GAZPROM’S POWER GENERATION STRATEGY Denis Fyodorov Head of the Directorate for Power Sector Development and Marketing in Power Generation, Gazprom; Director General, Gazprom energoholding PRESS CONFERENCE ON THRESHOLD OF GAZPROM’S ANNUAL SHAREHOLDERS MEETING JUNE 22, 2011
Gazprom’s Power Generating Assets – Gazprom’s core assets: Mosenergo, TGC-1, WGC-2, WGC-6 – Total capitalization of core generating assets exceeds USD 9 billion – Besides, Gazprom holds minority interests in some power generating companies Core generating assets 60.6% 53.5% 51.8% 57.3% FGC UES of Russia RAO Eastern Energy Systems Minority stakes (1-10%) Inter RAO UES TGC-11 in non-core assets* Holding MRSK TGC-5 Kaunas CHPP Other generating assets Gazprom energo Power supply Mezhregionenergosbyt *Largest minority packages within Gazprom energoholding Source: Gazprom’s data 2 GAZPROM’S POWER GENERATION STRATEGY
Gazprom’s Power Generating Assets: in Russia Gazprom is a leader among Russia’s state-owned and private companies in terms of installed power capacity (IPC) Gazprom accounts for 17% of IPC of the Russian power industry Top ten market players with the largest installed power capacity, GW Source: Gazprom’s data 3 GAZPROM’S POWER GENERATION STRATEGY
Implementing Investment Program of Gazprom energoholding Investment program is being implemented in full As of May 2011, the investment program was financed by 50% RUB billion GW within CSA 367 182 Total Put onstream Under Total Total Total Financed construction Source: Gazprom’s data 4 GAZPROM’S POWER GENERATION STRATEGY
Implementing Investment Program of Gazprom energoholding Investment program will increase the installed capacity of Gazprom energoholding to 44 GW* Commissioning of CSA facilities in 2007-2011 Station Capacity, MW Commissioning date Mosenergo (3 rd power generating unit of CHPP-27, CHPP- 1,325 2007–2008 21, 4 th power generating unit of CHPP-27) TGC-1 CHPP-7 50 September 2009 Mosenergo, CHPP Pavlovsky Posad 16 December 2009 WGC-6, SDPS-24 420 June 2010 TGC-1, first power generating unit of CHPP-14 180 October 2010 *Not including capacities TGC-1, HPP chain 121 July 2009–February 2010 decommissioned TGC-1, CHPP-22 450 April 2011 **To be commissioned in 2011 TGC-1, HPP chain** 31 July 2011 Kirshskaya SDPS upgrade** 800 November 2011 Source: Gazprom’s data Mosenergo, CHPP-26** 420 2011 5 GAZPROM’S POWER GENERATION STRATEGY
Operating Results of Gazprom’s Power Generation Assets In 2010 the total increase in power generation made up 6% versus 2009 Power energy, Thermal energy, billion KWh million Gcal 2008 2009 2010 6 GAZPROM’S POWER GENERATION STRATEGY
Financial Results of Gazprom’s Power Generating Assets Receipts EBITDA Net profit RUB billion +29.0% +30.7% +17.4% +15.7% 2008 2009 2010 Results under IFRS 7 GAZPROM’S POWER GENERATION STRATEGY
Projected Status of Gazprom energoholding by 2020 Strategy implementation and power generating assets consolidation will transform Gazprom energoholding into a major European integrated company by 2020 Average rate of 30% proceeds growth (2007–2010) 25% Projected status 2020 20% 15% 10% Cost effectiveness 5% according to EBIT (2007–2010) -10% 0% 10% 20% 30% 40% Source: Gazprom’s data, strategic analysis GAZPROM’S POWER GENERATION STRATEGY 8
Results of Shareholders Meetings in WGC-2 and WGC-6 The Annual General Shareholding Meetings of WGC-2 and WGC-6 took place on June 21, 2011. Shareholders of both companies voted for a merger between WGC-6 and WGC-2. Other agenda issues were approved as well. The newly elected Boards of Directors are comprised of: WGC-2 WGC-6 1. Denis Fyodorov, Gazprom 1. Denis Fyodorov, Gazprom 2. Anatoly Gavrilenko, LEADER 2. Oleg Savelyev, INTER RAO UES 3. Alexey Mityushov, WGC-2 3. Ilnar Mirsiyapov, INTER RAO UES 4. Damir Shavaleyev, Gazprom neftekhim Salavat 4. Anatoly Gavrilenko, LEADER 5. Oleg Tarasov, SO UES 5. Alexey Mityushov, WGC-6 6. Pavel Shatsky, Gazprom energoholding 6. Damir Shavaleyev, Gazprom neftekhim Salavat 7. Igor Golenischev, Gazprom 7. Irina Korobkina, Gazprom 8. Irina Korobkina, Gazprom 8. Pavel Shatsky, Gazprom energoholding 9. Artur Trinoga, Gazprom 9. Mikhail Khodursky, Gazprom energoholding 10. Mikhail Khodursky, Gazprom energoholding 10. Lyudmila Sergeeva, SO UES 11. Denis Kulikov, Investor Protection Association 11. Igor Golenischev, Gazprom GAZPROM’S POWER GENERATION STRATEGY 9
Merger between WGC-2 and WGC-6: Benefits for Shareholders - The merger will create Russia’s leading thermal power generating company, the synergetic effect may achieve RUB 7.8 billion in 2011–2015 according to the most conservative predictions. - Later on, the cash flow of the integrated company will be additionally increased due to the accession of Adler CHPP. - As a result of the merger, the leader of Russia’s thermal power generation industry will be set up. The company’s liquidity is expected to grow, while the amount of debt capital will diminish. United company’s indicators Capacity, GW Proceeds in 2010, RUB billion 96.5 48.6 9.2 17.9 47.9 8.7 WGC-6 WGC-2 + WGC-6 WGC-2 WGC-6 WGC-2 + WGC-6 WGC-2 Source: Gazprom’s data GAZPROM’S POWER GENERATION STRATEGY 10
Merger between WGC-2 and WGC-6: Benefits for Shareholders Growth potential for WGC-2 and WGC-6 shares makes up 62% and 72% accordingly versus comparable analogues Multipliers of similar Russian Multipliers of companies EV/IPC, USD/kWh EV/IPC, MCap, EV, Company USD million USD million USD/kWh 340 320 WGC-1 2 248 2 087 212 WGC-2 1 701 1 725 198 193 WGC-3 2 411 1 033 124 WGC-4 5 364 5 364 591 Enel WGC-5 3 034 3 781 432 WGC-6 1 360 1 710 187 Average* 340 Average Median Average Median* 322 (WGC-2 and WGC-6) (market) (market) *Exclusive of WGC-2 and WGC-6 Source: companies’ data (RAS, first quarter of 2011), Bloomberg (June 8, 2011) 11 GAZPROM’S POWER GENERATION STRATEGY
Gazprom’s Priorities for Further Progress in Power Industry At the next stage Gazprom is planning to take actions on optimizing the asset management structure and improving its operating results 1. Completion of merger between WGC-2 and WGC-6 2. Investment program execution 3. Operating results optimization 4. Further asset consolidation 5. Entry into new markets 12 GAZPROM’S POWER GENERATION STRATEGY
THANK YOU FOR YOUR ATTENTION! PRESS CONFERENCE ON THRESHOLD OF GAZPROM’S ANNUAL SHAREHOLDERS MEETING JUNE 22, 2011
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