The meeting on the promotion of the use of motor fuel, which was held in July at the central office of Gazprom’s board chairman Alexei Miller, was attended by representatives of the ministries of the Russian Federation, the major oil companies Rosneft and LUKOIL, officials from large auto-making plants, including KAMAZ, GAZ Group, from tractor plants, and from the Russian Railways, as well as by the executive authorities of different Russian regions and heads of the divisions and subsidiaries of Gazprom itself. The meeting’s goal was to review all the main aspects of the motor fuel market development in Russia. In particular, the discussion centered on the development of the production of auto emission and standard vehicles running on natural gas, the role of oil companies in the expansion of the network of gas filling stations, as well as of the importance of transportation for the gasification of Russian regions.

At the meeting, the participants emphasized that the use of natural gas as a fuel for vehicles is important for the whole society. In this regard, the most significant advantage of motor fuel to any other kind of vehicle fuel is its environmental friendliness. Converting cars from gasoline to gas allows reducing the emission of harmful substances nearly five times on average. This is especially important for large cities, where the largest share of air pollution comes from road vehicles.

The economic benefits of using natural gas are very important too. Its cost for consumers in Russia is relatively small. As such, the average price of 1 cubic meter of Russian gas fuel (which is roughly comparable to the traditional 1 liter of fuel) is now around nine roubles. Large-scale conversion of vehicles to natural gas will reduce transportation costs, which will lead to a reduction of costs in all sectors of the economy and the social sphere, and promote industrial growth and living standards.

Gazprom set out to significantly expand the NGV (natural gas vehicles) business in Russia and to create on its basis a large-scale market for natural gas companies. At present, the company explores new approaches that can be applied in this kind of business. The preparatory work on the development of a business scheme, which would allow the company to increase significantly the sales of motor fuel, is now underway.

On the global energy map, Russia is number one in natural gas reserves, but the nation takes only the 20th place on the list of countries using motor fuel for its vehicles. Gazprom has experience working with motor fuel in Russia through its subsidiaries, but the key challenge now is to build a system of motor fuel market in the country as a whole, uniting the efforts of all parties concerned. Alexei Miller believes that there are all prerequisites in place now for this task to be accomplished. The development of motor fuel in Russia will be part of the program of gasification of the regions, within the framework of which Gazprom has established channels of interaction with almost all Russian regions. Gazprom now offers the regions to sign on to its 2013 program of gas supply with the obligatory section on natural gas. “As such, from the beginning of next year, we could switch to a qualitatively new level of work on the development of the motor fuel market in Russia,” Mr. Miller said. “First of all, it should be done in the major cities of the country,” he concluded.

Discussing the organizational arrangements and financial incentives to use motor fuel, the participants stressed that now more than ever there is a need of appropriate legislation, as well as of the regulation of the conversion and the gas transportation process to ensure synchronization of building the gas fueling network with the development of the oil products market.

The meeting resulted in the issuance of instructions to the structural units of Gazprom to prepare model program components for the development of gas supply in the regions of the Russian Federation with the aim of facilitating the creation of the motor fuel market. It was also decided to conduct a similar meeting in the fall, which will focus on the development of the use of natural gas vehicles in the regions of Russia.

Before the meeting, an exhibition of gas-cylinder cars took place at a Gazprom venue. The exhibition featured 17 vehicles, including buses LIAZ, ML N, a KAMAZ truck, as well as cars Volkswagen CaddyEcoFuel, Mercedes E 200, Ekontsept, E-crossover, and others, as well as equipment for CNG filling stations.

The use of natural gas as a vehicle fuel is actively developing in the world and is currently being done in more than 80 countries. The average annual growth rate of the number of vehicles using natural gas is 26 percent. The world’s leading automakers produce more than 80 models of gas vehicles. The Russian fleet of vehicles that run on natural gas is estimated at about 86 thousand units (the number of the global fleet is around 15 million units).

Today, in 58 regions of the Russian Federation there are 242 CNG filling stations, 207 of which are owned by Gazprom. In addition, another CNG company is in the stages of formation in the Kaliningrad region.

In 2011, Russian CNG stations sold 361.6 million cubic meters of compressed natural gas, which is 16.6 million cubic meters more than in 2010, but only 18 percent of the design capacity of Russian CNG filling stations. The most developed regional markets as of 2011 are the Stavropol and the Krasnodar territories, the Sverdlovsk, the Chelyabinsk, the Rostov, and the Tula regions, as well as the republic of Bashkortostan. These regions accounted for 52.1 percent of total sales of CNG in Russia.

Gazprom signed an agreement on cooperation in the use of natural gas as a motor fuel with the Kaluga, the Orel, and the Penza regions. Local laws aimed at the development of markets for CNG have been enacted in Moscow, the Stavropol territory, the Sverdlovsk, the Tambov, the Kaluga and the Saratov regions, and in the republic of Tatarstan.

The promotion of natural gas filling facilities is also done in the regions of Eastern Siberia and the Far East. CNG stations have already been built in Bratsk. A methane filling station is now being designed in Petropavlovsk-Kamchatsky. In the future, it is planned to build CNG stations in Khabarovsk, Blagoveshchensk, Vladivostok, and Yuzhno-Sakhalinsk.

The main feature of the Russian E-mobile is the use of the hybrid power engine (internal combustion engine and generator). In this case, the internal combustion engine can run on either gasoline or natural gas. For Gazprom, the car is interesting not only from the point of view of the motor fuel market, but also from the perspective that the fabrication of composite materials used in manufacturing the car requires the use of natural gas.