President of Russia Vladimir Putin: Mr Tokarev, let’s discuss the company’s development plans in the context of your investment programme.
Chairman of the Board and President of Transneft Nikolai Tokarev: Mr President, last year, the Government examined and approved our long-term development programme, which covers the period from 2015 to 2020. The programme consists of two parts. The first is the investment programme itself – investment in new construction. The second is the programme for technical upgrading, reconstruction and complete overhaul of facilities. The budget for the first part is 690 billion rubles, and the budget for second part comes to 1.320 trillion rubles.
The investment programme includes completion of construction of the Zapolyarye-Purpe oil pipeline. This project is already nearing completion and we plan to have the pipeline ready to start operation at the end of next year. This is a new oil-rich area and the pipeline will link the rest of Transneft’s network to these northern fields, where we expect a significant increase in production. We are hoping for capacity of 45 million tonnes a year. Capacity is already 32 million tonnes a year.
Next year, we will also complete work on the Kuyumba-Taishet oil pipeline. This is in Krasnoyarsk Territory, 700 kilometres, a rich oil region, where Gazprom, Rosneft and a number of other companies are already working. We will complete all of the work in accordance with the deadlines the Government set in its resolution, and we hope the oil workers will be able to develop these regions quickly and get production underway at new fields.
Furthermore, given that reconstruction work will be completed at many oil refineries over the next year or two – they all have to complete this programme under the four-party agreement – we expect a substantial increase of products, particularly diesel fuel, on the market.
Transneft has already started getting ready for this challenge by preparing new pipeline routes. One is in the north, where we have re-profiled an oil pipeline for handling petroleum products and will be ready to receive new production in two stages: first 8 million tonnes, then 25 million tonnes.
We have a similar project in the south, with the Volgograd oil refinery and a group of plants in Krasnodar Territory. This is the Yug project, which will run through to Novorossiysk and will also come into operation in stages. Over the next four years, Russia will gain additional capacity for 35–40 million tonnes of petroleum products. These are the biggest and most intensive projects as far as new construction goes.
As for the technical modernisation and overhaul programme, we are upgrading and replacing 1,500 kilometres a year. We are replacing pipelines that have exhausted their technical capabilities and need upgrading, as well as our storage tanks, mechanical and energy equipment, pumps and electrical engines. This is why we have such a big budget for this work – 1.3 trillion rubles. This work is proceeding in accordance with the Government deadlines. Everything is going to plan.
This programme’s implementation also has a big social impact, as it will create an additional 7,000 jobs. There is also the social infrastructure that will follow – new roads, housing, bridges.
We can thus say that everything is going to plan and the financing is guaranteed and calculated. In other words, we see no problems for now. Our programme also has an import replacement component, but this was not in response to the restrictions brought about by the sanctions. The fact is simply that we already started working on this issue of our own accord three years ago, looking from a management point of view, because we were often having problems with getting timely supplies of pumping equipment, which was produced by Ukrainian companies with a monopoly in this segment.
Russia, unfortunately, had not yet started producing its own mainline pumps. Now, we are completing construction of a large plant, the result of three years of hard work, and in December, we plan to start full cycle operations at this plant in Chelyabinsk. We hope to invite you there for a visit.
Vladimir Putin: Good. Thank you.