Website of the President of Russia: Commissions and Councils

Meeting of the Commission on the Strategy for the Development of the Fuel and Energy Industry and Environmental Safety

2018-08-29T20:09:44+04:00

The President held a meeting of the Commission on the Strategy for the Development of the Fuel and Energy Industry and Environmental Safety in Kemerovo.

Before the meeting, the President inspected scale models of the facilities planned for construction in Kemerovo. In particular, Vladimir Putin was shown a project of a cultural, educational, museum and exhibition complex, which will house branches of the Mariinsky Theatre, the Russian Museum, the Gnesin Russian Academy of Music, a multi-purpose concert hall. He was also updated on the construction of the Kemerovo presidential cadet academy.

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Excerpts from transcript of meeting of the Commission on the Strategy for the Development of the Fuel and Energy Industry and Environmental Safety

President of Russia Vladimir Putin: Colleagues, good afternoon.

We are holding a meeting of the fuel and energy industry development commission in Kuzbass for a reason. We all understand that Kuzbass is one of the world's largest coal mining centres, I mean global centres. And, among other things, yesterday was a professional holiday for those who work here and in the industry as a whole – Miners’ Day. I want to congratulate the miners personally and on behalf of all those present here on their professional holiday, wish them good health, all the best, and success in their difficult work that our country needs so badly.

Colleagues, today we have a packed agenda. Together with business representatives and regional leaders, we will discuss the current situation in the Russian fuel and energy industry, consider the key areas and guidelines for the development of the industry and, of course, evaluate how the earlier decisions of our Commission are being implemented.

The fuel and energy sector plays an important part in increasing the pace and quality of the country’s economic growth. It accounts for about 22 percent of the country's GDP, almost 60 percent of exports and 40 percent of federal budget revenue.

Amid a complex market situation and artificial external constraints in recent years, the Russian fuel and energy sector was able to effectively overcome the challenges facing it. As of the end of last year, Russia once again confirmed its status as a leader in the global energy market. We are number one in the world in terms of oil production, and second in gas production. Russia is among the leading countries in electricity generation and coal production; we are the world’s fourth largest producer of electricity and the sixth largest coal producer in the world.

Russian energy companies are investing more in expanding their capacities. Last year, investment increased 10 percent to 3.5 trillion rubles.

New oil and gas fields are being developed, and the transport infrastructure is being expand accordingly. However, I want to emphasise that the provision of gas supply in the region, including rural areas, is not moving fast enough. We were to the Chernigovets open-cut mine with the acting governor just now. There, we met with a small group of employees and one of them had a question about provision of gas supply. This is a natural question, because the progress is, unfortunately, not moving as quickly as we had hoped. There’s need for coordination between the federal authorities, Gazprom, independent producers and the local authorities because the ”last mile“ is usually the problem. We need to coordinate everything. We need better dynamics on this issue. I propose that we discuss this particular matter at one of the commission’s subsequent meetings.

Russian energy companies are maintaining consistent positions on foreign markets. So, natural gas exports have been growing at record levels for two consecutive years now. We need to develop the Russian energy sector’s export potential.

Notably, competition on the global energy market has become noticeably sharper in recent years, so it is extremely important to use our competitive advantages efficiently, to diversify supply routes, and establish ourselves in new markets.

As we are all aware, the Asia-Pacific region is one of the most attractive areas with growing demand for a wide range of goods, which opens up great opportunities for Russian companies.

In this regard, I would like to note one important initiative. In June of this year, during my visit to China, I agreed with President Xi Jinping on organising a Russian-Chinese energy business forum. I am confident that this platform will expand our cooperation, help us find new areas for mutual investment, and launch promising projects in the energy sector. The first forum is planned for November in Beijing. I know that about 40 companies have already expressed interest from the Russian side. Prominent representatives of China are also expected to attend. Please report on the progress of this forum today.

Russia is certainly open to cooperation with all countries in the East and the West. It is important not only to gain new markets, but also to feel confident in our traditional markets. Today within the framework of our Commission, we will specifically discuss the prospects for the development of such cooperation in coal distribution. Last year, domestic companies exported more than 190 million tonnes of coal. This makes Russia the third largest coal exporter in the world. The current market situation gives Russia an opportunity to expand its presence in the global coal market, consolidate its positions and increase our country’s share. To take advantage of these opportunities, we need to resolve a range of problems – we have to increase the profitability and safety of coal mining and modernise production in traditional coal mining regions (Kuzbass, Khakassia, Yakutia) and in the new ones (eastern Siberia and the Far East).

We also need to improve logistics, expand export channels, especially the capacity of the railways, for which coal companies are anchor shippers. As you know, the development of the eastern railways, the bottlenecks on the BAM and the Transsib are viewed as priority objectives for the development of Russia's transport infrastructure in the coming years.

I would like to stress again that there needs to be ongoing coordination, the mutual adjustment of planned coal production increases with Russian Railways’ development programmes and seaport investment projects. It is important to ensure a balanced, integrated approach to expanding the capacity of the railways, to take into account the needs of the coal mining industry, as well as the shippers of bulk and bulk container products. We need to consider creating mutual obligations between carriers and buyers with long-term contracts in this area. This approach will serve the successful implementation of both shippers’ and transport companies’ investment plans.

Let me point out another matter of principle. We should solve development issues in coal mining with the aid of cutting-edge technology that must be efficient but, above all, must improve the miners’ working conditions and safety. We should introduce more advanced standards in the industry and pay more attention to environmental protection, especially at ports and coal-handling places. Concern for people’s lives and health as well as environmental welfare in cities and towns must be our unquestionable priority. The entire chain must become environmentally sound, from the mining to the handling of coal at sea ports.

I ask the commission to monitor these issues constantly and propose that it consider an audit of how mineral developers are complying with the approved models of deposit exploitation, the legal base and its use in environmental and industrial security in order to improve legislation in this sphere.

And another topic before we proceed to the reports: modernisation of thermal power plants. In recent years, we have managed to significantly increase our heat generation capacity, upgrade its structure and improve plant stability and efficiency. The agreement mechanism on capacity supply has played the key role in this process. It was based on investors’ responsibilities to introduce new capacities after privatising the energy facilities on terms that were rather comfortable for businesses.

Today we are speaking about resource-saving environmental stations, which will replace the obsolete and unreliable equipment with low ecological standards and cost effectiveness. In addition, we should do this using the equipment produced in Russia as widely as possible, including 100 percent localisation if our foreign partners are the original producers. We must identify stable sources of funding modernisation in the thermal energy sphere. I ask the Energy Ministry to focus on this issue and analyse all the market reserves.

In addition, I would like to stress once again that capital investment must not be passed along to consumers. Today certain regions lobby for unjustified rate increases. As a result, the money does not go to the development of the regional energy sphere but rather to certain people close to the decision-makers. There is a proposal to change this situation by introducing a standard rate-setting principle. We will also discuss this approach today.

This is what I wanted to say at the beginning. Thank you for your attention. Mr Novak, the floor is yours. Please, Mr Novak.

Minister of Energy Alexander Novak: Mr President, colleagues,

A number of fundamental decisions and strategically important documents on promoting the coal industry have been adopted over the past several years. One of the first, the Long-Term Programme for the Development of Russia’s Coal Industry to 2030, was approved by you, Mr President, here in Kuzbass, in January 2012.

Certain measures have been taken to promote this programme and, most importantly, all stakeholders, such as ministries, departments, coal and energy companies, Russian Railways and the administration of the coal regions joined their efforts to achieve that goal. All this has had a significant effect, and the coal industry has successfully overcome a period of a major fall in prices on global markets and is expanding steadily.

I will give you several numbers. From 2012 to 2017, Russian coal production increased by 15.5 percent to 410 million tonnes. This year, we will produce over 420 million tonnes, and we are likely to surpass the record set in the Soviet Union in 1988. The volume of coal preparation is also expected to increase to 195 million tonnes, up 28 percent. The investment will reach 130 billion rubles a year, and taxes will amount to over 100 billion rubles.

As a result of the measures taken on your instruction, Mr President, the production targets for 2030 have already been achieved. That is, we are moving ahead of the long-term development programme. To compare with the updated programme of 2014, we are three years ahead of schedule. So, of course, the programme itself needs to be adjusted, and more ambitious goals need to be set regarding commissioning capacities, the quality of coal, and the share of exports in supplies.

Coal mining is shifting to a safer, open method. The share of this kind of mining has increased from 70 to 75 percent in five years. Production is becoming concentrated at the most efficient enterprises. The load on the coal face and mining transport equipment is growing. Coal miners’ productivity has increased by a factor of 1.5 over the past five years. This year alone, the Russian miners set seven world records.

The capacities in traditional coal regions, primarily in Kuzbass, are being modernised. New coal mining centres are being created in eastern Russia, and coal fields in Khakassia, Transbaikal, Yakutia, Khabarovsk Territory, and Sakhalin are being developed. Since 2012, over 40 percent of production capacities were upgraded, nine modern mines were opened, 14 open cuts and nine coal preparation plants have been commissioned. New centres of coal mining in eastern Russia account for one-third of the newly commissioned capacity, which is also important and is included on the list of our priorities.

Fundamental changes to ensure occupational safety, especially in terms of reducing the risk of major accidents, mandatory degassing, and introducing multifunctional safety system at mines had a positive effect. Suffice it to say that in 2017 the industry had the lowest specific index of fatal injuries and the highest spending on safe conditions in its history. Following the work of the interdepartmental commission sponsored by the Ministry of Energy, coal companies developed medium-term measures to improve industrial safety in 2016 and are now implementing them.

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Now, a few words about further plans regarding the strategic development of the coal industry. It is fundamentally important for us to assess prospects for strengthening Russia's position on global export markets. Exports have been a key driver of the industry's growth over the past decade, and will remain such a driver.

The analysis of the situation on global coal markets shows that as the world's third largest exporter of coal Russia has a new window of opportunity in the medium term.

Last year, global coal consumption resumed its growth, including in Southeast Asia, India, Turkey and a number of other countries. The international trade in energy coking coal increased and exceeded 1.3 billion tonnes.

According to experts, the steady growth in demand for coal, primarily in the Asia-Pacific region, will continue to 2025–2030 and amount to at least 100 million tonnes.

It is in our interests to make the most of this potential additional demand, especially since Russian coal has significant competitive advantages due to its high quality, high caloric content, low sulphur, nitrogen and ash content which can be seen from the steady increase in Russia’s share in the international coal trade. Over the past 20 years, it has increased by over 3.5 times and reached 14 percent.

According to our estimates, we expect the export of coal from Russia to exceed 200 million tonnes this year: about 100 million tonnes to the west and about 100 million tonnes to the east. Right now our prospects for the western direction seem limited due to the EU countries’ plan to decrease coal consumption and the forecasted competition from Colombian and US suppliers. In general, we should say that today Russia’s share on European markets accounts for about 40 percent, which is rather high.

Speaking about the eastern direction, our share there is 9.3 percent, and we see an opportunity to double our exports by 2025 and increase Russia’s share to 20 percent. In general, our total share on the global market will increase 6 percent. We have the necessary production capacities to reach these export volumes.

The Energy Ministry together with colleagues from other federal bodies and coal producing companies have determined the probable increase in production according to the approved programme. The numbers may reach 560 tonnes by 2025 against the approved 460, and 590 against 480 by 2030. This means 23–25 percent growth. In order to do this, we need almost one trillion roubles of private investment in coal mining.

Our colleagues from coal companies say that they are ready to invest that much to develop production capacities. First of all, an increase in production is expected in Kuzbass, Khakassia, Yakutia, Tyva and the Khabarovsk Territory; we are also factoring in projects in the Trans-Baikal Territory, Buryatia and the Irkutsk, Novosibirsk and Amur regions. Of course, the main boost for this investment was the decision to set long-term rates for rail transport until 2025 that you approved at the end of last year. This is especially important and we have discussed this many times, considering the high share of transport costs in coal pricing.

Based on the forecasted demand increase on the coal market and businesses’ confirmed investment plans, we have determined the total volume of coal exports from Russia to the east. They can increase from 100 to 207 million tonnes by 2025, including up to 195 million tonnes carried by railway. Of course, here we return to the key issue you also mentioned at the beginning of the Commission’s work today: removing restrictions on the transport infrastructure’s transit capacity considering the need to supply it with electricity.

The first stage of the Eastern Range's development programme being implemented by Russian Railways involves increasing coal export haulage in the eastern direction to 125 million tonnes by 2019. The second stage involves boosting the volume to 180 million tonnes by 2024.

Through the efforts of the Ministry of Energy, Ministry of Transport and Russia's regions together with coal companies and Russian Railways, the project envisages, at the latter's own expense, further expanding the infrastructure's carrying capacity in the eastern direction to 210 million tonnes, including coal cargoes of 195 million tonnes by 2025. We propose making this task a target parameter of the second stage of the Eastern Range railway development programme today.

The long-term development programme envisages investments amounting to about 700 billion roubles for developing the infrastructure in the eastern territories. These figures are reconciled and substantiated.

Assessments have been made of the capacities of coal terminals at the ports in Russia's northwest, south, and the Far East. According to our estimates, the rate of development of these capacities will allow us to fully supply the expected volume of Russian coal exports through private investment.

The fastest capacity growth will be observed at ports on Russia's Pacific coast, given the proximity to core growing markets. Major transport hubs will be the Vanino-Sovgavan hub in the Khabarovsk Territory and southern Primorye Territory.

While addressing this issue, we also paid special attention to the development of energy infrastructure. It is expected that the investment programme of the Rosseti company and its subsidiaries will allocate funds for this purpose as well.

Mr President, colleagues, The practical implementation of these proposals will become a major investment process in the next few years to come. This is fully in line with your executive order on developing railway and energy infrastructure signed in May. Total investments will amount to over 1.5 trillion rubles during six years, including the investments up to one trillion rubles in the production and processing of coal, construction of ports, purchasing railway cars, as well as some 700 billion rubles to be invested by Russian Railways and investments in the development of the Eastern Range's electrification. This will have a massive multiplier effect on other economic sectors as well, such as metallurgy, heavy equipment and transport manufacturing, and shipbuilding, increase tax revenues to the federal and regional budgets, and create a foundation for our country's long-term socioeconomic development. Our proposals are also reflected in the Commission's draft resolution.

Mr President, I ask you to support the outlined approaches to solving more ambitious infrastructure tasks and the corresponding adjustment of the programme for the coal industry development.

CEO and Chairman of the Executive Board of Russian Railways Oleg Belozerov: Mr President, colleagues,

Transporting fuel and energy sector cargos is one of the most important components of our work which accounts for almost half the volume of the cargo carried by Russian Railways and about 60 percent of the turnover.

We ensure dynamic growth of coal transport in close cooperation with shippers and consumers, as well as industry regulators. This year alone, coal loading increased by an estimated 4.5 percent on 2017. Over the past 15 years, total coal loading increased by almost 1.5 times. Much more dynamic growth was recorded in the eastern direction where it amounted to more than 3.3 times over the same period.

The importance of coal for Russian Railways can be seen in the following figures: since 2003, the share of coal in freight turnover of railways has increased from 28 to 43 percent while the share of the fuel and energy complex in freight turnover has already exceeded 70 percent.

A high degree of coordination among transport participants, such as shippers, railways, operators and dock workers, helps increase the share of Russian coal on the international market.

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Mr President, in your Address to the Federal Assembly and the May Executive Order you set the task for the Russian economy of becoming one of the world’s top five largest economies in terms of purchasing power parity and to increase the gross product per capita by a factor of 1.5 by 2024. We estimated the necessary dynamics of cargo transport for this purpose. The average annual growth rate of loading should be 3.8 percent, and coal is the cargo which can support such an increase in the future. The forecast righty allows us to consider coal one of the most important drivers of economic growth. We fully agree with the forecast provided by the Ministry of Energy, according to which the demand for coal will steadily grow in the long term. This uptrend is also confirmed by coal companies and port terminals.

For smooth transit of cargoes of the fuel and energy complex, priority development of the railway infrastructure and streamlining of traffic are required. We are actively working in all these directions. I would like to draw your attention to the fact that in some cases the railway investment cycle takes longer than our colleagues, that is five to seven years for design planning, then about five years for construction, while our colleagues can develop faster. We should implement our ideas faster, so as not to become a bottle neck. Meanwhile, our colleagues know that we go to great lengths, which includes last year’s 9.2 percent rise in labour productivity and over six percent this year.

In 2012, we launched modernisation projects for the Baikal-Amur Mainline and the Trans-Siberian Railway to implement key decisions made at the meeting chaired by you, Mr President, here in Kemerovo. Implementation is proceeding ahead of schedule. Mr Novak said that the deadline was set for 2020 and we will try to hit the target in 2019.

Today we can see that coal exports are increasing and the traffic flow geography is changing. As you said, according to the May Executive Order, we mapped out a plan to increase the transportation capacity to 180 million tonnes. Still we need to do our best to carry more, so we agreed upon 195 million tonnes of coal only. At the same time, as you noted absolutely correctly, we will also increase the volume of container traffic.

The project of upgrading the Baikal-Amur Mainline and the Trans-Siberian Railway. The total investment volume up to 2025 is 696 billion rubles. At the same time we need to accelerate design planning, which is 3.4 billion rubles that are included in the budget. It is important that we develop the whole network looking beyond the dynamically growing Eastern Range and overhaul all key directions of transportation to the ports of the Azov-Black Sea basin, to the North-West and others.

In total Russian Railways’ investment programme until 2025 accounts for more than 7 trillion rubles. We need corresponding sources to implement the draft programme. We believe that the best solution would be to use our own profit because it also creates a multiplier effect: one ruble of ours attracts three rubles of loans that we can invest in the infrastructure development. To make the most effective use of the profits for investment, we propose paying dividends only for the preference stock, transferring the profit into the investment projects approved by the Russian Federation Government.

In the opposite situation, if we do not apply this mechanism, it will result in a reduction in the investment programme. We suppose that about 330 million tonnes of cargo would remain where they are. And we are very scared of becoming a bottle neck for global logistics processes. In addition, we understand that the state will be able to earn more from the results of infrastructure development than dividends, because this is how the multiplier effect is created in the economy.

Of course, the new infrastructure will require the corresponding development in the electricity sphere as well. We work in close cooperation with the Energy Ministry and we are grateful to our colleagues who are coordinating the development even in the first stage of the Baikal-Amur Mainline with us. In addition, the company is one of the largest consumers of diesel in Russia and pays excises in the corresponding volume. This sum will come to about 120 billion rubles in 2018–2025. The excise revenue is invested into constructing and repairing roads that Russian Railways’ rolling stock does not destroy.

At the same time, we have the problem of crossings between roads and railways, such as the construction of overpasses and grade-separated crossings. We asked the road fund to allocate money for this especially. We discussed this with the Ministry of Transport; we discussed the priority overpasses.

We have also prepared a number of proposals included in the draft protocol, such as giving us an opportunity to provide for accelerated financing to develop project documents because it would take a lot of time and issuing an instruction for us to draft a set of measures to prevent local deficits in the universal rolling stock in the Russian Railways’ network using electronic platforms. This means digitalisation. We could use more carriages from our operators to increase the cargo.

Mr President, our main problem today is not the limited freight base, but the limited throughput capacity of the infrastructure. Therefore, we asked that the draft protocol reflect the following: we need measures to improve the mechanism for taking and executing the shippers' orders for the transport of goods in conditions of limited infrastructure capacity. We spoke with both the Anti-Monopoly Service and with our colleagues; we will need to make a number of changes to ensure non-discriminatory access to our services.

For my part, I am absolutely convinced of the need for faster development of infrastructure to create conditions for the dynamic growth of the Russian economy. We are ready to implement the long-term programme drafted in the interests of all market participants.

I want to ask you to support this. Thank you all for your attention.

Vladimir Putin: Mr Belozerov, two questions.

The first one about the shortage of rolling stock and the use of online platforms. You and I have discussed this many times, and you reported to me that this can and should be done. Naturally, everyone supports that. But I met with Mr Fedyayev [president of the Siberian Business Union holding company, chairman of the board of directors of Chernigovets] today, and you know what he tells me? He says he is shipping coal, while the railcars travel back empty. The shortage of rolling stock could be minimised significantly if one were to use the cars available efficiently, including those from private companies.

Oleg Belozerov: That is exactly what we stipulated in the protocol. On the way back, the rolling stock should be sent to the nearest locations via the online dispatch platform to take more cargo.

Vladimir Putin: All right, very well.

And the second question our colleagues have already raised today, is the Severomuysky tunnel. What do you think about this project?

Oleg Belozerov: I believe now we need to start the initial feasibility study. I just want to remind you what the Severomuysky tunnel is. It took the Soviet Union 25 years to build that tunnel. At present, only 16 pairs of trains run through it, which means 16 million [tonnes of cargo] – it is the BAM bottleneck. Accordingly, to develop the Russian Far East, we will need to increase traffic. If we build a second tunnel, it will enable us to transport not 16, but 100 million tonnes of cargo. This is what we need. But there will be a natural limitation arising from the duration of construction, because it is 15 kilometres long, and even with modern technologies, as we report to you regularly, it will take around ten years. Therefore, we need to launch the study as soon as possible, the feasibility study, and discuss how to approach this issue.

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Meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Safety

2015-10-28T09:57:17+04:00

Vladimir Putin chaired a meeting of the Presidential Commission for the Strategic Development of the Fuel and Energy Sector and Environmental Safety.

In particular, the meeting participants considered ways of adapting the Russian fuel and energy complex to new economic conditions, prospects for the implementation of a number of investment projects and measures to reduce the industry’s dependence on imported equipment.

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President of Russia Vladimir Putin: Good afternoon, colleagues.

Today we will consider the current state of the national fuel and energy complex and compare notes with the CEOs of major Russian companies. We are talking about the oil, gas and coal industries. Power supply requires separate consideration at a future Commission meeting.

Before we begin, I would like to focus on a number of important matters. In the past few years, the Russian fuel and energy complex and its base industries have developed a good pace largely thanks to the decisions we made in the previous years. I am referring primarily to incentives for the development of fields in East Siberia and the shelf, as well as the stimulation of deep oil refining and the launch of the production of high quality motor oils.

These measures paved the way to unique discoveries of new reserves, including those on the Russian Arctic shelf, to enhance oil production, increase investment into deep oil refining and generally ensure overall positive dynamics of qualitative change in the fuel and energy complex. I would like to remind you, just by way of information, of the Karskaya oil and gas-bearing province discovered on the Russian Arctic shelf in 2014 with an overall resource base of about 87 billion barrels of oil.

Today Russia is among the world leaders in oil and gas production. In 2014 Russia produced 527 million tonnes of oil. This is slightly less than Saudi Arabia and slightly more than the United States: 12.9 percent for Saudi Arabia and 12.3 percent for the United States.

The production of natural gas in Russia in 2014 amounted to 578 billion cubic metres. We are implementing major projects to enhance the country’s export potential. The Russian fuel and energy complex is actively introducing new energy-saving environmentally friendly technologies. Thus, we have optimised the use of such an important resource as associated petroleum gas.

In the first six months of this year, for instance, we used 86.5 percent of associated gas, which is a 10.3 percent increase against 2012. We may not be moving at the rate we would have liked to, but we are gradually resolving the task we set ourselves a few years ago concerning associated gas.

Currently the fuel and energy complex accounts for 40 percent of all capital investment in the country. Our common goal is to retain the positive investment dynamics in the sector. We must bear in mind that investment into the fuel and energy complex has a positive effect on the entire national economy: it means additional jobs and orders for associated industries.

At the same time, the situation on the world energy markets is unstable, as you know better than anyone else. Thus, compared to mid-2014, oil prices have gone down by more than 50 percent. Gas prices followed with an almost 20 percent drop by the end of the first half of this year. World coal prices continue falling: from a peak in 2011, they have gone down by an average 50 percent. As a result, the crisis in the world energy sector forced international companies to cut investment into complex low-profit projects, which could have been implemented in conditions of higher prices of hydrocarbons.

For your information, though I am sure you know this already, but I would like to remind you that by international expert assessment, the reduction of world investment into the oil and gas sector might reach $300 billion in 2015. Over the past five years, the total losses incurred by producers of hard to extract shale oil in the United States amounted to about $150 billion, while in the first six months of this year they lost $62 billion. Obviously, this is not the first or the last crisis on the world market.

The key issue today is funding the fuel and energy complex investment programmes so it can continue acting as the driver of the national economy as a whole. We need to keep our eyes on the development horizon and ensure there are no pauses in investment. We must ensure the implementation of the long-term strategic goals facing the industry and, if necessary, adjust the draft national energy strategy along with the general development plans for the oil and gas sector and the coal industry development programme. By the way, the draft energy strategy envisages a significant growth in investment into the fuel and energy complex.

I would like to ask that you approach this issue with the utmost responsibility, indicating the sources of financing for investment programmes and determining measures for ensuring their success. As you know, investment cycles in the fuel and energy sector are fairly lengthy. The decisions made today will provide initial results in 5–7 years at the earliest.

Here is where I want to draw attention first and foremost. It is imperative to ensure that infrastructure projects with participation by the state are linked with energy companies’ investment programmes, focusing personnel and financial resources there.

Second, the fuel and energy sector traditionally plays a leading role in the federal budget’s revenues. With this in mind, we need to very carefully assess the efficacy of decisions we make concerning the industry’s tax burden and the impact they will have on the nation’s economy overall. We must strive to ensure that additional withdrawals from the industry do not lead to cuts in energy companies’ investment programmes and do not have a negative multiplier effect on related industries.

I know the discussions that were held in the industry, and indeed, I agree to an extent with the Finance Ministry, but we certainly need to constantly monitor the situation developing in the sector. Let’s return to this issue at an upcoming meeting of the Commission, after monitoring the situation, to see what is happening in the industry.

Third, we must increase the level of localisation for technologies and equipment that are needed by Russian companies and are in demand among domestic consumers. Naturally, it is important to also abide by the price-quality parameter and, moreover, we need to increase transparency of these orders by all mineral developers, regardless of the structure of their share capital. I ask that you report today about what has been done in this area.

Corresponding financial mechanisms should play an important role in developing import substitution of equipment for the fuel and energy sector, including relevant loans, leasing, and interest subsidies for equipment manufacturers. I ask participants in this meeting to share their thoughts on the efficiency of these instruments.

Fourth, it is imperative to continue our work to diversify exports of Russian energy resources. It is important to not only maintain our position in the traditional regions where we have a presence, but also enter new markets and know how to respond flexibly to changes in trends. In recent years, the growth points have been moving to nations in the Asia-Pacific Region. In spite of the fluctuations we are all aware of, this is a stable trend. The states in this region are becoming key hydrocarbon consumers. This is true of the liquefied natural gas market as well. Russia has the opportunity to increase its share of the LNG market and the planned large-scale projects in the LNG field should certainly be implemented.

Furthermore, it is imperative to continue work to improve stock exchange mechanisms in trading oil, oil products and natural gas. A year ago, we launched trade of natural gas on the St Petersburg International Mercantile Exchange, in fulfilling the decisions of our Commission. Over that period of time, the volume of trade came to 6.8 billion cubic metres. In developing exchange trade, it is imperative to create independent national price indicators for main types of fuel and energy products.

And in this respect, I would like to touch on another fundamentally important issue for developing the fuel and energy sector as well as the economy overall. I am talking about finally stopping the practice of using foreign currencies in domestic settlements. Mr Siluanov [Finance Minister], our law prohibits such payments, but what really happens? The prices for transhipment of crude oil and oil products in Russian ports of Novorossiysk, Taman, Ust-Luga, Kozmino, Primorsk and others are either set directly in US dollars or are denominated in US dollars in the online system practically in real-time mode. And this, of course, is unacceptable, it is in direct contradiction to current legislation. I do not understand, what are the monitoring agencies doing in this case?

We need to start serious work on the complex issue of strengthening the role of the ruble in payments, including for Russian fuel and energy sector products. National currencies should be used more widely in transactions with nations that we have active trade with. We are constantly discussing this with colleagues at an interstate level and we certainly need to strive to ensure a transition to this type of payment. Of course, I am fully aware of what our companies’ interests are. We need to do this carefully, so that the economic actors do not suffer – on the contrary, it should be beneficial to them.

And finally, we must systematically improve the competitive environment in our domestic market, first and foremost the oil products market. We need to stop the production and trade in counterfeit goods. Their circulation harms not only the companies that have made serious investments in modernisation and production of high-quality fuel, but overall, it is defrauding the population, directly deceiving consumers. In this respect, today we will consider applying common requirements to all oil producers.

And in conclusion, I suggest that at our next meeting we take a detailed look at the issue of monitoring the execution of previous decisions and instructions.

Let’s discuss today’s agenda.

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Meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security

2016-07-09T17:24:53+04:00

Vladimir Putin chaired a meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security.

Items on the agenda included the next steps for developing the fuel and energy sector, the outlook for implementing various energy sector investment projects in Eastern Siberia and the Far East, and price formation on the domestic gas market.

Participants in the meeting included representatives of the Presidential Executive Office, Cabinet members in charge of economic development, heads of federal services and agencies, regional governors, and representatives of Russian energy production and supply companies.

As part of his working trip, Vladimir Putin also visited the Astrakhan State Opera and Ballet Theatre. The President attended a rehearsal, spoke with performers and musicians, and toured the theatre premises.

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Opening remarks at a meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security

President of Russia Vladimir Putin: Good afternoon, colleagues.

We are holding this latest meeting of the Energy Sector Commission to examine ways of boosting our energy sector’s potential in line with developments in our own economy and in the global economy.

Russian companies have been increasing production over the past years, developing new fields and improving the oil and gas transport infrastructure. The crisis signs on global markets and the volatility that goes with them mean that our task is to put in place the conditions that will guarantee Russia’s economic growth, including by using the energy sector’s potential. Above all, as we have discussed on many occasions already, we need to focus more on Eastern Siberia and the Far East and also ensure that our companies have access to the Asia-Pacific Region’s growing markets.

The opportunities promised by our energy sector projects are a key condition for resolving this task. As a sector that has solvent demand, the energy sector must serve as the base for creating a multiplying effect by acting as the anchor customer for equipment, services, technology, and localising production. Import replacement is not a cure-all, but at the same time, we all know that it can and must help us to guarantee reliable implementation of many of our projects.

Of course, we have no plans to abandon imports and give up our work with our reliable partners and our cooperation with the rest of the world. Companies must guarantee that contracts will be reliably executed over the long term.

There is no question that increased localisation of production and increased participation by Russian companies in equipment production and service provision are things we should and will support. We must be more active in ensuring conditions for production of the best types of world-class technology and equipment here on Russian soil. This includes using tax incentives and other support measures.

In short, I ask the Government to draft a programme of concrete measures for localising production, based on energy sector companies’ investment programmes. We need to expand the oil and gas production resource base in Siberia and the Far East. Development of new fields will play a very important part in satisfying demand on our domestic market and increasing export supplies to the growing markets in the Asia-Pacific Region.

Moving on, we long since began work to diversify our energy supply routes and have achieved some good results here. The agreements signed during the recent Russian-Chinese talks were clear evidence of this. Our priority task is thus to ensure that we have the necessary infrastructure for the energy sector’s strategic development in the east, which will bring Russian exports to the Asia-Pacific Region.

Of course this will require some reflection. We need to think about it. Is Gazprom here? Yes. I think that Gazprom will not have any objections to this. The Government and the Finance Ministry should look into the possibility of topping up Gazprom’s capitalisation to the cost of the new infrastructure’s construction. There are various possibilities here, including through raising investment, some of which could come from our partners in these projects. We have agreed on receiving a prepayment, an advance.

But we could take the option of topping up capitalisation, all the more so as in today’s world, endlessly building up gold and currency reserves carries its own risk. It is something worth thinking about in any case, given that the contracts we are talking about here are long-term and will definitely pay for themselves. This is a solid fact and this kind of practice would enable us to cement our position as a reliable and promising energy supplier on the biggest and fastest-growing world markets.

The second item on the agenda is the principles for price formation on our domestic gas market. This is an important issue. We have discussed it on numerous occasions in the past. Representatives of other sectors in any case are saying that the price formation methods for primary energy resources in some countries put their economies in a much more advantageous position than our economy’s real sector. This is something we cannot ignore of course. It is a very important issue and it is not by chance that we agreed to work on this matter at the Commission’s first meeting.

For my part, I want to note that the gas sector is certainly one of the foundations for the entire system because gas is the energy source used in many economic sectors. The gas price influences the overall state of the economy and affects the final cost of all goods and services, and so it plays a major factor in the country’s socioeconomic development.

Russia is one of the world’s biggest gas producers. Our gas market has been growing fast over recent years, the gas transport system is expanding, and new processing facilities are starting operation, including for processing accompanying gas. Our vast gas reserves are Russia’s major asset and competitive advantage. It is crucial that price formation for gas be transparent, economically justified, exclude unnecessary middlemen, and ensure guaranteed supplies for all consumers, including households.

At the same time, the gas price should encourage the needed modernisation and development in the gas sector itself and its production facilities, as well as the gas transport system. A competitive environment is largely already in place now in the production sector, and independent producers are working actively. Of course, we need to bring down the cost of gas transport and storage.

Of course, we must look at how all this functions under the conditions of a gas transport monopoly. I think we must agree that this is not an ordinary business, to put it lightly – if it is a business, then it is not a classical one, and this also needs to be examined carefully.

As for the ultimate price formation for consumers, whose share is quite significant – naturally, our domesticconsumers should not have to subsidise the transport of gas for export. We should look into this and consider it carefully. We must work to ensure we have a single gas transport rate in the domestic market for all users of the commongas supply system, including the owners’ group, i.e., Gazprom itself. If we assumewe should have a market price, then the main producer should not take advantage of its monopoly status in the transport market and should not abuse the fact that it also owns the gas pipeline system.

It is no less important to provide guaranteed access to the main gas pipelines through long-term contracts for all producers. We have already discussed this many, many times: although Gazprom sets such requirements for its foreign partners, it does not always act based on these principles with its partners within Russia.

We will need to continue our work to develop gas trade on the stock exchange. At the same time, gas futures purchased in the stock market should have guaranteed transport to the consumer under priority conditions. In this regard, it is imperative to develop a concept for developing a domestic gas market that will reflect all aspects and factors affecting pricing, both short-term and long-term, including taking into account processes of deepened integration and agreements with our partners in the Eurasian Economic Union.

I am confident that a competent, long-term gas policy will allow us to create new instruments for broadening the use of gas in the internal market and connecting more areas in the regions to the gas supply network, which will fundamentally change Russians’ living standards.

We should carefully monitor what is happening in the field of technological security. We need to give this the necessary attention and, certainly, ensure technological security for the gas transport infrastructure. The new document must take into account today’s realities as well – first and foremost, relating to the development of a gas pipeline system in Eastern Siberia and the Far East.

I have already said that this gas pipeline system is certain to expand following the signing of a long-term gas contract with China. Naturally, this will require serious investments. But the result will be worth it, and all of us realise that. New capacities will not only noticeably strengthen our positions in Asia Pacific Region markets. It is vitally important that they must help us supply gas to regions in Eastern Siberia and the Far East and provide powerful momentum for developing these territories.

The third issue on our agenda is closely related to resolving this challenge – namely, implementing the first major investment projects in Eastern Siberia and the Far Eastern Federal District. Today, we will look at Rosneft’s pilot projects in this region. Rosneft has long been working in eastern Russia. In 2013, its investment volume in energy projects was approximately 160 billion rubles [over $4.5 billion]. Investment volume for the company’s projects will total 1.5 trillion rubles by 2020.

In August of last year, at a meeting on Primorye Territory’s development, we discussed the project to create the Eastern Petrochemical Company, whose goal is to produce petroleum derivatives and petrochemicals for the Far East and Asia Pacific Region. Building such a large-scale company will create new jobs and have a positive effect on the region’s entire socioeconomic situation.

Another important project is the shipbuilding cluster on the basis of the Zvezda plant. It is currently being implemented with participation by a consortium of companies, including the United Shipbuilding Corporation (USC). The scale of our offshore projects will grow from year to year, and clearly, they will require a large number of marine vessels and specialised equipment. This is a good opportunity for the Russian shipbuilding industry to gain serial orders and enrich its experience working in the high-tech segment. We certainly cannot let this opportunity pass us by. We need the Far Eastern Shipbuilding Centre to become a general customer for all marine equipment for offshore projects with the goal of gradually increasing its share in ship construction and localisation to 70%.

I want to point out that the Far East Shipbuilding Centre is a company that includes participation by USC, as I already said, and many other major Russian businesses, including financial companies. We must do everything to ensure that it develops actively. We have always had great shipbuilding capacities in the Far East, and we need all this to become a global company; only then can we develop the Far Eastern Shipbuilding Centre and the USC overall.

I think these and other projects being implemented by Rosneft in the Far East must be included in corresponding federal targeted programmes. This is also true for the Fear East projects being implemented by other Russian companies, such as RusHydro, Gazprom, Transneft, Novatek, and so on, which we will look into at subsequent meetings of this Commission.

Today, we will also hold several videoconference sessions and speak with our colleagues at Rosneft’s Vankor Field, communicate with the Khabarovsk refinery, talk to Novatek’s Purovsky condensate processing plant and Sibur’s Tobolsk-Neftekhim enterprise.

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Meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security

2015-03-20T18:00:46+04:00

Vladimir Putin held a meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security.

Restructuring Russia’s coal industry, developing the domestic coal market, and modernising the necessary transport infrastructure were the subjects of discussion.

Mr Putin also spoke with workers at several coal producing companies via video linkup.

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Excerpts from transcript of Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security

President of Russia Vladimir Putin: Good afternoon, colleagues.

This is the first time the Commission on Energy Sector Development Strategy is holding an away meeting. It is not by chance that we chose to discuss the situation in the coal industry in Kemerovo. This region, as we know, is the industry’s historical centre and flagship.

Another meeting took place in Kemerovo 18 months ago, here in this very same hall I think, at which we took a detailed look at the many problems facing the coal industry. Based on that meeting’s results, we approved a long-term development strategy for the sector through to 2030. Today, we will assess how the decisions made back then are actually being implemented.

I note that the commission’s members do not include anyone from the coal industry. This is something we need to change. This is a commission on the energy sector, of which the coal industry is a key part, and yet it counts not a single coal industry representative among its members. Let’s think about this. I’d like to hear your proposals.

I will start with a very important issue, namely, restructuring the coal industry. Starting in 2008, more than 33 billion roubles [around $1 billion] were needed for carrying out social measures alone, and these funds were allocated. More than 7 billion was spent on land re-cultivation and environmental improvement work in different regions. I want to stress that we will continue to allocate funds for this work. We need to improve monitoring of their targeted and effective use. The big priority here is to resettle miners from out of old and dilapidated housing and from the Far North.

I also want to draw your attention to safety in the mines. We have taken special measures to develop modern Russian-made personal protection systems and life support systems for people working underground. I want to hear about what has been done so far, not much it seems to me, though the money was allocated, a whole billion, what’s more.

Regarding the overall situation in the sector, there were good results in 2012. Production, processing and exports all grew. New production capacity is being put into operation. Exports were up by 17 percent. But the domestic market, for all its huge potential, is still not developing, even though we decided 18 months ago to stimulate domestic coal consumption through developing coal-powered generation in the energy and housing and utilities sectors.

Of course, when you have a falling export market, developing the domestic market would be positive in every respect, but as I said, instead of developing it is at a standstill. Even worse, it shows a negative dynamic, unfortunately. Just look, coal consumption on the domestic market has dropped by 7 percent over the last 5 years, and preliminary forecasts suggest that this trend will continue in 2013. With the export markets in an unstable state, this makes the situation if not critical then certainly worrying to say the least.

Of course, we need to take into account the particular situation for and competition between the different energy resource types, but these are all issues that require a very pragmatic approach. Coal is the most effective local energy resource for a number of regions. We should speed up construction of coal-powered generating capacity in the Far East. The relevant decisions were already taken on this matter but, unfortunately, I have yet to see any real progress.

I stress too the strategic importance of building a power station, one designed for flexible subsequent capacity development, in Kaliningrad Region. Coal-powered generation could give this region its own reliable energy source. I have discussed this matter on a number of occasions already with my Government colleagues. There are several possible options here: liquefied natural gas and other types of generating capacity. But we should not just toss aside the coal option. We should definitely examine it too, weigh up all the pros and cons and give it all very thorough analysis, especially with the discussions going on in the EU on possibly restricting energy cooperation between the European Union and Russia. At least, we know about the plans to take the Baltic countries out of our energy ring, and this would leave Kaliningrad Region in a difficult situation, and so we need to take the needed measures in advance.

I ask the Government to examine without delay the possibilities for building new generating capacity, including perhaps at coal-fired power stations. We need to settle this issue. Mr Dvorkovich [Deputy Prime Minister], I ask you to reach a final decision on this matter within the next three months at the latest.

We can supply coal to Kaliningrad Region via the sea port. Establishing a closed autonomous system in this region would reduce the energy sector geopolitical risks that could arise at any moment. As I said, it would perhaps be the right thing to diversify this region’s energy sector so that it does not depend on just one primary source. In any case, this is something we need to think about carefully.

One of the weakest links in the sector’s technological chain at the moment is coal processing and enrichment. Of the more than 272 million tons of energy-producing coal mined last year, only 26 percent was processed.

Coal chemistry is another area. The Energy Ministry, Industry Ministry, and the Russian Academy of Sciences of course should all be involved in its development. The Government and the relevant agencies, coal companies and regions should all work on developing the domestic market. I ask you to come back to this issue too during the meeting today.

As for coal exports, we need to hold on to our markets, even with falling prices on world markets creating difficulties that you know better than I. If we loosen our hold here we will lose what we have and it will be very hard, if not impossible, to regain these markets later. We need to make maximum use of our competitive advantages. I note that prices on markets abroad have fallen around 20 percent on average.

In term of advantages, coal from Kemerovo Region is a much more environmentally friendly coal, but transport still remains a huge problem. We need Russian production of heavy load rolling stock to be able to resolve this problem. We need of course to stimulate the market for these products, make it attractive for potential consumers, and put the necessary attention into modernising the transport infrastructure, both the railways and ports. We have already outlined plans to increase throughput capacity of the Trans-Siberian and Baikal-Amur Railways. Let’s look too at which other railway sections and port approaches require development. Some of them are already stretched beyond their capacity now.

I note too that average speed of industrial freight traffic on our railways is extremely low, and we are seeing a steady increase in the share of transport costs in the cost of coal production. The current system of railway tariffs needs improvement. It must be predictable and allow consumers to estimate their own transport costs. The railways are themselves a big energy consumer and could use coal-powered generation to bring down costs. This would all require study of course, but it would be worth in any case looking into the issue, and I ask you to do so. You transport coal to the coal-fired power stations, say, and then have the railway use the resulting energy too. Let’s reflect on the tariffs here.

Another issue is companies that build stretches of railway for common use. Flexible tariff agreement models are required in this case. If an investor builds a railway and then has to pay the same costs as everyone else, what incentive is there to invest? This requires some serious thought. There is nothing so unusual here, nothing anti-market. This applies in equal measure to the other structural monopolies too. It concerns not just the railways but also pipeline transport and the electricity grid. Overall, we need to move towards long-term tariff regulation for rail freight transport. I stress that we need to support the coal companies that put considerable money into developing rail and port infrastructure.

I would also like to draw your attention to the following. Since our coal companies’ resource base is located in Russia, the profit centres and therefore, tax imposition, should also remain in Russia, and not somewhere abroad, offshore. I want to point out that it isn’t only the Russian leadership or the Russian Government addressing this issue this way. I want to stress that throughout the world, in all industrially developed nations, the issue is being raised in precisely this manner.

Throughout the world, a civilised and pragmatic approach has already been created, and taxes are paid in the nation where the business activities are actually taking place. I suggest we stick to this rule, especially when it comes to mineral resources, our national wealth. Both the management of these assets and corporate property must remain under our Russian jurisdiction.

Furthermore, companies in the coal sector are developing using their own funding and face challenges in modernising production, as well as creating new extraction and processing capabilities. Today, we need additional incentives that will help companies increase investments and lower their own expenditures.

Support for the coal industry should help create new jobs, increase tax revenues and encourage greater company transparency. Over the course of five years, we have discussed eliminating taxes on mineral extraction for companies cultivating low-income coal deposits in hard-to-reach areas with underdeveloped infrastructure. I am asking the Government to ensure the adoption of incentive measures for companies working on such new deposits. At least new ones.

We have talked many times about highly necessary measures needed in various sectors, including the coal industry. And the coal industry is not an exception. These are, in essence, enterprises which are starting their work in a green field. We have never collected all the taxes, and we never will, unless there are incentives to launch business activities. So I am asking the economic bloc of the Government and the Finance Ministry to assess this situation accordingly and find an overall systemic approach to these types of problems. Naturally, we need to free companies which are starting their work from scratch from the obligation to pay taxes for a certain period; different intervals have been suggested, including five-year and ten-year grace periods. All this requires calculation. But those calculations need to be made, and we need to make a decision.

Practice demonstrates that multiple years go by before companies can take advantage of these tax breaks – no less than two years. Unfortunately, at this time, they are forced to collect various types of paperwork. And in this respect, I would like to once again draw attention to the fact that we must end this excessive bureaucracy. Otherwise, we will be bogged down unable to implement projects to develop new deposits in Eastern Siberia, the Far East and major deposits in, say, Tuva.

I feel that the Natural Resources Ministry must broaden license content as much as possible so that companies do not lose time collecting the necessary documents; we need to optimise this work.

The problems I listed speak to the need to once again analyse and improve the provisions of the long-term programme for this sector’s development – and to do so right now. We need to determine whether the indicators and target figures outlined within it are current and realistic, and bring these improvements into accordance with trends in the domestic and global markets. We must also synchronise the implementation of the programme with measures stipulated by the master plan for developing electrical power facilities, transport strategy projects and the strategy for developing port infrastructure. We have a deputy prime minister who is responsible for this entire set of issues. Mr Dvorkovich, I would like to draw your attention to this. This is, of course, a large-scale project, involving an immense amount of work, but your challenge is to coordinate all these areas. This needs to be done.

It is also imperative that we similarly discuss the course of the pricing process in the coal sector and the factors that influence the occasionally unjustified price increases for end consumers. In accordance with the decisions made, all transactions with coal products are registered on the commodity exchange. But this is just the first step – registering transactions is good, but insufficient. Now we need to broaden the use of the exchange mechanisms themselves; we need to finally start doing real trading on the stock exchange. It is also imperative to create conditions to exclude illegitimate intermediaries that supply coal products, particularly supplies for government needs and companies with state participation. Intermediaries are a natural element in a market economy, but sometimes, intermediaries also naturally occur in places where they are entirely unnecessary.

In conclusion, I suggest we return to the question we already touched on during our Commission’s meeting last October – I mean training high-level and top-notch professionals to work in the coal industry.

I am asking you to present suggestions on the prospects for creating large regional education and research centres based at existing universities in the fields of mining and geology and fuel and energy.

In addition, our agenda today includes the now-traditional issue of fulfilling decisions made by the Commission at previous sessions. Let’s begin our work.

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Vladimir Putin: Colleagues, I think that the issue we discussed today needs no further endorsement. This is a highly important sector – and not just because it employs thousands upon thousands of individuals. It is important for the overall situation in energy.

In addition to being a traditional sector in our nation, it is also promising and important for the Russian Federation’s economy, and it will be maintained for many years. We must think about how to develop it, how to provide jobs, how to make it more profitable and more competitive.

Many nations – indeed, industrially developed nations – are now once again trying to establish coal production. You are familiar, for example, with the German economy; they refuse to use nuclear energy and are currently considering how to use coal generation.

We have every opportunity to examine the development of our neighbours’ situation, analyse everything, weigh our options and make timely, thought-through decisions.

I am confident that working as we did today, working together – we can certainly disagree at times, but we share the same goal – we will find solutions and implement them.

Thank you very much.

Excerpts from videoconference with workers at coal enterprise

Vladimir Putin: You mentioned Miners’ Day. We celebrated it just yesterday and I sincerely congratulate all miners and mine workers on this professional holiday. I wish you success, happiness and new achievements – and you certainly have some in your sector; the Minister spoke about them and they are demonstrated through facts.

Indeed, it is true that our extraction volume is the highest in all recent history, and perhaps including the Soviet era as well. In terms of our productivity level, we have already advanced quite far compared even to Soviet times.

We are renewing production and new staff members are entering the workforce. Naturally, we will further discuss all these issues and all problematic areas – and there are many of them in the sector. But a holiday is a holiday, so I congratulate you all and wish you success.

This work is very important and quite necessary for our nation. It is no exaggeration to say that it is not just associated with greater expenditures, but also, unfortunately, with a great deal of risk. And the people who come to this sector and devote their lives to it deserve special attention and respect.

Happy Miners’ Day! I wish you all the very best!

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Meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security

2015-03-20T18:01:02+04:00

Vladimir Putin held a meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security.

The meeting was examining the resource base’s current state and development issues, including developing Russia’s continental shelf, drafting a state industrial security policy concept, and energy exports.

The meeting also examined measures for guaranteeing transparency at energy sector companies with state stakes.

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Speech at a meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security

President of Russia Vladimir Putin: Colleagues,

We have a very busy agenda for today’s meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security.

Before we start our work though, you have all heard about the passing of Rem Vyakhirev, former CEO of Gazprom and a person who did a great deal to develop Russia’s energy sector, the gas sector in particular of course, but also the energy sector in general. I ask you to honour his memory now.

(Minute of silence)

We will start today by looking at the resource base’s development and effective use. Investors show great interest in our fields, and there is also a lot of interest in financial investment in this sector.

Our archaic estimation methods meant that Russia’s resource base has been undervalued. This has a direct impact on how attractive our energy sector companies are for investors. The market actors – the energy companies and the investors – have to have accurate information about reserves, and our natural assets must have a proven, clear and objective value.

”Our archaic estimation methods meant that Russia’s resource base has been undervalued. This has a direct impact on how attractive our energy sector companies are for investors. Our natural assets must have a proven, clear and objective value.“

We are to develop and approve new methods for classifying reserves that follow international standards as closely as possible. We discussed this matter just before with our Government colleagues, company representatives, and the Commission’s secretary. The specialists think that our estimation system has a lot of positive aspects, and our task will therefore be to bring it as close as possible to the methods our colleagues abroad use and make it more comprehensible for them.

I think it is also time to look at declassifying data on reserves. These kinds of confidentiality rules are obviously outdated now, when we have foreign investors working in the Russian energy sector and our companies’ reserves go through international audits. We have nothing to keep secret here, after all, nothing to hide, and so these rules are only harmful.

Further, all subsoil resource users must comply with the field development rules and fully extract reserves across the whole territory and not simply ‘skim off the cream’. Above all of course, this means using the right technology.

Let me give an example. If you take a field and just start with uncontrolled extraction of all the gas, the oil will go to waste. As for extracting oil using hydraulic fracturing and other rather barbaric techniques, you know what this leads to. The specialists are well aware of the consequences.

We should introduce obligatory rules for developing and exploring fields, and of course fields should go through a very thorough comprehensive evaluation right at the first stage of project development. All factors influencing production effectiveness should be taken into account.

In this regard, I ask you to look at the matter of granting Rosnedra [Russian subsoil resources agency] the powers to carry out state evaluation studies. The central commission for approving project feasibility studies should become a collegial body that will include representatives from the ministries and agencies, the companies, and also environmentalists, scientists, and experts.

”It is time to look at declassifying data on reserves. These kinds of confidentiality rules are obviously outdated now, when we have foreign investors working in the Russian energy sector and our companies’ reserves go through international audits.“

I stress the point that our final objective is to ensure that our fields operate as effectively as possible and coordinate their development with regional, local, sector, and infrastructure development plans and strategies. At the same time, we must decide how to replenish our resource base and step up geological prospecting work in yet little studied but promising regions.

Of course, reality also confronts with the question of how to encourage development of fields with reserves that are difficult to extract. When doing so we will take objective criteria alone as our guideline. The specialists are very familiar with these criteria. The tax breaks that were approved last spring apply to this category of fields. Let’s discuss today how well these mechanisms are working in practice.

It is important to remember that extraction from these kinds of difficult fields creates greater demand for scientific studies, advanced technology and innovative equipment, as well as creating new jobs in the metals sector, chemicals industry, and machine building. The projects underway in Tatarstan, Western Siberia and Sakhalin demonstrate just this kind of multiplying effect.

The next matter on the agenda is that of increasing and diversifying Russian gas supplies to the world markets. This is a big issue for Russia. Last year, as you know, shrinking markets and lower gas exports cost the Russian budget billions of dollars.

But the forecasts all predict that global demand for gas will grow over the coming 20 years, above all in Asia, but I think demand will grow in Europe too, especially now that some of Europe’s main industrially developed countries are renouncing nuclear energy. The liquefied natural gas market is set to become more and more important.

Russia’s share of the global liquefied natural gas export market is only 3.6 percent at the moment. If we do not follow an active policy we will risk losing this market almost entirely to our competitors. We are to remember too, that building modern LNG facilities takes up to 5–7 years, sometimes even up to 10 years. You all know that these are very capital-intensive projects too, of course.

”Our final objective is to ensure that our fields operate as effectively as possible and coordinate their development with regional, local, sector, and infrastructure development plans and strategies. At the same time, we must decide how to replenish our resource base and step up geological prospecting work in yet little studied but promising regions.“

We have to put all the right conditions in place for developing this sector. This includes reflecting on possible gradual liberalisation of LNG exports and organising production of the required technical equipment here in Russia. Let’s discuss these matters too, today. We will continue with this subject in the future too and address it in concrete and consistent fashion.

Colleagues, the next matter on the agenda is the new state policy concept for regulating industrial security. The Government already received the instructions to begin this work. The rules currently in place are obsolete rules from last century. I want to draw your attention to the following points.

First, we have to put in place a reliable and transparent mechanism for ensuring safe operation of hazardous production facilities.

Second, the legislative base in industrial security must not be in contradiction with the laws regulating the energy sector’s operations.

Third, we should set clear criteria and distinctions of hazardous production facilities and put them into categories.

Finally, we need to set strict liability for company executives and also for designers and experts.

We should considerably raise expert organisations’ level of corporate legal liability. We must particularly thoroughly examine the issue of their licensing and put in place a transparent system of requirements and supervision for their operation.

But we must not create excessive red tape. We have been working constantly to get rid of administrative barriers. We must not create new and unnecessary ones now, but at the same time, we cannot ignore areas that the state must be able to monitor.

I want to hear from you today on how the new government industrial security policy will resolve these issues, and also on the draft law on industrial security, its provisions, and the deadlines for their implementation.

Colleagues, let me say a few words about the electricity sector. We have discussed the problem of payments discipline in the sector a number of times, but we haven’t made an inch of progress since then it seems. Of course, things are changing, but very, very slowly, and we have yet to see the hoped-for results.

What’s more, last year’s results show that total electricity debts rose by more than 60 percent. There are quite simply flagrant examples. The Energostream company is one notorious case. I think seven criminal cases have already been opened against it. The managers have all fled somewhere and no one can seem to be able to catch them.

Other companies also have many problems. OGR-2, for example, used higher physical amounts of work and costs than was really the case to calculate its tariffs. Problems continue at MRSK North Caucasus, and there are similar violations during construction of generation facilities. More than 12 billion rubles [$400million], including money received as part of extra emissions credits, went into building the Zagorskaya-2 Power Station. We have to look in general at how these companies are spending the money and what the management is doing.

”It is important to remember that extraction from these kinds of difficult fields creates greater demand for scientific studies, advanced technology and innovative equipment, as well as creating new jobs in the metals sector, chemicals industry, and machine building. The projects underway in Tatarstan, Western Siberia and Sakhalin demonstrate just this kind of multiplying effect.“

A contract for more than 6 billion rubles [$200 million] was signed with Gidrostroy, the general contractor, and 12 billion rubles were spent on purposes that clearly did not match the declared needs. I will send these documents on to the law enforcement agencies later and they can take a closer look. There are also problems with so-called ‘unswitchoffable’ customers, who abuse their special position and simply don’t pay for their electricity.

In order to settle this debt problem, I remind you that the Commission approved last July a new electricity payments system that introduced strict control over bringing down costs, including partial restrictions on their use with the help of special bank accounts. The Government was instructed to draft the relevant laws.

The new payments system was to begin operation in the Central and Urals Federal Districts, but little progress has been made so far. I want to hear from you today what are the problems here, and why are we encountering these kinds of delays in decision making?

We clearly must break the vicious circle that has formed over the past years. Given that the introduction of new electricity payment methods concerns directly the regions’ activities, I propose that we discuss this issue at a State Council meeting. The Market Council [for organising effective wholesale and retail trade of electricity and generating capacity] proposes taking even tougher measures to get the payments system in order and tighten discipline. Let’s discuss their proposals too, today.

We also are to significantly improve control over enforcement of court decisions. There are cases when companies and all kinds of intermediaries pile up billions in debt, do not settle their bills and ignore court decisions. What are the bailiffs doing? I ask the bodies concerned to analyse this work and report.

I also want to say a few words about the situation with state companies in the energy sector. More than a year ago, I gave instructions aimed at making these companies’ activities more transparent, but not all of these provisions have been implemented properly and in full.

For example, the relevant legislative framework has not been put in place yet, and there is still no mechanism for removing state companies’ top managers from their posts, including for refusal to declare information about participation in other organisations’ business activities.

Information on final beneficiaries is either incomplete or not provided at all. All-round cooperation between the law enforcement agencies and the other state bodies has also not been properly organised yet.

In conclusion, I want to say once more that not all of the Commission’s decisions have been implemented. In this regard, I ask the Commission staff to work constantly on making sure that decisions are actually implemented, and report immediately on all cases of red tape and bureaucratic delays.

Meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security

2015-03-20T18:01:11+04:00

Vladimir Putin chaired a meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security. The issues discussed included draft Energy Security Doctrine, the current trends in production, processing and marketing of natural gas, and the prospects of electric power cooperation between Russia and the European Union.

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President of Russia Vladimir Putin: Good afternoon, colleagues,

This is the second meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security. Our first meeting held in July 2012 showed that this is an interesting and useful format. We have a new venue for deep, multifaceted discussions of key, strategic matters pertaining to energy sector’s development.

Our today’s agenda consists of three main issues.

First, we will discuss the draft Doctrine of Russia's Energy Security, which was prepared by the Energy Ministry. This document aims to address a wide range of tasks, including ensuring a reliable supply of energy to consumers, innovative development of the fuel and energy sector, energy efficiency of all sectors of the Russian economy and non-discriminatory access of our exporters to foreign markets.

Regular renewal of enterprises’ production assets and maintaining these assets in a safe and efficient condition are our unquestionable priorities.

We will formulate strategic planning documents on the basis of the Doctrine and implement a long-term energy security policy. The Doctrine outlines a system of indicators for the assessment of key groups of internal and external risks. Today, we will conduct a comprehensive analysis of the Doctrine’s provisions, and I think it should be adopted in November.

In the future it will be necessary to monitor and assess the main indicators outlined in the Doctrine, thus ensuring control over the situation in the energy sector so that timely decisions are made on strengthening our country’s energy security.

The second item on our agenda is also directly related to energy security and the long-term prospects of strengthening Russia's position in the global energy markets. I am talking about current production trends and the proactive response to these trends in production, processing and sale of natural gas, which we will talk about today.

In recent years, we have seen a change in the energy market configuration. There is no need to explain this to you; you are all aware of the situation and understand what is happening. European countries, for example, are consistently working to create a common gas market. They are diversifying their sources of supply and adopting internal decisions that are not always coordinated with their main partners and are not always right, in my opinion, from the point of view of international law, but such decisions are made. We are in dialogue with our partners, and I hope that we will reach an acceptable consensus, but nevertheless we must consider these trends.

There is tough competition among gas exporters for the long-term and short-term contracts. However, energy consumption is rapidly growing in the Asia-Pacific region: China, Japan, which has increased its share of hydrocarbons since the Fukushima tragedy, India, and Russia’s other eastern neighbours are large and promising consumers. Given the existing transport infrastructure in Russia, this opens up new opportunities for the exporters of domestic energy resources.

Another important global trend is the growth of trade in liquefied natural gas. Such major players as US and Canadian companies have already begun to move in this direction.

I would like to note that more and more countries are adopting new gas production and processing technologies. For example, in the United States, as you know, new technology is used to increase the cost-effectiveness of shale gas production. That has caused some serious environmental problems, but, nevertheless, the technology continues to be used. The sale of the by-products makes it profitable even given the low domestic prices in the United States. Politicians, experts and the business community are all talking about a shale revolution. In 2011, according to our data, the output of shale gas in the United States rose to 214 billion cubic metres.

All of us know this well; we are not novices on the gas market and understand its laws. Therefore, we must be very prudent in our actions and at the same time very flexible.

In this regard, I ask Gazprom to conduct the necessary analysis and report to the Commission on the main principles of its gas export policy. The Commission must be briefed on the way the principal Russian gas company is planning to organise this work because a great deal in the Russian economy depends on its effectiveness. The Energy Ministry must make adjustments to the gas industry development plan to 2030 and our Eastern Gas Programme, and report on the results to the Commission.

Our priority, and I want to stress this, must be the domestic market, meeting the needs of the Russian economy, businesses and consumers, deep processing of raw materials, the development of gas chemistry and the maximum use of all gas components and by-products, as well as market diversification, taking into account the potential of Asian countries, as I have mentioned, and gas delivery methods.

An important area that will dominate in the future is the development of domestic gas processing and its use in the production of motor fuel. Gazprom should incorporate a special subsidiary [for that purpose] in the near future, or, perhaps, it has already been incorporated, and in that case we must support it in every way.

Despite the measures that are already being taken, much of associated gas continues to be wasted. About a quarter of the volume produced is simply burnt off: that is 24.6%, or 16.2 billion cubic metres. This is more than the total consumption of some European countries in a year.

Let me reiterate: we must take full account of the current trends in the global gas market in cooperation with our international partners, to find new mutually acceptable forms of cooperation, to be closer to the end users. Taken together, these steps will increase the export potential and competitiveness of Russian energy resources and enhance the status of our country as one of the leaders in the global export market.

Finally, the third item on our agenda is cooperation with the European Union, our closest partner and major consumer, in the electricity sector.

Russia has traditionally supplied large amounts of electricity to EU countries. First of all, this applies to our closest neighbours, Scandinavia and the Baltic region.

Thus, in 2011 we exported about 5.5 billion kilowatt-hours of electricity to the Baltic States. This is more than half of the total energy consumed by a country like Lithuania, and meets more than 20% of the total consumption of the Baltic States. Importantly, electricity from Russia is supplied to our partners without any interruptions even in the winter periods of peak demand.

Today it is essential to consolidate the principles of intergovernmental cooperation in the energy sector with the EU countries and the EU as a whole, to develop a set of measures that will improve the competitiveness of the Russian electricity sector, and not only to keep our traditional markets, but also to expand to new markets in the near future.

Colleagues, today I would like to hear your proposals on priority steps in all these areas. Thank you very much for your attention. Let’s get to work.

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Meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security

2015-03-20T18:01:19+04:00

Vladimir Putin chaired the first meeting of the Presidential Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security, which focused on the Commission’s priority areas of activity.

The Commission was established in accordance with the President’s executive order. Its objectives are to coordinate the activities of executive bodies at all levels and organisations on the development of fuel and energy complex, ensuring industrial, energy and environmental security, sustainable use and efficient replenishment of the country’s mineral resources.

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President of Russia Vladimir Putin: Good afternoon, colleagues,

You have such a formal atmosphere here, which is absolutely appropriate considering the gravity of the issues the newly established Commission will be working on and the importance of the energy sector for the economy today and in the future.

This is the first meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Safety. The Commission is in charge of strategic coordination among all components of the Russian energy sector and promoting increased efficiency.

Let me emphasise straight away that the Commission’s efforts must never be perceived as a replacement for the Government’s work. The Government has its own prerogatives under the law, and this must and will be respected.

The Commission was created to coordinate our joint efforts in this crucial sector of the Russian economy, involving the direct participants of the energy market, scientists, representatives of public organisations and law enforcement agencies in order to analyse strategic development issues with the direct participation of the Government, which will be responsible for adopting the final decisions on various matters. Please keep this in mind.

On June 15 the Commission’s regulations and members were approved. In preparation for the first meeting, the Commission’s members submitted a number of proposals. I think that they should be analysed and taken into account in the formulation of the current and long-term agenda. Today, we must focus on the priorities for future work.

We are all aware and proud of the fact that Russia is one of the leading global energy powers. We have large energy reserves and impressive facilities for their processing and transportation. Our task is to use this bounty for the benefit of the Russian people, to promote economic development and social services, and strengthen the export potential of our country.

I want to highlight that in recent years the fuel and energy sector not only made a full recovery from the global economic crisis, but has also shown a growth pattern. Oil production has stabilised: it is about 510 million tons (you know this since all of you are experts here), and natural gas production in 2011 reached a historical high, exceeding 670 billion cubic metres.

The long-term foundation for the development of the fuel and energy sector is in place, the energy strategy up to 2020 is being implemented, the oil and gas industry development plans have been adopted, as well as the distribution of energy facilities and the coal industry development programme.

Experts estimate that in the coming decades energy demand, as well as the demand for derivatives will remain stable, both within Russia and in the global markets. Our goal is to provide a clear and uninterrupted operation of all mechanisms in the fuel and energy sector and decide on the parameters of its development. In this regard, I would like to draw your attention to the following key points.

First. We must expand the geography of hydrocarbons production in the coming few years. We have repeatedly said that the rate of raw materials replenishment is insufficient. We must actively start work offshore, while at the same time maximising the returns on existing projects.

Geological prospecting and exploration work must become more effective. This will strengthen Russia’s resource base and attract new investments, technology and the latest scientific developments to this area. This topic should be considered at the Commission’s future meetings.

I should add that the Government has already adopted a number of decisions aimed at stimulating the production of hydrocarbons on the shelf. We hope that this will give a strong impetus to the emergence of new oil and gas regions and the development of the industry as a whole.

Second. The fuel and energy sector of tomorrow is above all a high-tech industry. We have often been told that we are all too dependent on oil (and this is certainly true to some extent) and that we must develop high technology (this is also true), but we must not forget that today's oil and gas sector is nothing other than a high-tech industry. Both production and processing should use modern equipment based on the latest technologies, including energy efficient and resource saving technology.

The third important task is the expansion of international cooperation in the energy field. It is obvious that its economic attractiveness is very high. We all know that well. Moreover, we expect that it will grow even more after Russia’s accession to the World Trade Organisation. Therefore, we must make greater use of various forms of cooperation, more actively attract foreign capital and advanced technology, and follow the route of exchanging assets in the fuel and energy sector and related industries.

We already have such examples, they are widespread and appear very attractive and impressive, even by global economic standards. I have already mentioned (and you know about such examples in the electricity sector), that we have asset exchanges in the gas industry and in the petroleum industry. It is essential to provide stable rules of the game for our energy markets. This will enable foreign businesses to make long-term plans and implement large-scale investment programmes.

In turn, Russian companies should be more ambitious in offering their services on the international energy markets and more energetic in searching for new niches. In general, work in this area is quite active, and many colleagues here are making good progress in the markets of third countries. But I am sure more can be done.

Special attention will be given to developing energy cooperation with CIS countries. In this regard I want to note that the CIS is our special priority in many areas, both in our foreign policy and in the economy. I very much hope that energy industry professionals will do their best to promote our interests and the interests of our partners in order to accelerate the integration processes in the former Soviet Union.

Today I would like to hear your reports on advanced joint projects with our partners in the Commonwealth, including the possibilities of achieving a new, mutually beneficial partnership with individual countries. For example, in Kyrgyzstan we have such large-scale projects as the construction of Kambarata-1 hydroelectric power plant, Upper Naryn cascade of hydropower plants, as well as the construction of a coal thermal power station to guarantee energy supply in the autumn-winter period, when the risk of water shortages is high. Just recently, the President [Almazbek Atambayev] and I discussed those projects, and I know that very active analysis of all these areas of cooperation is currently underway.

I think that in future the Commission should discuss specific projects of strategic importance and with strong investment potential.

Next. Russian oil and gas companies are operating in global energy markets and are often leaders in attracting foreign investment. About 25% of the industry are currently owned by foreign investors.

I want to draw your attention to this, ladies and gentlemen: not all countries where the energy sector is as vital as in Russia, where we can say that it plays the most important role in the economy, have such a state of affairs. In this sense we have largely liberalised the state policy on fuel and energy: 25% is owned by foreign businesses. Look at the other major oil-producing countries. Which of them have the same situation?

The state will continue to pursue the policy of privatising state assets in line with the previous decisions (I want to stress this) and certainly taking into account the special significance of the fuel and energy sector’s contribution to the federal budget and energy security. We must pay special attention to this. Naturally, environmental protection should be at the forefront in deciding such policy matters.

I would like to ask you that in the course of our discussion today you state your views on the participation of Rosneftegaz oil and gas company in privatisation projects. I have followed the expert discussion on this subject closely. Of course, strictly speaking, the participation of Rosneftegaz in the acquisition of state companies’ shares can’t be termed privatisation in the true sense of the word. Nevertheless, we must proceed from the fact that we will act in compliance with the existing legislation with regard to the shares which Rosneftegaz could acquire and their amount. That is the first point.

Second. We must bear in mind that certain government decisions that were previously adopted have limited the revenues of some of our companies, and now they are in need of additional capitalisation. You should assist them in obtaining reasonably cheap loans to develop their activities.

And third: it does not mean that we should stop at Rosneftegaz’ participation in privatisation. Absolutely not. Let us discuss this topic today, too.

There is another aspect that we should pay attention to. Our objective is clean privatisation; this process must be completely transparent and honest with respect to our citizens and the state.

For example, large-scale projects in the electricity sector are being launched. Experts say that the current market capitalisation of RusHydro, for example, is $7.5 billion, which, of course, is too low. We know what kind of projects they are going to launch soon. We know the Boguchanskaya Hydroelectric Station and the Sayano-Shushenskaya Hydroelectric Station will be completed and the Far Eastern assets will be consolidated, so in the coming years the company's capitalisation will grow to $40 billion. So we cannot sell now something that will absolutely certainly be worth $40 billion for $7.5 billion!

We must take all of that into consideration. I believe that the approach to these issues should be fundamental, market-based and totally balanced, and we must proceed from the reality of the economic situation in the world and in Russia.

I stress that the sale of state-owned shares should make economic sense for the country and bring economic and systemic benefits. It is hard to tell which is more important; both the systemic and economic effects are vitally important, and the fiscal benefits must be absolutely obvious. Therefore, we must proceed, I repeat, from the real situation on the market.

Another matter that I would like to draw your attention to is the need to improve the management of companies with state participation. I would like to suggest that such companies consider increasing dividend payments, as Rosneft has already done. I do not insist on this, but I want you to focus on this matter and analyse your potential.

Next. We need to create the conditions for transparent functioning of the entire economic chain in the electricity industry, in particular, to bring order to the payment system. I would like to hear your concrete suggestions on ways to improve the payment system at all stages of pricing. Let me remind you that we have discussed this issue on numerous occasions, yet the consumers have not seen any benefits so far.

Finally, we must focus on protecting the environment as we develop the fuel and energy sector. All new projects must comply with the current environmental regulations and standards, and pass the relevant inspections. This logic must be incorporated in the new territorial development programmes.

I hope that the Commission will actively contribute to addressing these problems, and that its work will be filled with concrete strategic and systemic content, and in some cases, for example, those related to resource management, it is time to move on from discussions to legislative consolidation and final decisions.

What do I mean? Strategic deposits of federal importance (with reserves of over 70 million tons of oil and over 50 billion cubic metres of gas) should be allocated through auctions, without tenders. Tenders are inefficient and, most importantly, they are not transparent. There is another aspect, one that is purely fiscal. As we all know, the budget gets higher revenues from tenders, but still the transparency of the procedures is more important.

In conclusion, I will repeat: our task is to build a high-tech fuel and energy industry. It should become a factor in the growth of Russian economy, stimulate the creation of new and highly skilled jobs, and in general, work for the benefit of national development. If our efforts are consolidated, we are certain to achieve this goal.

Let us proceed directly to the discussion.

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Establishment of the Presidential Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security

2015-03-20T18:01:23+04:00

Vladimir Putin signed Executive Order On the Russian Federation Presidential Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security.

The order establishes the Commission and names its membership. Mr Putin will chair the Commission, and Chairman of Rosneft Igor Sechin will be its executive secretary. The Commission also includes big business and state power bodies representatives.

The Commission’s members include Deputy Prime Minister Arkady Dvorkovich, Economic Development Minister Andrei Belousov, Finance Minister Anton Siluanov, Industry and Trade Minister Denis Manturov, Energy Minister Alexander Novak, Natural Resources and Environment Minister Sergei Donskoy, President of LUKOIL oil company Vagit Alekperov, and Gazprom CEO Alexei Miller.

The Commission’s aim is to coordinate the work of the federal and regional executive authorities, local self-government authorities, and organisations in developing the fuel and energy sector, ensuring industrial, energy and environmental security, and rational use and effective management of the minerals and raw materials resource base.