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Excerpts from transcript of meeting on the autumn-winter heating season
President of Russia Vladimir Putin: Good afternoon, colleagues.
The New Year holidays are approaching and by tradition, many of our people will spend them at home, with their families and friends. All of us understand how important it is to ensure, during these long holidays, the reliable, failsafe operation of all housing and utility companies, continuous production cycle businesses, transport, and many other economic and social branches that provide services for the daily life of our cities and villages.
Today, I suggest discussing in detail how the national energy complex copes with peak loads. This year it is taking place against the backdrop of economic recovery and increasing energy consumption. In December, this indicator hit a historical high.
I would like to note that in general the national energy complex is working steadily. That said – I must put it straight – far from all regions keep their grids and equipment in proper condition. Meanwhile, before the start of the heating season, we discussed this situation many times, and I was assured that everything was in excellent shape everywhere. As usual, there are setbacks: some constituent entities of the Federation are facing difficulties in the operation of their housing and utility sectors and require additional material and human resources.
During the news conference last week, a journalist from Buryatia spoke about a major utility accident in Ulan-Ude. True, a fire at a station triggered it, but it was still an accident. Because of this emergency, many city residents were left without hot water and heating. I know that the regional authorities and relevant companies are doing all they can to eliminate the consequences of this accident.
At the same time, it is obvious that the federal authorities must also keep this issue under their permanent control. I would like to hear what measures to help Buryatia have been taken and what the plan is for them.
One more point. Another journalist, from Daghestan, said during the news conference that the region's energy companies are failing to meet the needs of the regional economy and social sphere. I know they have a tangle of longstanding problems such as low payment discipline, a non-transparent and ineffective structure of ownership of generating facilities and grids. I would also like to ask you to specifically look into this problem today.
Again, it is our most important responsibility to make sure that every flat and house, industrial and social facility across the country, every city and community is reliably supplied with heat and electricity. We need to ensure that the housing and utilities system works smoothly and accurately, especially in winter, during low temperatures, that energy resources are supplied regularly, predictably and at affordable prices. By the way, unfortunately, this is far from the case today in many countries.
The situation in the housing and utilities sector is primarily the responsibility of the regions and municipalities, and it is clear why. This industry is huge, and it is better to monitor locally the state of the heating and power grids, generating facilities, boiler houses, etc., to check what sections should be put into operation and when and what needs to be repaired in time.
At the same time, I would like to point out that the relevant federal ministry and the Government also need to constantly monitor the hands-on situation in the regions. Consumers do not have to care whose responsibility it is – it is important that everything functions properly, especially in those places where the climate is the most severe.
In those climates, any accident or abnormal situation can have the most serious consequences. It is extremely important to respond to emergencies quickly, as quickly as possible, to help our colleagues in the regions deal with any problem that might emerge.
Today I ask you to report on the tools and mechanisms you propose to employ in emergencies, as well as on your systemic work that is being done to improve the reliability of energy distribution. In this regard, let me remind you that housing and utility upgrades are among the key projects eligible for the easy-term infrastructure loans we provide to the regions.
I would like to close my opening remarks with yet another important matter. As you are aware, steady gas supply to the domestic market is our top priority when it comes to expanding gas infrastructure in our country, which is why major gas infrastructure development projects are underway in the regions. Residents of communities with pipeline gas availability will have gas brought to their houses before the end of 2022, as agreed.
To ensure reliable and stable distribution for the long term, the domestic fuel and energy companies are carrying out long-term development plans and developing new fields. Given the challenging circumstances our foreign partners are now in, Russia can increase gas exports.
The first string of the Nord Stream 2 gas pipeline was filled with technical gas in October. As I understand it – and I want Mr Miller, Gazprom CEO, to cover this in his report – the second string Nord Stream 2 will be filled with gas today. This pipeline’s total capacity is 55 billion cubic metres of gas, all supplied to our colleagues in Europe.
Again, I would like Mr Miller to cover this in detail. This additional route will undoubtedly help stabilise prices on the European market. I would like you to discuss this at the meeting today as well as the overall situation in Europe, because our main consumers are in Europe.
Let's move on to discussing the issues under review.
Gazprom CEO Alexei Miller: Mr President,
Ensuring a successful heating season in Russia is Gazprom’s main task. Prior to pumping gas from underground storage facilities, we had 72.638 billion cubic metres of reserve gas. It is possible to pump 847.9 million cubic metres daily. Reserve gas volumes and daily pumping capacities have hit an all-time high in this country.
There was a steep drop in ambient temperatures in Russia from the second week of December. On December 23, the average temperature was minus 17 degrees Celsius in all regions covered by the Unified Gas Supply System. This is 9.3 degrees lower than the average seasonal level. These days gas supplies to Russian consumers on the domestic market and the pumping of gas from the country’s underground gas reservoirs have reached an all-time high for the last 10 years since 2012.
At the same time, Gazprom has, as always, reliably supplied gas to Russian consumers and to our customers abroad, and it continues to do so. We completely fulfil our export contact obligations under long-term bilateral contracts in accordance with specific requests.
As of today, 12.36 billion cubic metres of gas, or 17 percent of all reserve gas, have been pumped from Russia’s underground storage facilities which are now filled to 83 percent of their capacity.
Mr President, as per your instruction, Gazprom pumped its own gas into Europe’s underground reservoirs throughout November and December. In late December, the volume of gas involved will total one billion cubic metres.
On December 21–25, European operators pumped record-breaking volumes of gas from underground European reservoirs, reaching the highest levels for many years. Today, Europe’s underground reservoirs have been depleted by 44 percent, and those of Germany, by 47 percent.
At the same time, it should be noted that reserve gas volumes in Europe’s underground reservoirs are 21 billion cubic metres less than for the same period in 2020. They are 28 percent or almost one-third lower. Underground reservoirs have a substantial shortage of gas, and this continues to have a serious impact on the European gas market.
Gazprom has completely fulfilled its obligations under a contract to pump gas via Ukrainian territory. We were to pump 40 billion cubic metres of gas, and we have already pumped 41.5 billion cubic metres of gas via Ukraine. On December 24, Ukraine’s underground reservoirs hit an all-time low in terms of reserve gas volumes. Today, Ukraine holds less than 14 billion cubic metres of gas reserves, which is ten billion less than it had in late December 2020.
Mr President, today at 12.58 pm Moscow time Gazprom completed filling the second string of Nord Stream 2, and now both legs of the pipeline are at the operating pressure and ready to go. The Nord Stream 2 gas pipeline has a design capacity of 55 billion cubic metres per year and is the longest offshore gas pipeline in the world, at 1,234 kilometres.
Mr President, the Nord Stream 2 gas pipeline is ready for operation.
Vladimir Putin: I would like to congratulate Gazprom and your Nord Stream 2 partners on the completion of this project to build this large additional pipeline and on this pipeline being ready for operation. Now the start is up to our partners, consumers in Europe, in Germany. As soon as they make the decision on the launch of operation, a large additional amount of Russian gas will immediately begin to flow towards Europe. Let me remind you that we are talking about 55 billion cubic metres a year. By the way, this should immediately affect the price on the market, on the spot market. And all those countries and consumers of Russian gas are bound to feel it right away. This applies to businesses and households alike.
Even in Ukraine, this should shift prices downward, because they buy a significant amount of Russia-produced gas at European market prices, which are fairly high – $1,000 or more, $1,000 per 1,000 cubic metres. This will immediately influence the prices in a country like Ukraine, which, for political reasons, unfortunately, refuses to buy gas directly from Russia and has to pay such a high price because of this. But if the Nord Stream begins operation, it will also have a positive effect on prices for a country like Ukraine.
But again, now it is our European partners’ turn to act, and it is up to them. We have completed a project to develop this additional gas transportation route with our partners, by the way, European companies, with five European companies. Nord Stream 2 is ready to go.
So much for our exports. I would like to return to where we started, back to the matters that brought us together today. We need to make sure that Russia goes through the period of the lowest temperatures safely and reliably, without any failures. We know that certain disruptions are inevitable in such cold weather as we observe today. As long as the response is instantaneous, and all repairs are performed as quickly as possible and with high quality, people will not feel any disruptions in the energy system’s operation.
I would like to ask Mr Maxim Oreshkin and his colleagues to prepare draft instructions following this meeting.
Happy New Year, everyone!
Goodbye, and all the best.