* * *
President of Russia Vladimir Putin: Mr Tokarev, let’s discuss the results of the year’s work. I would also like to hear a few words about the state of progress with the investment programme.
chairman of the Board and President of Transneft Nikolai Tokarev: Mr President, we think the company had a very successful year last year. We exceeded our production and financial and economic targets. A number of facilities such as the ESPO (Eastern Siberia-Pacific Ocean) oil pipeline began operation 9 months ahead of schedule.
Vladimir Putin: Nine months ahead?
Nikolai Tokarev: Yes. We planned to start operations in the third quarter of this year. So far, 480 million tons of oil have already entered the system – eight-and-a-half million more tons than was planned.
Vladimir Putin: How many people were working on the ESPO pipeline? The project created more than 3,000 new jobs, didn’t it? I am talking about overall personnel, together with servicing personnel.
Nikolai Tokarev: Twenty-three thousand people were directly involved in the construction work. The pipeline has created 8,000 new permanent jobs, of which 6,500 have been taken by local specialists living in the regions concerned. They have received training in our special training centres and obtained the relevant skills. There are also the social facilities to take into account, infrastructure construction, a lot of housing built, electricity transmission lines, medical centres, facilities for children – everything that is needed in places where this many people are working.
Vladimir Putin: In your view, how are things going with sales of the new sort of oil to markets in Asia?
Nikolai Tokarev: There is a lot of interest because this oil is of a higher quality than the Dubai sort. At the moment, 40 percent is going to China and another 30 percent to consumers in the USA. The Japanese are buying the oil, so are customers in Singapore and even Peru, where we have had buyers too.
We plan to increase the volume transported to Kozmino and sent out through there to 21 million tons this year. We are building another four new oil pumping stations for this purpose. They will enable us to deliver oil to the Komsomolsk and Khabarovsk refineries.
Vladimir Putin: I was just about to ask about the situation with our refineries.
”Carrying out this kind of big investment programme has a definite impact on the country’s economy as a whole, because the orders you place not only give work to the pipeline industry but also to the metals sector and on down the chain to the mining industry.“
Nikolai Tokarev: The issues have been settled here. The Khabarovsk refinery will be getting additional volumes next year, and we will have the work at the Komsomolsk refinery completed by 2016. We have already agreed on a financing scheme with Rosneft. We will try to have this work completed over the next two years. This involves 350 kilometres of pipeline, which will deliver an additional 7 million tons of oil to the Komsomolsk refinery.
Vladimir Putin: How do you plan to ensure supplies for the system itself? I am talking about the resource base: what is the situation with the exploration companies’ work, how do the prospects look?
Nikolai Tokarev: One of the big areas in the Transneft investment programme involves building a mainline pipeline in the region of the Yurubcheno-Tokhomsky and Kuyumbinsky oil fields. This is a promising new oil-bearing region. We finished the exploration and estimate work last year and have prepared all the required information. We are currently completing the planning work and I think we will be ready to start work in the field and start actually carrying out the project by June. This will involve 750 kilometres of pipeline and will enable the oil workers to transport 15 million tons of oil from this region. This is good solid increase to our supplies.
We are also working full steam on building the Zapolyarye-Purpe small pipeline in the Far North. The specialists guarantee that we will be able to transport an additional 45 million tons of oil from this region every year. What’s more, this oil will be able to be pumped on in either direction — east or west.
Today, 56 kilometres of this pipeline have already been built. The project uses a truly original engineering solution that is unique in the world. We travelled around and looked at how oil pipelines are built in similar conditions elsewhere. Our project is one we will be able to be proud of. We should have all three stages – 450 kilometres of pipeline – ready by 2016. Work is in full swing on the first stage.
Vladimir Putin: What is the average wage of the builders and the average wage of the people servicing the system on a permanent basis?
Nikolai Tokarev: The average wage is 75,000–77,000 rubles [$2,500] in the Novosibirsk, Urals and Far East regions at the moment, depending on the worker’s qualification. A qualified welder would get more than 100,000 rubles. As for the builders, we are talking about an average of 53,000–60,000 rubles depending on the region. Our permanent employees get an average of 77,000 rubles, and the figure is around 55,000 in the central region and an average of 68,000 rubles [$2,300] for Transneft as a whole.
Vladimir Putin: You already mentioned some of your investment plans. Could you give a bit more detail?
Nikolai Tokarev: We will soon begin construction in the Kuyumbinsky and Yurubcheno-Tokhomsky region. We have the 350 kilometre-long pipeline that will go to the Komsomolsk refinery, and there is the construction of the Zapolyarye-Purpe pipeline, which we have divided into three stages, all of which we expect to complete by 2016.
There is a lot of work ahead to repair and rebuild existing pipelines. We replace 1,000 kilometres of old pipeline every year, and will replace 1,080 kilometres this year. We have to increase the amount of old pipelines we replace because they are wearing out and coming to the end of their service lives, and we are to ensure safe and secure work, so we have to step up the pace here.
We have a similar problem with the Transnefteprodukt Company. The situation there is more complicated, but we are working on a solution and are in the process of settling the issues.
Vladimir Putin: What is the investment programme worth this year in terms of the actual figures?
Nikolai Tokarev: We have planned around 160–180 billion rubles each year for the next three years, in order to cover the investment programme itself and also potentially the construction of a pipeline for oil products. This project is still in the planning phase and we are settling the matter of financing sources. One of the options has already been worked through overall though, namely, an oil pipeline from Volgograd, the group of plants in Samara Region, and the Saratov plant to our terminal in Novorossiisk. This project, the Yug [South] pipeline, would stretch 1,500 kilometres and have capacity of 8 million tons of oil products.
Vladimir Putin: Carrying out this kind of big investment programme has a definite impact on the country’s economy as a whole, because the orders you place not only give work to the pipeline industry but also to the metals sector and on down the chain to the mining industry. What have you been doing to coordinate your work with the Economic Development Ministry?
Nikolai Tokarev: Our investment programme is generally known. It was approved by the government energy sector commission and by the presidential energy sector commission. Our project figures are known. This year, we plan to buy 26 billion rubles [$850 million] worth of large-diameter pipes, and next year we will spend 31 billion rubles [$1 billion] on this. In other words, we will keep up this scale of contracts over the next three years. That is just the pipes, but we also have orders for pumping equipment and metal for reservoirs. All of this has been calculated and approved. The pipe makers know the figures and are synchronising their production plans with our plans.
Vladimir Putin: The Government is taking your needs into account in its plans.
Nikolai Tokarev: Yes, of course.