Excerpts from transcript of meeting with Government members
President of Russia Vladimir Putin: Good afternoon, colleagues,
Before we start discussing several matters that come under the responsibility of the Government, Presidential Executive Office, regional authorities and deputies (one of these issues is comprehensive development of Kaliningrad Region, and in particular guaranteeing reliable energy supplies), I first want to ask Minister of Economic Development Mr Ulyukayev to say a few words about the results of the St Petersburg International Economic Forum. How do you assess the results? Please, go ahead.
Economic Development Minister Alexei Ulyukayev: Mr President, colleagues,
The preparations for the Forum took place in what I would call exceptionally difficult circumstances. It was enough of a difficulty that we changed the dates by a month when the heads of big companies make their plans for years ahead, but we also had to deal with the recent tensions that you know, with more than 20 heads of big companies pulling out from attending the event after coming under direct pressure from people in the US administration.
Things turned out not as bad as we feared in this respect, however, and the Forum went ahead with success. As far as the statistics go, we had more than 7,500 participants, more than ever before.
We had 458 heads of big Russian companies and 248 heads of big foreign companies, including global leaders such as Telenor, Royal Dutch Shell, Philips, Total, British Petroleum, Eni, Alstom, Fortom and Danone, working in the energy sector, consumer sector and many other areas.
A large number of bilateral talks took place and contracts worth a total of 400 billion rubles [$11.6 billion] were signed. Agreements were reached in 175 different areas. That is as far as the statistics go.
But there is also the substance of the event. This includes the discussions themselves, the subjects covered, and also the technical possibilities at the participants’ disposal, the modern technology that enabled them to organise discussions, get feedback at the same time, and reach out to the broadest possible audience using video channels.
Most important of all of course is that investors got answers to their biggest questions. After all, the reason why we hold such events in the first place is to make our plans clearer and explain our economic policy so that investors can see that the risks are acceptable. I think that they understood this.
The Forum fully lived up to its main theme of Sustaining Confidence in a World Undergoing Transformation. I think that confidence really did get a big boost, especially after the plenary session and the President’s speech and subsequent discussion. I think that investors came away with a better understanding of our economic policy, the 8–9 projects that we plan to carry out over the coming period to speed up economic growth, and our intention to do everything we can to improve the global climate so that investors can work better. We see this reflected in their speeches and the decisions they are taking.
Vladimir Putin: Thank you. In other words, your assessment is positive overall.
Alexei Ulyukayev: I would say it’s more than positive. Frankly speaking, all the scare stories beforehand were really exaggerated. These fears turned out empty in the end. The mood was very positive.
Vladimir Putin: Thank you.
Our colleagues, the Energy Minister and Gazprom CEO, held talks on our energy relations with our Ukrainian partners. We are coming to a certain point now that could see the possible transition to advance payment by our Ukrainian colleagues for gas supplies to Ukraine. This is a harsh measure that was provided for in the 2009 contract. But I want to ask Mr Novak, and Mr Miller if necessary, to inform us on the talks and the agreements reached.
Energy Minister Alexander Novak: Mr President, colleagues.
Trilateral consultations took place on May 26 between Russia, the EU and Ukraine. The three items on the agenda for these consultations were outlined in your letter to the leaders of European countries. They were, first of all, carrying out our contractual gas supply obligations to Ukraine, measures to ensure reliable transit for European consumers, and ensuring payment for gas supplies to Ukraine in light of the country’s current financial and economic situation.
The outcome of the talks was that Ukraine confirmed the existence of an undisputed debt as of April 1 for the November-March period of $2.237 billion.
As a compromise solution, we and the European Commission proposed the following scheme for resolving the situation. Naftogaz of Ukraine will transfer $2 billion to Gazprom by May 30, and will transfer the next tranche of $500 million by June 7. This is partial payment for the gas delivered from November to April.
Vladimir Putin: To April inclusive?
Alexander Novak: Yes, to April inclusive. The June 7 payment is partial payment for May, since the deadline for the May payment falls on June 7. The bill will be higher of course, for the $500 million here is just partial payment. The two tranches combined come to $2.5 billion.
Once we receive the first tranche, which is due by May 30, we are ready to continue the talks. We agreed to meet again on Friday, May 30, to discuss our next steps, including possible options for future gas payments, taking into account of course that we could discuss a discount, but not a revision of the terms and conditions of the 2009 contract. By the way, Ukraine confirmed that both these contracts are indeed in force and does not challenge the contracts themselves.
Vladimir Putin: It would be hard to challenge them when they were signed by the Ukrainians, signed by the same people who are now in power, and have been in force since 2009. It would be nonsensical to challenge them.
Alexander Novak: Mr President, I want to add that the European Commission supported us, which was important, especially in the last round of talks, and the Ukrainians took some time out until Thursday to hold further consultations with their leaders. In other words, today is the deadline when they are to inform the European Commission and Russia on their decision.
Vladimir Putin: Mr Miller, do you have anything to add?
chairman of Gazprom Management Committee Alexei Miller: We gave our Ukrainian colleagues the preliminary bill for gas supplies for June. The deadline is June 2, Monday, by the end of the day. If Ukraine does not pay the money, then on Tuesday June 3, at 10 am, we will restrict gas supplies to Ukraine. Ukraine has been taking maximum daily volumes allowed by the contract throughout May. Gas supplies for May come to 3.5 billion cubic metres, and the cost for the month’s supplies comes to around $1.7 billion. This means that by June 7, Ukraine’s gas supply debt will come to more than $5.2 billion. There is not much time left. The next consultations are scheduled for Friday in Berlin. Mr Novak and I will take part in these trilateral talks with the European Commission and the heads of Ukraine’s energy sector and Naftogaz Ukraina.
Vladimir Putin: Good, that is agreed.
I think it is clear to any objective observer that Russia’s position with regard to our energy contracts and energy cooperation with Ukraine is not just that of a partner but is more than friendly. Up until now, as I have already said, we were supplying Ukraine for free with more gas than total consumption and our annual gas supplies to a country like Poland. This situation cannot continue forever. This is simply not possible and everyone understands this.
I hope that we will not end up in a situation when we are forced to move over to advance payments. In any case, if the conditions you agree upon with our partners are carried out and payments begin at the amounts that you settled on, the Russian Federation Government will need to decide on what it is ready to accept with regard to further cooperation in the gas sector with our Ukrainian partners. I will then ask the Prime Minister to make the relevant decision.
Thank you. Now let’s move on to the routine matters.