Working meeting between Vladimir Putin and Alexey Miller

A working meeting took place today between Vladimir Putin, President of the Russian Federation, and Alexey Miller, Chairman of the Gazprom Management Committee.

Alexey Miller briefed Vladimir Putin on preparing the gas supply system for the upcoming autumn/winter period. Particular attention at the meeting was paid to the preliminary results of Gazprom’s efforts for gas infrastructure expansion in Russian regions over the course of 2020 and the plans for the next five years. The status of the Power of Siberia 2 project was also discussed.

Shorthand record

Vladimir Putin: Mr. Miller, I have many questions, as usual. I would like to start off with two questions. Firstly, please talk about the preparations for the approaching heating season and the plans for gas infrastructure expansion.

Alexey Miller: Dear Mr. President,

The preparations for the upcoming autumn/winter period are going in strict accordance with the schedule. By the beginning of the withdrawal period, the working gas inventories in Russian UGS facilities will total 72.3 billion cubic meters of gas. Also, we will maintain the daily deliverability at the record level of 843.3 million cubic meters of gas. In addition, the Company will inject almost 9 billion cubic meters of gas into European UGS facilities.

By taking all these measures, Gazprom will be able to fully satisfy the needs of our consumers in the winter period.

One of the top-priority social projects is the implementation of our gas supply and gas infrastructure expansion programs in the constituent entities of the Russian Federation. In 2020, Gazprom increased their funding by more than 1.6 times, earmarking RUB 56 billion for investment, which is RUB 22 billion more than in 2019. We are going to build 2,350 kilometers of linear gas pipelines, bring gas to 319 localities, and construct 410 boiler houses. By the end of this year, the gas penetration rate across the country will reach 71.4 per cent. On top of that, we will bring gas infrastructure programs to completion in 11 regions of the Russian Federation.

We are nearly finished with the drafting and signing of five-year programs for gas supply and gas infrastructure expansion in 67 constituent entities of the Russian Federation. This is the scope of our work for the next five-year period. Within that period, the amount of funding for gas supply and gas infrastructure expansion programs on the part of Gazprom needs to be nearly tripled to RUB 526.1 billion. The linear pipelines that will be built in those five years will stretch for 24,400 kilometers in total. We will provide 3,632 localities with gas, and the gas penetration rate will reach 74.7 per cent.

It should be noted that gas grid expansion activities will be entirely completed in another 24 regions of the Russian Federation within the next five years, i.e. by the end of 2025. This means that as many as 35 constituent entities of the Russian Federation will be fully provided with gas as a result of our work.

As of today, we have already signed five-year programs with 14 constituent entities of the Russian Federation, and within virtually the next two months we will finish this work, so that the documents will be signed with all constituent entities of Russia.

The new five-year period can be described as one with a very distinct social trend, and this is the main feature that distinguishes it from the work we carried out in the previous years. And, of course, in line with your guidance to us, we will pay the utmost attention to gas infrastructure expansion in rural areas.

Vladimir Putin: Mr. Miller, the Accounts Chamber of the Russian Federation reported to me that there are certain problems as regards the alignment of the efforts taken by Gazprom and the regional and municipal authorities. What is your assessment of this situation? I mean the implementation of the gas infrastructure expansion program.

Alexey Miller: You know, Mr. President, there is a proposal which may be worth considering: to appoint Gazprom as a single operator of the programs for gas supply and gas infrastructure expansion. Gazprom could perform the whole set of works on the construction of gas pipeline branches, build inter-settlement gas pipelines, additionally build intra-settlement gas pipelines (Russian constituent entities are currently in charge of that), and lay so-called “last-mile gas pipelines.”

Vladimir Putin: To reach consumers and households?

Alexey Miller: To reach land plots and households.

Without any doubt, this would, firstly, accelerate gas infrastructure expansion and, secondly, allow the constituent entities of Russia to allocate more funds for the heat energy sector and, more specifically, for boiler houses, in their budgets. With an approach like this, budget funds could be redistributed in a certain way among the regions and, definitely, planning from the end consumer, as we call it, would become possible. In this scenario, Gazprom would not have to create excessive capacities, for instance, in gas pipeline branches. Unfortunately, our gas pipeline branches are not very loaded, that is, we have created excessive capacities.

Vladimir Putin: All right, I will instruct the Government to address this issue, and we will address it jointly with you.

Alexey Miller: Will do.

Vladimir Putin: All right, agreed.

What else?

Alexey Miller: The current performance indicators of Gazprom are fully in line with the market demand and the macroeconomic environment in general. Gazprom maintains strong liquidity, displaying high operational reliability and great confidence. The situation has been improving in recent months.

This August, Gazprom’s gas supplies to Russian consumers rose by 5 per cent against July, while gas exports grew by 12 per cent.

Gas supplies to Europe in August of this year can bear comparison with the same period of last year: supplies [in August 2020] exceeded 16.3 billion cubic meters, which is a significant amount. We can say with confidence now that the volume of Gazprom’s gas deliveries to that region in 2020 will be among the top five highest in the entire history of supplies.

Vladimir Putin: Let us talk about our eastern project: Russia – Mongolia – People’s Republic of China.

Alexey Miller: Mr. President, you instructed us to start design and survey works for Power of Siberia 2. We commenced them simultaneously with the work related to the Mongolian section.

During a video call with the Mongolian Prime Minister [Ukhnaagiin Khurelsukh], we signed a Memorandum of Intent to set up a special-purpose company in order to conduct a feasibility study for the gas pipeline route and to choose the best route option. It will be possible to discuss the obtained results as early as in the first quarter of 2021.

There is no doubt that the Power of Siberia 2 project will, firstly, connect the gas transmission capacities in the west to those in the east. Mr. President, you have repeatedly set this goal: to create a single gas supply system. The project will also provide new opportunities for expanding gas infrastructure in Eastern Siberia and the Transbaikal Territory, creating a new export corridor with a capacity of up to 50 billion cubic meters of gas, as well as delivering gas from Yamal to not only Europe but also the Asian market.

Vladimir Putin: All right.