blue fuel newsletter | june 2014 | vol.7 | issue 3

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BLUE FUEL June 2014 | Vol. 7 | Issue 3 ÝÊÑÏÎÐÒ www.gazpromexport.com | [email protected] | +7 (499) 503-61-61 | [email protected] 1 BLUE FUEL Alexander Medvedev: Going Eastward Gazprom Export Global Newsletter June 2014 | Vol. 7 | Issue 3 Page 5 Page 6 Gazprom’s Advantage in an Evolving Asia Pacific LNG Market Page 9 The African NGV Market: From Experiments to Mass Market Page 19 Poland’s Energy Supplies Between Supposed Revolutions and Missed Opportunities. A Possible Repositioning © Gazprom Export www.gazpromexport.com | [email protected] +7 (499) 503-61-61 | [email protected]

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BLUE FUELJune 2014 | Vol. 7 | Issue 3

Ý Ê Ñ Ï Î Ð Ò

www.gazpromexport.com | [email protected] | +7 (499) 503-61-61 | [email protected] 1

BLUE FUELAlexander Medvedev:

Going Eastward

Gazprom Export Global NewsletterJune 2014 | Vol. 7 | Issue 3

Page 5

Page 6

Gazprom’s Advantage in an Evolving Asia Pacific

LNG Market

Page 9

The African NGV Market: From Experiments to Mass Market

Page 19

Poland’s Energy SuppliesBetween Supposed

Revolutions and Missed Opportunities. A Possible

Repositioning

© Gazprom Export

www.gazpromexport.com | [email protected] +7 (499) 503-61-61 | [email protected]

Ý Ê Ñ Ï Î Ð Ò

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BLUE FUELGazprom Export Global Newsletter

Publishers Contact Info:www.gazpromexport.com | [email protected] +7 (499) 503-61-61 | [email protected]

To Our Readers ................................................................................

Alexander Medvedev: Going Eastward .............................................

Gazprom’s Advantage in an Evolving Asia Pacific Market ...............

Gazprom’s GDRs Listed on Singapore Exchange ............................

The African NGV Market: From Experiments to Mass Market ..................................................

CNG Cars in the Czech Republic Prevail over Electromobiles ...............................................................

Shale Revolution Is a Regional Phenomenon ..................................

Creating Excellence in Retail .............................................................

European LNG Sector is More Dead than Alive ................................

The Germans Are Worried about Increasing Energy Costs .............

Demostenes Floros. Poland’s Energy Supplies ................................

Gazprom Export Sponsored Children’s Day in Kremlin’s Museums ......................................................................

In this issueJune 2014 | Vol. 7 | Issue 3

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“A journey of a thousand li starts beneath one’s feet,” states the famous Chinese saying ascribed to Laozi. For Russia and China, it took more than a decade of negotiations to take this first step but there can be no doubt that it’s a step in the right direction.

On May 21, 2014 the largest and the most anticipated pipeline supply contract in the history of Russia’s gas industry was signed by Alexei Miller, Chairman of the Gazprom Management Committee, and Zhou Jiping, Chairman of China National Petroleum Corporation (CNPC), in Shanghai. The importance of the moment was marked by the presence of the President of the Russian Federation Vladimir Putin and the General Secretary of the Communist Party of China Xi Jinping at the signing ceremony.

Under the terms of the contract, which will inevitably change the Asian energy landscape for decades to come, Gazprom will supply China with 38 bcm of natural gas per annum for a 30-year period via a planned 4000-km pipeline named the “Power of Siberia”. All in all, more than 1 tcm of gas will be delivered to China, an equivalent to the aggregated proved gas reserves of a mature hydrocarbon producer such as the Netherlands.

The resource base for supplies to China includes the giant Chayanda and Kovykta gas fields located in the Sakha Republic and in the Irkutsk Oblast with natural gas reserves totaling up to 3 tcm or even more. Such a vast resource base clearly translates into crucial security of supply.

Realization of the contract will be carried out under a tight schedule. Gas deliveries may start in four years but each of the parties is able to postpone the date by up to two years depending on the readiness of their infrastructure and end-consumers. The

volumes will be gradually elevated to the contractual level during a 5-year period.

The contract is based on mutually beneficial and commercially attractive terms and conditions, including the “take-or-pay” principle. The price at the delivery point is determined by a formula linked to oil and the oil products’ reference basket.

The total value of the contract is estimated at approximately $400 billion. Investments in gas production and transportation projects in Russia alone will amount to $55 billion and will include not only the production facilities and the pipeline itself, but also gas processing, gas chemistry capacities and a helium plant.

The significance of the deal for Russia cannot be underestimated. The historical contract will provide Russia access to a new market with huge potential. According to the IEA, demand for natural gas in China will exceed 500 bcm per year by 2035. A strong impetus will also be given to the development of key sectors of the Russian economy: metallurgy, pipe and infrastructure equipment manufacturing, heavy engineering. The project will also have a positive impact on the labor market.

In fact, the Gazprom-CNPC contract is beneficial for China for at least three reasons:

First, the north-east regions of the second largest global economy, noted for their dynamic development, have significant energy needs, and China cannot afford to go below a certain rate of GDP growth otherwise it loses sustainability;

Second, increasing the share of natural gas as the cleanest fossil fuel in the energy balance will help China mitigate the damage caused by coal burning;

To Our Readers: Gazprom-CNPC Gas Mega Deal Finally Signed

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Third, in the current turbulent geopolitical environment which is challenging high seas’ lanes used by China for hydrocarbon imports, the Russian onshore pipeline gas will provide two advantages, security of supply and “strategic depth.”

All in all, the Gazprom-CNPC contract opens a brand new chapter in the history of economic relations of the two

countries, and since the first step has been taken, both energy majors will now be able to initiate a new epoch of Sino-Russian energy cooperation.

This is our first meeting since the historic China supply deal was signed. Seriously, this contract deserves an entry in the Guinness Book of Records, though I’m not sure we’ll be applying for an entry.

The supply deal between Gazprom and China National Petroleum Corporation (CNPC) is the biggest gas deal in history. Over a trillion cubic meters of gas will be supplied under this long-term agreement. Investments in gas production and transportation infrastructure on the Russian territory alone will amount to $55 billion. Gas processing and gas-derived chemicals production facilities will be created as well.

An entirely new market – the Chinese market – is opening up, and even with contracted volumes of this scale, it remains open to additional supplies of both pipeline gas – we are looking to resume western route negotiations with our Chinese partners in the foreseeable future – and liquefied natural gas (LNG).

This means that our LNG projects in the Russian Far East will neither be suspended nor delayed because the

Chinese pipeline contract has been signed. All projects are proceeding as scheduled: that is, Vladivostok-LNG and the third train of Sakhalin-2. I’d like to emphasize the prospect of creating large-scale gas industry infrastructure in Russia’s Far East which will become a driving force for developing not only the regional economy, but Russia’s economy as well. This will provide a powerful development stimulus for major industry sectors like metals, pipe manufacturing, machine-building and shipbuilding.

Further supporting the region’s development prospects is an agreement signed by Sovcomflot, NOVATEK, Gazprom, and Rosneft which will see a shipbuilding plant for the region’s needs being created under the auspices of the United Shipbuilding Corporation and focus primarily on equipment for developing offshore shelf fields. The Russian Far East will acquire significant shipbuilding production capacity, and vessels of all types will be soon manufactured in the region.

Furthermore, a helium processing plant will also be built. The Chayanda and Kovykta fields are both rich in helium. Global demand for this commodity is growing and will continue to grow. So, with the resource base of these two fields, Russia will become the world’s leading helium producer and exporter.

Investment under the China contract is substantial. To optimize financing, we have reached agreement with the Chinese party on an advance payment of $25 billion before delivery begins. This is a 30-year contract. Delivery may start as soon as four years from now, or six years if China’s infrastructure is not yet ready. But the Chinese have an interest in completing their infrastructure as soon as possible. So we take the view that delivery will start within the shorter timeframe – that is, four to six years from now. The gas flow build-up period, also an economic factor, is five years from the start of delivery.

Alexander Medvedev: Going EastwardExcerpts from Moscow press conference speech

Continues on page 6

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The contract is worth a total of $400 billion. It is a profitable contract. Given the abovementioned factors, we consider its economic effectiveness entirely satisfactory and in line with our corporate profitability standards.

Work on our LNG projects is in full swing as well. Along with those mentioned earlier, the Baltic LNG project is also worth noting. While not tied to any specific field, it will be sourced from Russia’s European gas supply system. Most importantly there are neither

technical nor technological problems. This project is also on schedule. We know there is a market – or rather, markets – for our LNG, and our product will be fully competitive there.

Alexander Medvedev: Going EastwardContinued from page 5

Gazprom has looked towards Asia Pacific for a while now as it seeks to cement its leadership position in the global energy market by, among other things, diversifying its geographic coverage.

The Asia-Pacific region is an irresistible draw for energy companies, there is a relentless appetite for energy, and environmental concerns are driving natural gas consumption and a corresponding demand for Liquefied Natural Gas (LNG). Major players are looking to claim a share of this robust market.

Over the past decade, Gazprom has been developing its profile in Asia through its positions in the LNG market and investments in infrastructure, such as Sakhalin-2 and the planned Vladivostok LNG, and will continue to do so in the future.

Gazprom Marketing & Trading Singapore (GM&TS) has been instrumental in supporting its parent company’s ambition to expand its footprint into the Asia-Pacific region. It is part of a global network of offices under Gazprom’s Marketing &

Trading (GM&T). Headquartered in the UK, GM&T was set up in London in 1999 to manage Gazprom’s marketing and trading activities in the liberalised markets of Europe.

Serguei Edrenkine, general director of GM&TS explains, “In 2009, a Singapore subsidiary was set up and initially focused on LNG trading based on a Sakhalin Energy contract we marketed into Asia Pacific.

As we developed direct relationships with the region’s buyers and traders, we diversified our trading business, building up a third-party portfolio, and are now a platform not just for LNG trading and marketing but also shipping, as well as trading in LPG.”

These trading deals are important as they allow Gazprom to develop an intimate understanding of the LNG market,

particularly in the region, where LNG demand is the highest worldwide.

A unique characteristic of the gas trade in the Asia-Pacific region is the limited amount

Gazprom’s Advantage in an Evolving Asia Pacific LNG Market

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of natural gas that is traded via pipelines and the region’s growing dependence on LNG. Though pipeline and LNG competition may exist in some markets, particularly in China where

Gazprom recently announced a deal with China National Petroleum Corporation (CNPC) to supply up to 38 bcm of pipeline gas annually for 30 years, fundamentally, there is a need for both.

By 2025, demand for LNG in Asia Pacific will increase by around 150 million tonnes per annum (MTPA) to reach 320 MTPA. This translates to more than 70% of global LNG demand, which is estimated to reach around 450 MTPA.

Both long-standing Asian LNG buyers – the big traditional importers – Japan, South Korea and Taiwan, as well as “new” LNG importers, particularly the Southeast Asian markets – will underpin LNG demand growth in the region.

While the outlook for the region is incredibly bullish, a general trend of demand uncertainty in the established markets has emerged, created by evolving national energy policies affecting both power generation and market structure and a far greater emphasis on competitive energy prices domestically.

The Japanese government, for instance, has been outspoken about the need to purchase LNG more competitively and is looking at a number of ways to achieve this. They have broached the idea of an LNG buying consortium, with the objective of diminishing perceived competition between Japanese buyers that they believe has driven up prices.

However, given that Japan is also seeking to liberalise their power and gas markets, one could argue that this latter step will generate sufficient incentive for competitive purchasing without having to create a buyer consortium. Additionally, Japan has recently started to publish the spot prices paid for their supplies in a bid to promote more transparency.

Another emerging trend is the growth of the spot market. Some Asian buyers are now coming to rely on this short-term market to meet some of their base demand, instead of

relying exclusively on long-term transactions as they did in the past.

This does not diminish the fundamental requirement for the secure supply of LNG, but rather creates a new pattern of contracting, the full impact of which is yet to be known.

The industry is also starting to see cooperation between LNG buying countries to support each other. This broader view of the market-place is also reflected in a growing desire of buyers for greater flexibility of supplies.

Indeed, another potential source of change would be the development of a regional trading hub and greater price transparency as paper markets develop.

Mr Edrenkine says, “The Asia-Pacific LNG market is robust and full of opportunities, but also challenging. Our worldwide, 24/7 trading team offers the ability to respond swiftly to shifts in the global LNG market. We believe in a long-term approach, underpinned by strong relationships and partnerships. Together with that, market expertise is the key to success.”

He continues, “With GM&TS, we have the perfect platform to support the broader activities of Gazprom in the region, meet the demand of traditional LNG importers, and play a role in the development of emerging markets.”

“The ultimate goal is working with energy companies in the region to become their strategic partner and a reliable supplier of gas in the region.”

Serguei Edrenkine

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Gazprom’s GDRs Listed on Singapore Exchange

On June 17, 2014 Gazprom’s Global Depositary Receipts were granted an introductory listing on the Singapore Exchange (SGX). This listing is a major milestone in Gazprom’s efforts to broaden its investor base globally, and an opportunity for investors in the Asia-Pacific region to access Gazprom’s remarkable long-term growth. Gazprom’s listing at the SGX reflects the importance of Singapore, and the wider Asia-Pacific region, for Gazprom’s business and future strategy.

The Asia-Pacific region is widely expected to become the world’s largest gas consumer, with China destined to record the largest increase in gas demand in any single country. By the mid 2030-s, China’s gas consumption will skyrocket to more than 500 bcm per year, while India’s consumption is expected to reach 170 bcm by 2035, according to the International Energy Agency’s latest forecast.

The region has been the focus of Gazprom’s growth and diversification strategy for a

number of years. As Gazprom’s first step towards becoming the region’s premier energy source, Sakhalin Energy celebrated its 20th anniversary earlier in 2014. Since its launch in December 2009, Gazprom Marketing & Trading Singapore (GM&TS) has grown to become one of the most active LNG players in the Asia-Pacific region. While GM&TS continues to expand its trading, marketing, and shipping activities, the recently signed truly historical pipeline gas supply deal between Gazprom and China’s CNPC was a logical extension of the company’s strategy and will further enhance energy security in the region.

Gazprom’s unique and unrivalled reserve base, geographical scope and transmission infrastructure enable it to be the secure and reliable energy supplier of choice in Europe and Asia. The listing of Gazprom’s GDRs on the Singapore Exchange will further cement its position as a truly global company.

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The Working Committee 5 of the International Gas Union held a “Day of Africa” during its regular meeting to discuss the use of natural gas in Africa. Particular attention was devoted to the use of the ‘blue fuel’ in transport. The growth of this market in Africa looks promising. So why does natural gas vehicle fuel have good prospects in this developing region?

The population of Africa is growing as is the number of vehicles, so demand for natural gas fuel is increasing and prices are rising. Moreover, all these developments are occurring amid the exhaustion of oil reserves. Coupled with the climate risk of higher exhaust emissions from petroleum, these circumstances make the use of natural gas fuel – an alternative to oil products – more attractive.

From an environmental point of view, natural gas is the least harmful fossil fuel and the only commercial type of fuel that can be used on any class and category of vehicle. Besides, ‘blue fuel’ is significantly cheaper than petrol, diesel and liquefied petroleum gas. That is why both industrially developed countries and developing countries – including those on the African continent – are seriously considering the possibility of using this fuel in transport on a large scale.

Africa started looking into the possibility of using natural gas as a vehicle fuel in the mid-1990s. Introduction of compressed natural gas (CNG) in transport is gradually developing from the experimental phase into pilot projects, and in certain countries – into widespread use. From 2004 to 2014, the number of CNG vehicles in Africa increased 3.6 times to 203,000 cars, the number of CNG filling stations more than doubled to 188 stations, and CNG consumption is now nearing 500 million cubic meters per year.

Egypt is the pioneering African gas vehicle fuel market. The country accounts for 98% of all natural gas vehicles in Africa – nearly 200,000 cars consuming 96% (over 470 million cubic meters) of CNG. There are 172 CNG filling stations operating in Egypt – 92% of all CNG filling stations located in Africa – and 73 vehicle conversion and maintenance centers in the country.

In Nigeria, the market for CNG for vehicles is only in its infancy but could grow exponentially with the expansion of the country’s gas potential. With proven reserves of more

than 5 trillion cubic meters of ‘blue fuel’, the country is launching pilot projects on conversion of passenger buses and other vehicles into CNG. Already there are eight CNG filling stations and more than three thousand natural gas vehicles crisscrossing the roads of the country.

Recently, Nigerian industrial conglomerate Dangote – a major supplier of products and services on the African continent – signed a contract with the Nigerian Gas Company for the supply of CNG for the refueling of 5,000 trucks in the first phase and 15,000 more in the long term. Dangote’s plans are well complemented by the strategy of General Electric, which intends to invest $1 billion in Nigeria for the production of gas refueling modules, termed CNG-in-a-Box, that are mounted in standard 20-foot containers.

Other African countries – Algeria, Mozambique and Côte d’Ivoire – are only just beginning to use natural gas as a vehicle fuel. Initial experiences show the fuel has good prospects of entering the mass market. For example, Algeria has a very favorable pricing environment for CNG: ‘blue fuel’ in the country’s retail market is 3.5-3.8 times cheaper than petrol, 2.3 times cheaper than diesel, and 2 times cheaper than propane/butane mix.

Today, a majority of African countries are faced with numerous questions on how to practically fuel the increasing number of vehicles as their populations grow. The answer for many will be to develop their domestic CNG markets, and LNG in the future as a vehicle fuel.

The African NGV Market: From Experiments to Mass MarketYevgeny Pronin, Chief Specialist at Gazprom Export, Chairman of Working Committee 5 (Gas Utilisation) of the International Gas Union

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CNG Cars in the Czech Republic Prevail over Electric VehiclesJan Ruml, Executive Director, Czech Gas Union

Altogether some 4.7 million vehicles are registered in the Czech Republic, with 150,000 new vehicles registered in 2013 alone, according to the European Automobile Manufacturer’s Association, ACEA. Over seven thousand cars drive on compressed natural gas, or CNG, with year-on-year growth of 2,500 vehicles. The Czech Republic’s CNG fleet also comprises 435 buses and 81 municipal service cars. 340 new CNG vehicles were added in the first quarter of 2014, according to Czech Gas Union statistics.

The consumption of CNG in the Czech

Republic reached almost 22 mcm in 2013, representing a substantial 44% increase compared to 2012. In the last five years consumption tripled in the Czech Republic, while in Europe, according to the Eurogas Long-Term Outlook for Gas to 2035, CNG consumption is expected to grow seven times by 2035.

A clear signal to strengthen the role of CNG vehicles was sent to everyone in Europe, including producers, transport companies and drivers, when the majority of the European Parliament approved the Directive on alternative fuels infrastructure on 15 April 2014. The vote was a significant milestone for the further development of the sector. The Directive includes, along with

the detailed list of supporting steps, goals for concrete numbers of fueling stations with CNG, LNG, hydrogen and other fuels; it sets the minimal average distance between fueling stations at 150 km for CNG and 400 km for LNG on main traffic roads.

Now EU countries, including the Czech Republic, have two years to prepare plans, including the definition of concrete goals in fueling infrastructure and the alignment of internal regulations. Every three years EU members should report back to the European Commission on the steps that have been taken; such as: the direct

“The CNG sector in the Czech Republic has long overcome all ‘growing pains’ like high prices of NGVs, low speed of fueling, unclear regulations, questions over driving distance, tax discounts, zero road tax and so on. We believe the new CNG-fueled Octavia G-TEC will be widely appreciated.” Jan Ruml, Executive Director, Czech Gas Union

CNG SALES IN CzECh REPUBLIC (MCM)

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promotion of alternative fuel vehicles, preferences in parking, taxation, using bus-only lanes and so on... The EU estimates the costs of the creation of the needed European CNG infrastructure to be 160 million Euro.

Today natural gas is the most promising alternative fuel in the Czech Republic. In April 2014, 53 public gas fueling stations were operating and an additional 45 fueling stations are to be commissioned by the end of the year. Of those, E.ON plans to open 10 to 12 stations, 10 or more are to be added by Vemex, over 20 to be opened by Vitkovice and at least three by RWE. The Czech Republic already complies with the requirements of the EU Directive on the deployment of alternative fuel infrastructure when it comes to CNG. The optimal number of CNG refueling stations for the country is said to be between 150 and 200 stations.

Local public transportation companies are showing growing interest in CNG buses which allow them to save over 10 million Czech crowns (365,000 Euro) per year. Today already over 20 towns are being served by CNG buses, and for instance Havířov is considering a full switch of all public transport to CNG vehicles. Cities like Ostrava or Brno are planning the purchase of 100 buses each to be introduced into the cities’ public transportation system this year.

Recent Navigant Research predicts that global CNG bus and truck sales will grow from 170,000 in 2013 to almost 400,000 in 2022. The EU is supporting alternative transport in every possible way too, while locally, the Czech Ministry for Environment, supported by the State Environment Protection Fund, is ready to provide 1 billion Czech crowns in subsidies for three regions if they replace their oldest and dirtiest buses with new clean CNG buses. The subsidy would cover up to 85% of the purchase price, and can also be used to fund the construction of CNG fueling stations.

According to the ACEA, against the overall European decline in car sales that has persisted for the past six years, NGV sales keep growing, with already 1.85 million CNG cars running on European roads. The Czech Republic also witnesses the growth of corporate CNG fleets at the Czech Post, municipal fire departments and police forces, as well as CNG forklift truck fleets for warehouses to name only a few examples.

In 2010, when Global Industry Analysts issued a report predicting 28 million CNG vehicles in the world by 2015, readers could hardly believe that. However, by the end of 2013, already 20 million CNG cars are on the roads. The International Association for Natural Gas Vehicles

(IANGV) in the same year forecasted CNG cars to cover up to 9% of global vehicle fleet by 2020. It is very likely that there will be the forecasted 50 million NGVs on the roads globally by then.

The use of CNG vehicles continues to grow in popularity with companies and consumers alike, a further increase is expected with the introduction of the new ŠKODA OCTAVIA G–TEC that was launched in May 2014. Spring 2014 has also been marked with the release of the fifth CNG Volkswagen on the market, the Golf Variant TGI Bluemotion CNG that will join Caddy, Touran, Passat, and ECO up! At least 35 types of personal CNG vehicles are available on the market today and when including buses, trucks and other commercial vehicles the number of different model reaches 60. Personal NGVs are also offered by Opel, Fiat, Renault, Citroen, and Mercedes.

CNG vehicles also keep getting numerous awards, Opel’s Zafira Tourer CNG was lauded as the “greenest van of the year 2014“ by the European Institute and Auto Test magazine. This award is offered since 1995 based on fuel consumption, emissions level and overall environmental impact. The ECOBEST 2013 AUTOBEST award went to FIAT for its CNG program. AUTOBEST awards this prize for the thirteenth time, and represents 15 European countries with a market of 300 million people.

Continues on page 12

DyNAMICS OF NGV FLEETS, CzECh REPUBLIC

DyNAMICS OF NGV FLEETS, GLOBAL

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CNG Cars in the Czech Republic Prevail over Electric VehiclesContinued from page 11

Awards for CNG vehicles are not an exemption but already the rule. In 2012, the Honda Civic GX Natural Gas was named the „Green Car of the Year” at the Los Angeles Auto Show by an 11-head jury, made up of experts in car manufacturing and the environment. An important winning

factor for CNG cars is that their driving range on a single tank exceeds the same feature of electric vehicles manifold. The VW Passat TSI EcoFuel can drive 820 kilometers, and Škoda Octavia G-TEC, available since May 2014, has a reach of 1330 km.

CNG DEVELOPMENT IN ThE CzECh REPUBLIC IN 2005-2014

ExPECTED GLOBAL CNG DEVELOPMENT (NGVA EUROPE):WORLDWIDE MARkET GROWTh TREND NGV

December 2005 March 2014 Growth

Total number of CNG vehicles, global 4,640,000 9,873 000 15,233,000

Total number of CNG vehicles, 556,650 1,848 550 1,291,900 Europe

Total number of CNG vehicles, 390 7,050 6,660 ČR

Total number of CNG buses, 125,050 781,400 656,350 global

Total number of CNG buses, 90,232 278,503 188,271 Europe

Total number of CNG buses, 90 435 345 ČR

Total number of CNG 8,965 22,165 13,200 fueling stations, global

Total number of CNG 2,031 4,191 2,160 fueling stations, Europe

Total number of CNG 9 53 44 fueling stations, CR

Global CNG consumption in 10,003,016,000 76,900,680,000 66,897,664,000 the previous 12 months (m3)

Czech CNG consumption in 3,010,000 21,951,900 18,941,900 the previous 12 months (m3)

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Abstracts from the lecture of Dr. Seyed Mohammad Hossein Adeli, Secretary General of Gas Exporting Countries Forum (GECF), at the Moscow State Institute of International Relations (MGIMO University)

The importance of gas is rising for many reasons: it is abundant, it is clean, and it is a source of energy that does not need costly and polluting processing. There are three types of unconventional gas: tight gas, coal methane gas, and shale gas. Today we can say that shale gas has had an impact on global energy trends..

Shale gas is found in solid shale rock formations and needs special technology to be extracted such as horizontal drilling and fracking. This fracking is done underneath the formation and this is where environmental concerns arise.

Let’s see where shale gas is found in the world. As of today, most of the proven reserves are registered in North America. However, the largest shale reserves are estimated to be in China. Shale reserves have also been identified in Europe as well as in the CIS and Russia. Also, some shale reservoirs are located in Australia, Africa, and Latin America.

We often hear about the “shale gas revolution.” It is indeed a revolution, but only in the US. The US has always been a major importer of energy but now it is becoming self-sufficient, and soon will be able to export it resources. The price of this revolution remains the major question.

What is the US going to do with this gas? The US wants to export its gas to Europe. Is that possible? The US plans to build nine LNG plants for the export of shale gas, with

three of those are already targeting China. So, as you can see, there is not much left. We are probably going to witness the first LNG export in 2016 and it will most probably go to China.

Will unconventional gas influence the price of gas on the global market? Yes it will, but this impact will be insignificant and most importantly, it will be determined by real contracts.

China is a big question mark. This is a country with an enormous demand for energy, but at the same time the biggest shale reserves are estimated to be in China. Will China be able to develop its shale gas? We don’t know. Currently China is only producing 0.2 bcm of shale gas and the country is facing many challenges. There are doubts that China can replicate the shale boom that happened in the US. First of all, China lacks the appropriate technology; then there is the geological complexity of China’s shale reserves and China also lacks the water that is needed for fracking. Moreover, the density of population is very high and limits the opportunities for production as fracking can cause earthquakes and thus is to be avoided near residential areas. It can also cause damage to agriculture in the region.

GECF Secretary General: Shale Revolution Is a Regional Phenomenon

“The GECF is a small cosmopolitan organization with members from all parts of the world. here are a few words about our mission. We want to become a global platform for the debate surrounding natural gas, a center of active discussions about the major developments on the gas market and a platform that can help many different subjects of study and research. We have to promote gas which is the cleanest fossil fuel, and emphasize that gas is the “rising sun” of the energy market.”

Continues on page 14

Dr. Seyed Mohammad hossein Adeli

Dr. Seyed Mohammad hossein Adeli

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China won’t be able to develop it shale resources before 2020.

In Europe in general, there is simply not enough shale gas to replicate the shale boom that we have witnessed in the US. Only in Poland and Ukraine have significant shale reserves. In France shale reserves have been identified, but the government banned its development due to ecological considerations.

To sum up, global gas reserves, both conventional and unconventional, will be sufficient to satisfy worldwide future gas demand. Shale gas remains an important

factor for North America’s gas supplies, but it’s development is limited or delayed in other regions due to environmental concerns (e.g. Europe), relatively high costs and a lack of know-know (e.g. China). Unconventional and the yet-to-be-found conventional reserves are expected to nearly double global natural gas production in the next two decades. Shale gas has allowed a certain level of energy independence in the US; however, there are many uncertainties surrounding its sustainability due to the current economics and production performance.

Lars Clausen: Creating Excellence in RetailIntroducing Lars Clausen – Global Head of Retail, Gazprom Energy, Gazprom Marketing & Trading (UK)

What appealed to you about GM&T?

I’m fascinated by the energy industry: it is on the front pages every day. I was specifically attracted by the chance to build on a truly customer-oriented business – and take it forward. My decision was confirmed by meeting Jon Feingold (MD Gazprom Energy) and his team – their passion is infectious! Hopefully my previous experience will help bring value to the business; I was with Shell for 20 years and Dong Energy for seven.

What were your first impressions of GM&T?

Before I joined, I didn’t know what to expect – I wasn’t that familiar with the

Russian culture generally. I did know, however, that Gazprom is highly respected in the industry, and that is an important consideration when you are making a career move. Now that I’m here, I know I have made the right decision.

How big is Gazprom Energy? Can you provide an idea of the scale of the business?

We have 360 employees spread across four offices: Manchester, Paris, Walluf and s’Hertogenbosch. They serve 142,000 customers across five countries – and we’re currently the No 2 UK business gas supplier by volume. In 2013 we traded 2.3m tonnes of carbon and purchased 440GWh of power from embedded generation sites.

What’s your ambition for Gazprom Energy?

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Our aspiration to be the pan-European leader is very exciting – and itis achievable, but it will take time. The world has changed: we now have liberalized markets, and there are numerous wholesalers, distributors and resellers. There are great opportunities; we can learn from what wehave done well in the UK and bring that to Europe.

What are your priorities?

We need to understand where we came from, where we are and whether we need to make any changes. Does the

current way of operating help us achieve our goals? If not, how can we improve? How can we get closer to customers and be more innovative for them? Where are the new market opportunities that will help us grow the business?

What do you hope to have achieved in a year’s time?

As a leader, I want to have delivered on my promises. Customer-wise, we’re highly appreciated on almost all accounts. Hopefully we’ll continue to maintain and improve on this position. I also hope that we will clarify what we are for our people, to make them want to stay and continue to be part of our success story. Then there is the Gazprom

Group. If we want the Group to invest in us, we have to show them a credible story of our moving forward in Europe. If we can delight the customer in a way that is less costly than our competitors, we will add more value to the business. That is the key to long-term survival as a downstream player.

How do you see the retail environment evolving?

Gas consumption by European industry has diminished. On the other hand, there are plenty of businesses that will continue to consume energy, so I think our role will change slightly. We need to bring customers more value – and that is partly about helping them use less energy. That might seem like a strange perspective for an energy seller, but helping customers become more energy-efficient is the key to winning and retaining them in the long term. I have seen it happen. We already have a strong bond of trust with our customers; our most recent customer satisfaction score was 79%. I think we can make great progress that will give us a competitive edge. We have strengths that Jon and his team have already demonstrated so clearly – particularly the ability to listen and to grow according to the circumstances we’re in.

Why should customers choose Gazprom Energy?

Firstly, security of supply – we are in it for the long term. Secondly, we supply one of the best fuels for the future. Gas is here for generations to come – and Gazprom will be strong right across the value chain, both upstream and downstream – with gas-to-power, LNG, gas for transport and so on... We have the potential to do these things better than anybody else. The story here is about creating the excellence in Retail, not just with regard to sales and service, but on the operational side too.

“I want to convince everyone – the Gazprom Group, our customers and our people – that we’ll develop leadership in creating energy solutions for customers.”

Lars Clausen

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The Asian dragon keeps flying high

The European liquefied natural gas (LNG) market is no longer attractive for suppliers, according to the latest statistical data distributed by the International Group of Liquefied Natural Gas Importers (GIIGNL) and Gas LNG Europe. At the end of the first quarter of 2014, the majority of European Union LNG importers reported record low levels utilization of LNG terminals.

On average in Q1 2014, 16 operators of European LNG terminals representing 90% of Europe’s total regasification capacity used only 15% of their regasification capacity.

Simultaneously, the European share of global LNG trade is declining. Since 2010, Europe’s share of global LNG imports has decreased two-fold: from 29% to 14%.

Furthermore, several European countries are actively re-exporting LNG: in 2013 Belgium re-exported about 50% of purchased LNG, Spain – the largest LNG market in Europe – re-exported some 20% of its LNG. The re-exported cargoes are heading for two of the most rapidly growing markets, Asia and Latin America.

Europe cannot even dream of such a dynamic market as in Asia. In the aftermath of the tragic accident at the Fukushima nuclear power plant, Japan phased-out the majority of atomic power capacities and increased its LNG imports by 25% during the last two years. In addition, China has loaded its regasification terminals up to the limits (94% in 2013, according to the International Gas Union). During the last five years China has increased its LNG import capacities five-fold. Moreover, currently 20% of all LNG import capacity under construction in the world is located in China. Between 2011 and 2013, Asia increased the offtake of LNG from the global market by 16% (153 MT in 2011, 178 MT in 2013).

The pricing environment for suppliers is most favorable in Asia. In winter 2014, spot LNG prices in Asia (under Platts Japan-Korea Marker) maintained a level of $18-19 per MBTU and in days of peak consumption exceeded $20 per MBTU. Prices under contract during the same period fluctuated between $16 and $17 per MBTU.

It is not only Asia which is heating up the world LNG market. Latin America, regarded for a long time as a “dark horse”, is coming to the forefront of the global LNG market. From 2011 to 2013, the region increased imported volumes by almost 80% (from 10.5 MT to 18.75 MT). In the last few years, countries like Argentina, Brazil and Mexico

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European LNG Sector Is More Deadthan Alive

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have been demonstrating sustainable growth in LNG imports. Prices in the region are even higher than in Asia.

In the midst of galloping demand and high LNG prices in Asia and Latin America, the European market looks abandoned. LNG prices on the European spot market float around $10 per MBTU and that is 40-50% less than in Asia. Of course, this situation does not please suppliers. As a result, European LNG imports under the most flexible spot and short term contracts fell 8-fold from 2011 to 2013 (from 12.4 MT in 2011 to 1.5 MT in 2013). Even Qatar, which endeavors to balance its export strategy in order not to overly depend on a certain market, decreased its short-term and spot LNG exports to Europe over the same period 5-fold (2-fold in total volumes including the longer-term contracts). Overall in 2013, Europe received 50% less LNG volumes than in 2011 (65 MT in 2011, 34 MT in 2013).

Is it a temporary setback? On the one hand, there are ongoing discussions about the capability of LNG exports from the USA to adjust Asian gas prices to the downside after coming to the region. On the other hand, if prices plummet a number of big LNG projects currently under construction may face difficulties because their business strategy implies high gas prices (see graph №3). There is no reason to expect a considerable adjustment of the pricing environment in Asia in the mid-term perspective. Most likely the disparity between European and Asian prices that finally diverged in summer 2009 will remain and Asia will preserve a “promised land” status for LNG suppliers.

As for European consumers, under the present conditions the most predictable, sustainable and commercially sound

solution is pipeline gas from Russia. Russia possesses a vast resource base, an extensive pipeline network and unique capabilities to increase supplies under the existing contracts - flexibly responding to requests of European partners. And what is even more important – Russia has a 40-year history of uninterrupted gas supplies to the countries on the European continent.

As the latest data shows, Europe has made its choice in favor of Russian energy supplies. In 2013, Western Europe increased gas year-on-year imports from Russia by 20%. At the end of the first quarter of 2014, despite the rather warm winter, supplies surged. Among the leaders of Russian gas purchases were large European economies like Germany, Italy and the UK who correspondingly imported 15%, 6% and 30% more of Gazprom’s gas compared to the same period in 2013.

Forsa Survey: The Germans Are Worried About Increasing Energy CostsClimate protection, affordable energy costs and security of supply – which takes priority from the German point of view? At the end of the heating season, a new survey by the Forsa polling institute shows that for German citizens one thing counts above all else: the cost. 76% of Germans emphasize that electricity and energy must remain affordable. 62% also consider it very important that the energy supply is secure and reliable at all times. 43% consider environmentally friendly energy generation to be very important. Compared with a similar survey from the previous year, the results

show that the importance of environmental protection has fallen slightly by one percent, for Germans, while the importance of energy prices has in comparison risen by another two percentage points.

“This shows that although climate change is important

to citizens, they are increasingly concerned about the costs that are occurring as a result of transforming the energy landscape in Germany,” explains WINGAS Chairman, Dr. Gerhard König. In the latest survey conducted on behalf

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of WINGAS, Forsa surveyed over 1,000 citizens, including 570 home and apartment owners, for their views on energy supplies and the Energiewende – the energy transition.

Around three-quarters of those surveyed by Forsa believe that the energy provision for German households and businesses is essentially secure at the moment. However, when it comes to the energy transition and future energy security, doubt prevails. 64% believe that the energy transition could lead to bottlenecks or even failures in the supply. One third still believe that the energy transition will succeed in accordance with government plans. “People clearly recognize that if the sole focus is on expanding renewable energy, this will not be enough in itself to ensure that the power supply is not only environmentally friendly, but also economically viable and secure,” says König. “The energy transition is more than a loose juxtaposition of renewable and traditional energy sources. There must be a coordinated interplay; otherwise the costs and supply security will spiral out of control.”

The Germans also have a clear opinion when it comes to the question as to which traditional energy sources should play a central role in a modern, low-carbon energy

landscape: according to Forsa, 70% would like natural gas to supplement renewables. Natural gas therefore lies clearly ahead of all other traditional fossil fuels, and also before nuclear power. “We need to set the future course now, in this year, if the energy transition is to succeed. We need to transform our overall energy supply in such a manner that we can reconcile climate protection with supply security in a cost effective manner with electricity, heating and mobility. Cleverly combining the vast potential provided by renewables and natural gas will be of crucial importance here,” said König.

WINGAS is one of the largest suppliers of natural gas in Germany. The energy company is active in natural gas trading across Europe – in Belgium, Denmark, France, Great Britain, Austria, the Netherlands and the Czech Republic. Its customers include municipal utilities, regional gas suppliers, industrial firms and power stations.

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Poland’s Energy Supplies - Between Supposed Revolutions and Missed Opportunities. A Possible Repositioning.Demostenes Floros, Contract professor of Geopolitics of Energy, University of Bologna (Italy)

Few European nations, over the course of their history, were subject to the deep geopolitical influences as Poland has been. Its geographical position between Germany on the West and Russia on the East is the key element that allows us to understand the meaning of its historic events since the modern age, in particular

as regards the troubled relations with the USSR during the 20th Century, starting from 1918, when Poland regained its independence from the Tsarist Empire, after 123 years, following the Bolshevik revolution and the Brest-Litovsk Peace Conference.

Following the Cold War, but also after the American unipolarism of the 1990s, there is no doubt that different geopolitical views lie behind the current Polish energy supply issues. From Shale Gas to the Nord Stream project - it often appears unclear to the eyes of non-experts what forces are at play in Poland’s energy debate as Washington’s and Moscow’s interests have diverged in the background.

We will try to present the most significant aspects of a crucial issue for both Poland and the whole of Europe, especially because of the hostile attitude displayed by Warsaw in the EU context.

In 2013, the Russian Federation exported 161.5 billion m3 of natural gas to Europe: after Germany, Turkey and Italy, Poland was the fourth largest importer, with approximately 9.8 billion m3 of natural gas.

In 2012 (BP Statistical Review 2013), Poland’s energy mix was broken down as follows:

a) Coal – 54.0 Mtep (55%);

b) Oil – 25.1 Mtep (26%);

c) Gas – 14.9 Mtep (15%);

d) Renewables – 3.6 Mtep (4%).

As for oil, the import figure reaches 98%, the supply being almost entirely provided – via pipeline – by the Russian Federation. In particular, the origin of the oil consumed by Poland during 2012 was the following:

a) Domestic Production – 0.6 Mtep (2%);

b) Imports from the Russian Federation – 22.6 Mtep (90%);

c) Imports from Norway – 1.5 Mtep (6%);

d) Imports from the United Kingdom – 0.5 Mtep (2%).

Therefore, Poland’s dependence on Russian oil imports equals approximately 23% of its primary energy consumption.

The supply of natural gas shows a steadily decreasing domestic production equal to 25% of consumption, as well as imports from Russia equalling 75% (always through pipeline), of which about 5% is supposed to come from Germany.

In particular, the origin of the methane consumed by Poland during 2012 was the following:

a) Domestic Production – 4.6 billion m3 (25%);

b) Imports from the Russian Federation – 13.2 billion m3 (75%);

c) Total Consumptions – 17.8 billion m3 (100%).

Hence, Poland’s dependence on Russian gas imports equals approximately 11% of its primary energy consumptions.

To conclude, taking into account the overall low level of Poland’s dependence on imports of raw materials as a consequence of the considerable use of coal, Poland’s

Demostenes Floros

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dependence on Russian imports of raw materials (23% oil and 11% natural gas) equals approximately 35% of its primary energy consumptions (EU average:18%).

Thus, Poland, if compared to Europe in terms of absolute import value, depends much less on foreign countries, but much more on Russia in relative terms. It is also interesting to observe that over two thirds of this dependence refers to oil and only a smaller amount to natural gas.

Now, Poland has to face at least two issues: the first concerns the excessive use of coal. In the mid-term, the use of coal is environmentally unsustainable. On the other hand, the possible closing of many coalmines would almost certainly produce strong social conflicts.

The second dilemma regards instead the legitimate Polish will to diversify its suppliers and to become therefore less dependent on Russia’s oil and gas. To this end, Warsaw’s government has been strongly supporting the national production of shale gas and shale oil for a long time now.

Should this option actually come true, are we so sure that this track will be the most profitable, in terms of costs on the one hand, and, on the other, from the point of view of the strategic choices that the country shall make?

Besides being one of the possible causes of water pollution, this technique seems to be strictly connected to seismic risk, as well as to the enhancement of the greenhouse effect because of the natural gas that is released in the atmosphere during the first phases of its extraction. For these reasons, several EU countries, among which France, Czech Republic, Romania and Bulgaria, have banned this technique (which is, however, difficult to apply in Europe) because of the different distribution of the population and of the differences in the property rights of the underground resources in comparison with the United States (who, since 2008, has perhaps been

the true protagonist – if not the only one – of the shale gas boom).

Poland does have shale gas reserves, though probably lower in comparison with the amounts initially estimated. During the past few years, in order to diversify its suppliers and become less dependent on Russia’s gas imports, Warsaw’s government has strongly supported this alternative thanks to the suggestions of American experts. Until today, however, the results have not been up to the expectations, mainly because of the high production costs, resulting in the multinational ExxonMobile, the Canadian Talisman and the American Marathon oil, chucking in the towel and leaving the country. With all likelihood, public companies will be the ones who will acquire the production of shale gas (in particular, the public company PGNIG that is also the main owner of the concessions), considering the unusual and criticized involvement of subsidiaries not connected to the energy exploration, such as oil refiner PKN Orlean and copper miner KGHM. Other major companies in the energy field, such as the American Chevron and the Italian ENI, instead, are still in Polish territory as proof of the fact that if shale gas is ever produced in Poland, it will be directed to the domestic consumption, i.e. in the production site, in order to be economically sustainable.

A second alternative to Russian gas is Liquefied Natural Gas (LNG). On 29 June 2009, PGNIG signed a twenty-year agreement with Qatargas, worth 550 million dollars a year, for the supply of 1.5 million tons of liquid gas a year (equal to 1.4 mc3) – starting in 2014 – thanks to the Polish regasification terminal in Swinoujscie, on the Baltic Sea. However, its construction has been delayed due to the financial difficulties faced by the general contractors of the project, among which is the Italian Saipem. The agreement stipulated with Qatar is a take-or-pay contract and 100% linked to oil price. The curious outcome is that the whole transaction will cost more than the Russian

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gas imported by pipeline. As a matter of fact, the Polish government’s request to renegotiate the above mentioned agreement just a couple of weeks after Gazprom reduced the prices by 15% could hardly be explained.

As a conclusion, Poland’s political choice could be summed up as follows: higher prices do not compensate for the benefits deriving from an only presumed higher energy security. This option should be examined in all its geopolitical aspects. In fact, it is not an a priori refusal of the shale gas extraction technique, but a criticism for those who, perhaps too quickly, gave credit to rumors about the fact that by developing non-conventional gas fields, Europe would curb the winds of de-industrialization. It is also tracking hypothesis as that supported by the European Steel lobby, that the Polish elite were supplanted by the pipe under the Baltic Sea?

Nord Stream is the name of the gas pipeline, which runs through the Baltic Sea floors near Vyborg, in the Russian

Federation, to Greifswald, in Germany. The gas pipeline, extending for 1224 km, is estimated to have a full working capacity of 55 billion m3 of gas per year. After having been revised a number of times after Warsaw’s complaints as to its passage to the south of Bornholm island, the underwater route now crosses areas of Finland, Sweden and Denmark, bypassing the Baltic countries (Estonia, Latvia and Lithuania), Poland and Ukraine, through which up to 80% of the Russian gas to Europe used to be pumped.

Like any pipeline, Nord Stream defines a whole set of industrial and geopolitical relations. In particular, it represents the contradiction between the military (NATO) and political relations between Germany and the United States on the one hand, and, on the other, the commercial and energy interests of Berlin with Moscow.

In front of this juxtaposition, what were the main foreign policy choices adopted by the former member of the Warsaw Pact over the past few years?

First of all, it is very important to remember that, in 2006, Poland’s neoconservative Minister of Foreign Affairs Radoslaw Sikorsky, compared Nord Stream to the Molotov-Ribbentrop Pact. Two years later, well aware of having previously supported the so-called “orange revolution” in Ukraine, Lech Aleksander Kaczynski led a non-improvised “group of five” with Ukraine, Latvia, Estonia and Lithuania which, tired of Nicolas Sarkozy’s and Old Europe’s balancing acts, joined forces with Mikhail Saakashvili in his short adventure against “imperialist” and “revisionist” Russia. For the occasion, the Polish President proclaimed the “beginning of the war” against Moscow, as if he

“you know, I always try to be objective, even if it is against human nature. I was deported in Siberia, where I lost my father, and only a few years ago could I visit his grave. Even so, I am against who tries to find pretexts to be against the Russians.” W.W. Jaruzelsky

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wished that the Caucasian fire were just the beginning of the final showdown with Russia.

As a matter of fact, Poland’s clear support to Nabucco pipeline as an alternative to South Stream, as well as the charges directed to Moscow as regards the Smolensk plane crash, are nothing compared to the entrance of Poland in the military Atlantic Alliance in 1999, and to the missile programme-related issues that followed. Still, in 1990, during the German reunification, former US Secretary of State James Baker assured the leader of USSR Mikhail Gorbachov that NATO would not expand eastward.

Could Warsaw’s missed participation in the project be considered as a serious mistake? First of all, Poland, for geographical and strategic reasons, missed the opportunity to take advantage from its location between the world’s biggest oil and gas supplier – the Russian Federation – and some of the main Western economies. In fact, between the EU – of which Poland has been a member since 2004 – and Russia, in the energy field, there is an interdependent relationship based on the sizes of the European final markets and on the technical abilities of many national Western companies.

Secondly, Poland’s steady reduction of its domestic gas production and Nord Stream’s European nature (with German, Dutch and French enterprises as stakeholders) could have suggested a different approach to the problem.

Thirdly, this choice appears a little bit irrational if we compare Poland’s foreign energy dependence to EU’s average, which is much higher.

Since the fall of the Soviet Union, Washington’s policy has focused on transforming Poland in a wedge, aiming to block any close cooperation between Russia and Germany. At the same time, all the Polish ruling classes – those sprung from Solidarność as well as the post-

communist, Catholic and non-religious ones – pursued a double aim: to break free from Moscow’s sphere of influence and anchor Warsaw to the Euro-Atlantic structures. Starting from the remembrance of Katyń’s tragedy, faint but interesting signals of opening between Prime Minister Donad Tusk and President Vladimir Putin, started with the remembrance of victims of the Katyń massacre. The current President of the Republic Bronisław Maria Komorowski is also trying to keep good relations with Moscow.

Despite the many uncertainties and hesitations, the signature of a memorandum of understanding last April 5th between Gazprom and EuRoPol Gaz (the enterprise managing the Polish section of the Yamal gas pipeline, which connects Russia to Germany, passing through Belarus and Poland) appears to be much more forward-looking. The agreement provides for a feasibility study for the construction of a gas pipeline (Yamal 2) that would branch out from the existing line of Yamal and cross Poland and Slovakia, reaching central Europe bypassing Ukraine.

There is no doubt as to the fact that these are important attempts, but insufficient if we take into account Poland’s urgent need to pursue its national interests while reaching a new balance in the ideal line between Washington and Moscow on the one hand, and between the United States and the European Union on the other, within an international framework that is now polycentric, but also characterized by increased tensions. It will not be easy: “No more ingenuity”, thundered former CIA chief James Wooley, on the pages of newspaper Stampa after the Snowden affair: “Russia and China are not partners of the United States”, he explained, “but rivals”. Everybody is warned, and there will be no exceptions.

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Russia celebrates International Children’s Day on June 1. This year, charity events were held across the country to help orphans, the disabled and children in difficult situations.

As part of festivities, Gazprom Export, together with its partner Moscow Kremlin Museums, prepared an exciting excursion and educational program for children from sponsored orphanages and social institutions in Smolensk region.

The children were entertained with a fascinating excursion across Troitsky Bridge, past the Tsar Cannon and Tsar Bell, to the Cathedral Square. The main purpose of the visit was the exhibition “Amazing India: tracking the treasures of the Indian maharajas”. Held at the One-Pillar Chamber of the Patriarch’s Palace, the exhibition created a lasting impression in the children. During the excursion, the kids were introduced to the culture of India and the art of Indian jewelers. They learned about the riches of India and heard about the Mughal Empire. The museum staff also told the children about the first encounters between Europeans and the skilled craftsmen of India and the impact their art had on European arts and culture.

After the exhibition, the children along with guides from the Kremlin Museums discussed what they saw, watched a thematic animated film and demonstrated their creativity skills. The children created an elephant decoration on paper, based on the traditions of Indian jewelry. The joyful event ended with the presentation of keepsakes – flags with symbols of the Kremlin Museums and postcards with images of famous Kremlin monuments and artifacts from the collection of the Kremlin Armoury.

As part of its charitable programs, Gazprom Export actively works with child care social facilities and charitable organizations to implement projects aimed at helping children with disabilities. These are long-term projects and incorporate a comprehensive approach to the issue of treatment of children. Children not only receive quality medical care but also engage in a variety of adaptive programs, allowing them to gain new social skills and facilitating the process of integration into wider society.

Gazprom Export Sponsored Children’s Day kremlin Museums