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President of Russia Vladimir Putin: Mr Miller, you recently started work at the big Bovanenkovo field. Once again, I congratulate you and everybody who brought this programme to this level. Today, I want to discuss with you an equally important matter, namely, the Eastern Gas Programme’s development. We drafted and adopted this programme back in 2007. Gazprom has accomplished a lot since then, establishing two big production centres, one on Kamchatka peninsula and one on Sakhalin island. Petropavlovsk-Kamchatsky, Khabarovsk, and Vladivostok have all been connected to the gas network now, and projects to develop pipeline transport are underway.
Now the second stage of the programme is ready to begin with the start of work to develop fields in Yakutia and Irkutsk Region – the fields of Chayanda and Kovykta. These are international-level fields in terms of their reserves. I remind you that we agreed that once the work there begins, we will carry out our plans to develop new transport possibilities and build at least two new pipeline systems.
I also remind you that we agreed that the gas from these fields would go primarily for domestic needs, but given that these deposits have huge reserves – we have 3.5 trillion cubic metres of gas overall here – we could also set up another export centre focused on the Asia-Pacific region, an area in which we should concentrate above all on developing liquefied natural gas exports. Let me remind you that we are developing shipbuilding capacity in the Far East with a view to placing orders for gas transport ships at Russian shipyards.
I would like to hear from you now on the situation with the second stage of work, and what Gazprom plans to do and when. Go ahead.
Gazprom CEO Alexei Miller: Mr President, Gazprom is working steadily on carrying out the Eastern Gas Programme. We have established two production centres on Kamchatka and Sakhalin and have built two mainline gas pipelines – the Sobolevo-Petropavlovsk-Kamchatsky pipeline, and the Sakhalin-Khabarovsk-Vladivostok pipeline.
Gazprom is continuing its work on Sakhalin. In 2013, a new field, the Kirinskoye field, will come into operation. This field is unique in that production there will be carried out using the bottom-sediment layer production method for the first time in Russia. Of course, Mr President, now that the work on developing the Sakhalin and Kamchatka fields is underway, we will set our sights on carrying out the second stage of the programme and developing new gas production centres, above all in Yakutia and Irkutsk region.
Vladimir Putin: Kovykta is in Irkutsk and the gas production centre in Yakutia is Chayanda?
Alexei Miller: That’s right, Chayanda is the main gas field in the Yakutia production centre. Total onshore deposits in Eastern Siberia and the Far East amount to 53 trillion cubic metres of gas, and the adjacent shelf has 15 trillion.
Vladimir Putin: And how much gas does Irkutsk have?
Alexei Miller: Deposits of Irkutsk gas production centre amount to 3.7 billion cubic metres.
The Chayanda field has 1.2 trillion cubic metres of gas. Geological research on the region is extremely limited: only 8% of onshore deposits and 6% of shelf deposits have been explored.
Vladimir Putin: Are you planning to build the pipeline from Yakutia to the east first?
Alexei Miller: Our first priority is to start work on the Chayanda field, the second stage will be developing the Irkutsk gas production centre and the Kovykta filed, and the third stage is the Krasnoyarsk centre.
After work starts at the Chayanda field, we plan to build a pipeline from Yakutia to Vladivostok via Khabarovsk (the pipeline length will be 3,200 kilometres). At the same time as we develop the Kovykta field, we will start building the second part of the pipeline from Yakutia (its length will be 800 kilometres).
Vladimir Putin: This is to connect the two fields. Are you going to build a pipeline to the west?
Alexei Miller: There is an option to supply gas in the future from the Irkutsk gas production centre to the west, in the direction of Krasnoyarsk, Novosibirsk and Omsk (over 2,000 kilometres of pipelines). Thus, we plan to connect the eastern part of the country, Eastern Siberia with Western Siberia, the main consumption centre.
Vladimir Putin: This way you will create a unified system of gas supply.
Alexei Miller: A unified gas supply system for the entire country.
The investment feasibility study for the Chayanda field has been completed, as well as the feasibility study for the pipeline from Yakutia to Vladivostok via Khabarovsk.
With regard to the priority of the Eastern Gas Programme, the supply of gas to the domestic market (this is how Gazprom is organising its work), we have developed master plans for gas supply to 11 regions in this part of the country and signed the relevant agreements with the local administrations. Of course, we realise that this is a two-way street, and the local and regional authorities should be working to prepare the consumers for receiving gas and building gas distribution facilities. As you know, gas in Eastern Siberia is multicomponent – there is significant share of ethane, propane, helium.
Vladimir Putin: So it is necessary to develop the gas processing industry.
Alexei Miller: We therefore must develop the gas processing industry at the same time.
Given that Gazprom does not consider gas processing its priority at the moment, investment should come from the companies that specialise in this field. They must develop capacities simultaneously, in parallel with the work on the Chayanda field and the gas transportation system.
Vladimir Putin: Now please report on the timing.
Alexei Miller: The deadlines are as follows. The feasibility study has been approved. As for the pipeline, we believe that it could be built by the end of 2017. In that case, we could also talk about building an LNG plant near Vladivostok with the understanding that while the domestic market is our priority, we are also focusing, as you said today, on creating a new centre for exporting Russian gas to Asia-Pacific countries.
As you know, this market has the biggest capacity in the world and is rapidly developing. The markets of China, India, Japan, Korea, Taiwan, Thailand, Bangladesh, Singapore, and Vietnam are growing very fast. This opens up great prospects, and in the near future we will be able to build up our gas exporting capacity to an extent that it will be comparable to gas supplies to Europe, and may even surpass them.
Vladimir Putin: Mr Miller, are you planning to build the pipeline junction from the Chayanda field or a separate one to Vladivostok?
Alexei Miller: No, we will build it to Vladivostok.
Vladimir Putin: How many kilometres are you planning?
Alexei Miller: 3,200.
Vladimir Putin: And it will be launched at the end of 2017?
Alexei Miller: Yes, it will. It will take five years, given the fact that the feasibility study is ready.
Vladimir Putin: And how many kilometres from Irkutsk?
Alexei Miller: 800.
Vladimir Putin: Well, that’s a small job.
Alexei Miller: The gas pipeline is designed to go along the Eastern Siberia — Pacific Ocean oil pipeline. This will optimise the cost of infrastructure and energy supply. As for the gas pipelines from Irkutsk to Yakutia and from Yakutia to Vladivostok via Khabarovsk, the question of choosing a name for the gas mains supply network becomes relevant.
Vladimir Putin: See what you can come up with and announce a competition online. People who are interested in the development of the Russia’s east will send you their proposals.
Alexei Miller: We will, Mr President.
We are planning to focus on the export of pipeline gas in the second stage of the project, after the plant is completed and long-term contracts for the supply of liquefied natural gas from Russia are signed.
Vladimir Putin: How much investment will you attract in the Irkutsk project? What is the approximate figure of investment in the development of fields in the Irkutsk Region and how much will the gas pipeline network cost?
Alexei Miller: I can give you the figures based on the feasibility study for Chayanda and the gas pipeline to Vladivostok. The field development will cost 430 billion rubles [$14 billion], and around 770 billion rubles will be invested in the construction of a gas pipeline.