Vladimir Putin had a working meeting with Chair of the Gazprom Management Board Alexei Miller who briefed the President on the company’s performance, preparations for the autumn-winter heating season and the prospects for one of the company’s major projects, the Power of Siberia. The President and Gazprom CEO also discussed the company’s relations with Ukrainian and European consumers of Russian gas.
* * *
President of Russia Vladimir Putin: How is work proceeding, Mr Miller? May I ask you to start with domestic developments? How is the company getting along, what are its performance indicators and plans? And what about relations with its partners, including on our major projects?
Gazprom CEO Alexei Miller: Mr President,
Our main task at this point is to prepare for the upcoming autumn and winter period and pump gas into underground storage facilities. The volume of supplemental gas in Russia’s underground storage facilities as of the beginning of the gas withdrawal period stands at 72.2 billion cubic metres.
By the beginning of the autumn and winter period, we will reach a daily output of 843.3 billion cubic metres in Russia’s underground storage. This will be an all-time high for the country’s natural gas industry.
By the end of the year, Gazprom intends to pump at least 11.4 billion cubic metres of gas into underground storage facilities in Europe, which would be twice last year’s volume.
We see that our European partners are actively pumping gas into their underground storage facilities, and our Ukrainian colleagues are trying to do the same.
There is no doubt that one of the factors behind this surge in the volume of gas pumped into underground storage facilities is that the contract for gas transits through Ukraine expires on December 31.
The gas transit agreement is an extremely important matter, of course, but the priority question is whether Ukraine will buy Russian gas under a direct contract.
The answer to this question is also the answer to how much gas transit capacity Gazprom should guarantee, from the Russian side, for gas supplies to Ukraine.
Vladimir Putin: True, we will have to provide maintenance, pay for it.
Alexei Miller: Yes.
This also affects our understanding of what price the Ukrainian end consumers will pay, because if a direct gas supply agreement is signed with Gazprom, the consumer price in Ukraine may be 25 percent lower than the current level.
However, without a doubt, the main issue, I emphasise, is the supply of gas to the Ukrainian market. This is a matter of bilateral negotiations between Russia and Ukraine.
Vladimir Putin: What about our major projects?
Alexei Miller: Mr President, concerning the largest project of this year, it is Power of Siberia. On December 1, it will begin supplying gas from Russia to China.
This will be a truly historic event because the world’s largest gas exporter will launch supplies to the largest importer. In 30 years, one trillion cubic metres of gas will be delivered to China.
The Chinese market is the most dynamic, and the fastest growing one in the world. Today, with our Chinese partners we are exploring the possibility of supplying gas to China via other routes.
Vladimir Putin: Which other routes?
Alexei Miller: We are considering the possibility of supplying gas via the western route and another possibility of delivering gas via the Far Eastern route from the Sakhalin production centre.
Vladimir Putin: In this connection, I would ask you to return to the topic we have repeatedly discussed with you and with our Chinese friends – I mean the possibility of using the resources of Irkutsk Region and Krasnoyarsk Territory.
Please also look at the resources of Yamal in the context of ensuring sufficient reserves to deliver to China along the western route via Mongolia.
I know that the route involved is complicated as well, but preliminary consideration of this issue showed that it is quite realistic, and our Chinese partners seem to hold the same view.
I ask you to explore this issue and report back.