The Gazprom Management Committee took note of the information about the prospects for the NGV fuel market development in the Russian Federation, including in the agro-industrial complex, and about the Company's performance in 2023.
It was noted that, a competitive NGV fuel market has already been created in Russia and the required conditions have been provided for converting vehicles and machines to natural gas, the most eco-friendly and cost-efficient fuel. Gazprom, as key producer of natural gas in Russia, plays a major role in the NGV fuel market development.
The Company has been systematically participating in the construction of new natural gas refueling infrastructure. As of the beginning of 2024, there are 836 NGV refueling stations in Russia, which is 3.5 times more than in 2012. Over a half of the facilities are owned by Gazprom. In 2023, the sales of NGV fuel at Gazprom's NGV refueling stations accounted for more than 70 per cent of the total volume of natural gas as a vehicle fuel sold in Russia.
Gazprom facilitates the expansion of Russia's NGV fleet. For example, the Company implements a number of marketing programs aimed at converting passenger vehicles to natural gas. For instance, under the People's Fuel project launched in 2023, the population and companies can convert vehicles to gas free of charge or get a fixed reduced price for EcoGas fuel.
Gazprom is also actively converting its own vehicles to natural gas. As of early 2024, almost 15,000 motor vehicles of the Company's subsidiaries run on methane, which makes 63 per cent of their total number of vehicles suitable for retrofitting.
The Company supplies Russian automakers with orders for the manufacture of new models of vehicles that run on compressed natural gas (CNG) and liquefied natural gas (LNG). New natural gas-powered models of KAMAZ developed to serve the needs of Gazprom include a bus for shift personnel, a suburban bus and a mobile workshop. The Company's orders encourage manufacturing plants to expand the lineup of NGVs. Today, the range of vehicles offered by Russian manufacturers includes more than 200 NGV models: passenger cars, trucks, buses, and special-purpose vehicles.
Apart from that, in the interests of domestic automakers, Gazprom jointly with Russian industrial enterprises is working to develop the manufacture of component parts required for the assembly of NGVs. In 2023, in the Moscow Region, Gazprom launched Russia's first-ever batch production of engine-compartment natural gas equipment for CNG-powered vehicles. In the Republic of Tatarstan, RariTEK Holding started the manufacture of a wide range of cryogenic fuel tanks for LNG-powered vehicles.
Taking into account the refueling infrastructure already created and the extensive work on gas infrastructure expansion being carried out by Gazprom in Russian regions, it is agricultural machinery that emerges as a promising direction in which the use of natural gas as a vehicle fuel can further develop. Work is already in progress in this regard.
With assistance from Gazprom, agricultural machinery manufacturers produced their first natural gas-powered prototypes of tractors and a combine. One of those prototypes, an LNG-powered row crop tractor, was displayed for the first time last year at the St. Petersburg International Gas Forum.
In 2023, the Agreement of Cooperation was signed between Gazprom and the Ministry of Agriculture of the Russian Federation. In terms of its implementation, the parties have identified the need for NGVs intended for the transportation of agricultural products that is going to be observed among agricultural enterprises throughout 2024. To partially compensate agricultural producers for purchasing these NGVs, the Ministry of Agriculture of the Russian Federation is currently looking into the possibility of introducing subsidies in this regard.
In 2024, the parties will shape the program for enterprises of the agro-industrial complex to purchase agricultural vehicles and grain drying equipment and convert them to natural gas.
Other promising areas where natural gas can be used as a vehicle fuel include quarry machinery for the mining sector, as well as railway and waterborne transport.
It was noted that further comprehensive development of the market will be facilitated by the approval of the Concept for the NGV fuel market development in Russia up to 2035, which has been developed by the Ministry of Energy of the Russian Federation with the participation of Gazprom.
The issue of the prospects for the NGV fuel market development in the Russian Federation, including in the agro-industrial complex, and the Company's performance in 2023 will be submitted for consideration by the Gazprom Board of Directors.
