The Status of Russian Sulphur in the Global Market.Oil Refining 8% Ore Leaching Industry 2% The Pattern of Sulphur Production in Russia Sulphur Production in Russia 2 The Status of

The Status of Russian Sulphur

in the Global Market.

Andrey Kremnev

Gazprom Export LLC

Sulphur 2011, Houston, November 7-10, 2011

Gas Industry (Gazprom OJSC) 90%

Oil Refining 8% Ore Leaching Industry 2%

The Pattern of Sulphur Production in Russia

Sulphur Production in Russia

The Status of Russian Sulphur in the Global Market 2

0

1000

2000

3000

4000

5000

6000

7000

2008 2009 2010 2011 2012 2013 2014 2015 Th

ou

s.t

Outlook of the Sulphur Production Dynamics 2008-2015

Ore Leaching Industry Oil Refining Gas Industry (Gazprom OJSC)

Gazprom

dobycha

Astrakhan

LLC

72%

Gazprom

dobycha

Orenburg

LLC

18%

Total production growth in all

industries 2011 to 2015

+ 0,8 mln.tons

The Status of Russian Sulphur in the Global Market

The setup of the Gazprom Group Sulphur Production and

Sales

Gazprom OJSC, the parent company Central Planning of the offtake of Sulphur,

produced by its Subsidiaries

Sales - 98% of all Sulphur, exported by Russia

Gazprom export LLC (100% subsidiary)

Gazprom sulphur LLC (subsidiary of Gazenergoset OJSC)

Production of 5,9 mln.tons - 90% of all Sulphur, produced in Russia

Gazprom dobycha Astrakhan LLC - 4.8 mln.tons (100% subsidiary )

Gazprom dobycha Orenburg LLC - 1.1 mln.tons (100% subsidiary)

Main volumes of Sulphur

produced are exported

Main volumes produced are

sold at the domestic market

The sole exporter of the goods

produced by the Gazprom Group

(Sulphur included)

Specialized agent of Gazprom

OJSC majoring in domestic

sulphur supplies

С Е Р А

А С Т Р А Х А Н Ь

3

Chemical Industry 76%

Paper-pulp Industry

11%

Woodworking 5%

Mining 4%

Metallurgical and Construction Engineering

3% Other 1%

4

Sulphur Consumption in Russia

With 6,6 mln.tons of Sulphur produced in Russia in 2010 the

consumption amounted to 2,5 mln.tons (surplus of 4,1 mln.tons left

for export)


0

1000

2000

3000

4000

2008 2009 2010 2011 2012 2013 2014 2015

Th

ou

s.t

Outlook of the Sulphur Consumption Dynamics in Russia 2008-2015

Consumption Growth 2009 to 2015

+ 1,4 mln.tons

Fosforit LLC (Kingisep) Evrochem -

Belorechensk Mineral fertilizers OJSC

Shcekinoazot OJSC

Voskresensk Mineral

Fertilizers OJSC

Balakovo Mineral Fertilizers LLC

Ammofos OJSC, Cherepovets

Meleuzovskie Mineral Fertilizers

OJSC

Metahim CJSC, Volkhov

Azot OJSC, Kemerovo GHK BOR

CJSC

Biysk Oleum Plant PPGHO OJSC, Krasnokamensk Apatit OJSC, Apatity

The main Sulphur Consumers in Russia

Sulphur Consumption Pattern in Russia

by industries

5

Utilization

Worldwide Sulphur overproduction outlook for the year 2015 and further on stimulates us to consider different alternative ways to use Sulphur, including its burial ground disposal


21%

50%

29%

Production by types of Sulphur in 2011

liquid formed crushed

6

Production

Gazprom dobycha Astrakhan LLC – abt.4,8 mln.tons


0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

2008 2009 2010 2011 2012 2013 2014 2015 Th

ou

s.t

Outlook of the Sulphur Production Dynamics within 2008-2015 .

liquid formed crushed

Pro

ductio

n d

ecre

ase

by 2

5%

,2-4

q

.

0

1

2

3

4

5

6

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

mln.t

Dynamics Graph of production, sales and stocks

stocks (start of the year)

production

sales

7

Deliveries


forecast

Due to limited capacity of the domestic market most of Sulphur is

exported

0

1 000

2 000

3 000

4 000

5 000

2005 2006 2007 2008 2009 2010 2011 (est)

Thou.t

Sulphur Export by types of product

formed

crushed

79%

21%

Standard Segments of Sulphur Deliveries

export

domestic Storage capacity

about 4 mln.t

Only technological stocks

8

Shipment from the Plant


Shipments are subject to seasonal changes. They increase during navigation (April thru November) and decrease in winter to rail deliveries only

-

100 000

200 000

300 000

400 000

500 000

600 000

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

Total

Rail

Water

River Navigation Period

9

Logistics


The export of Sulphur is performed by means of rail and water transportation through sea and river ports using diversified logistics schemes

Buzan Port

19 км

916-1271 км

1621-1955 км

2590 км

Ust-Donetsk Port

Temruk Port (МК-14-10)

Russia:

Ust-Luga Port

Ukraine:

Nikolaev Port, Ilyichevsk

Southern Direction (Tunisia, Israel, Morocco, Brazil and others)

Northern Direction (Morocco, Brazil, China, South Africa and others)

Russia:

Kavkaz Port

10

Logistics (Ports and Terminals)

In its diversified logistics scheme Gazprom export LLC uses Russian shallow-water ports (Buzan, Ust-Donetsk, Temruk); Russian Sea port (Baltic Sea – Ust-Lugs); Russian Sea port (Black Sea - Caucasus) with transshipment at the Roadstead; Ukrainian Sea ports (Black sea - Ilyichevsk, Nikolaev).


In 2008 – 2010 the maximum volumes of Russian Sulphur transshipped in each of the ports in different years reached: - Using rail transportation: Ilyichevsk (dwt.40thous.t) – 0,86 mln.t Nikolaev (dwt.42thous.t) – 0,73 mln.t Ust-Luga (dwt.70 thous.t) – 0,49 mln.t - Using river barges: Ust-Donetsk (dwt.5 thous.t) – 1,17 mln.t Buzan (dwt.5 thous.t) – 1,91 mln.t Caucasus (dwt.75 thous.t) – 2,44 mln.t

11

Logistics


Due to a certain shortage of deep-water ports servicing Sulphur at the South

of Russia (Black Sea), construction project for a multi-functional universal

terminal has been developed at the Taman Peninsula (Tuzla)

The Project, developed under Russian

Government’s supervision , anticipates

investments of over 1.5 billion USD for the

construction of a universal (coal, grain, fertilizers,

sulphur, iron-ore concentrate, etc.) deep-water

port:

Cargo turnover - up to 66 mln.tons/year

Sulphur transshipment – up to 5 mln.tons/year

Design Planning - 2011-2012

Construction - 2013-2016

12

Geography of Deliveries

Gazprom export has a diversified structure of the Sulphur

distribution at the market


Since 2008 Sulphur

has been delivered to:

Morocco, Tunisia,

Brazil, Senegal,

Lebanon, Lithuania,

Belarus, Jordan,

Israel, USA, Italy,

China, Egypt, Ukraine,

Spain, Finland and

others

13

Regional Sulphur Distribution / Total Deliveries

Key

markets:

Morocco,

Tunisia,

Brazil,

Israel

In 2003-2011

the share of the

Russian Sulphur

at the key

markets reached

20 to 90%

depending on

the region.


46%

22%

6%

4%

2% 4% 1% 4% 2%

9%

Morocco Tunisia Brazil

Israel Lebanon Jordan

USA Senegal Belorus

58%

6%

11%

5%

4% 6%

4%

3%

Morocco Tunisia Argentine USA Brazil Israel Lebanon Jordan Senegal Chile Finland China China (off-spec)

2010

2011

2010 - around 4,8 mln.tons

delivered to offshore consumers

(5,0 mln.tons – total export incl. CIS)

2011 – about 3,5 mln.tons

are to be exported offshore (3,1 mln.tons already shipped as of today)

2012 – only 3,2 mln.tons

for offshore export (~10% decrease)


Thanks for your kind attention!

Documents

The Status of Russian Sulphur in the Global Market.Oil Refining 8% Ore Leaching Industry 2% The Pattern of Sulphur Production in Russia Sulphur Production in Russia 2 The Status of