum of its product within the Russia because of its political leverage.

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Gazprom Neft, 2016. Board of directors, Available at: https://ir.gazprom-neft.com/corporate-governance/board-of-directors/ [Accessed 08 July 2016]

Gazprom Team, 2015. Gazprom – Joint Stock Company. [Online] Available at: https://www.gazpromquestions.ru/en/about/  [Accessed 08 July 2016]

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Smith, K. C., 2010. Managing the Challenge of Russian Energy Policies: CSIS  [Accessed 08 July 2016]The Gazprom Grup, 2011. Management Report OAO Gazprom, Available at: https://www.gazprom.com/f/posts/05/636836/gazprom-ifrs-management-report-en.pdf[Accessed 08 July 2016]Victor, N., 2008. Gazprom: Gas Giant Under Strain, Available at: https://pesd.fsi.stanford.edu/sites/default/files/WP71,_Nadja_Victor,_Gazprom,_13Jan08.pdf [Accessed 08 July 2016]