OREANDA-NEWS. August 26, 2011.   The focus of the meeting was on measures to increase supply on the domestic petroleum products market, in part by transitioning to a new system of taxation for the industry. Mr Sechin also reported to Mr Putin on the implementation of the prime minister’s order on concluding defence procurement contracts, particularly in shipbuilding.

 Transcript of the beginning of the meeting:

Vladimir Putin:  Mr Sechin, let’s begin with the oil industry. At our meeting in Kirishi, we agreed on several tax amendments. How is the work going?

Igor Sechin: Mr Putin, in accordance with your instructions on increasing supply on the domestic petroleum products market and preparing for the transition to the industry’s new system of taxation, which you issued on the July 8 meeting while visiting Kirishi’s oil refinery, the Energy Ministry, the Economic Development Ministry and companies have developed the government’s resolution on new customs tariff regulation in the industry. The draft resolution calls for introducing a new calculation for export customs duties, particularly raising the rates for primary processed oil products. As regards dark petroleum products, a single customs duty is proposed for the entire range of products in the amount of 0.66 of the export customs duty on crude oil. This is proposed for the entire range of products, excluding straight-run and commercial petrol, which we would like to use more to increase supply on the domestic market. For them, we suggest keeping intact a current coefficient of 0.9 of the export customs duty on crude oil.

This will not result in a decline in budget revenues according to the calculations we made together with the Finance Ministry. This decision is rather balanced. Reducing the customs duty on oil in the present conditions from the current 65 to 60 and raising it on dark petroleum products from 46.7 to 66 will result in a balanced situation, with the margin for dark petroleum products accounting for around 19%, which will balance out the shortfall of revenues from crude oil. In addition, we have agreed with companies on their strict control over the stablisation of crude oil prices on the domestic market. We ask you to support this approach, which corresponds to the decisions you made at the meeting in Kirishi and which will help balance the process on the domestic market.

Vladimir Putin: Good. Please submit the draft resolution to me today.

Igor Sechin: I will.  

Vladimir Putin: And another issue that concerns a different sector. Recently, we have met with the defence minister to discuss defence procurement, and we paid particular attention to the slow-moving shipbuilding sector. I asked Defence Ministry experts to work this problem out and to take practical steps to implement defence procurement plans.   

Igor Sechin: Mr Putin, in accordance with your inistruction, last week the government held several meetings to discuss the issue. The attendees included representatives from the Defence Ministry and the minister himself, the Industry and Trade Ministry, the United Shipbuilding Corporation, as well as representatives from the government commission on the military-industrial complex. An interdepartmental working group, made up of representatives from all departments, has been created. Yesterday, the group members visited the Rubin marine centre (Rubin Central Design Bureau for Marine Engineering), where they thoroughly discussed all these issues. The Defence Ministry agreed to reconsider its approaches and switch to direct cost estimation for products manufactured by our domestic industry. Earlier, there was talk of using deflators – while now we have agreed with the Defence Ministry on the direct calculation regarding supplied products.

Vladimir Putin: When will the contracts be ready?

Igor Sechin: Mr Putin, as a result of these efforts, three of the 13 contract are to be signed today. As for the remaining contracts, the work to specify and coordinate costs will be finalised within the next two weeks. We will inform you when the whole package is signed. 

Vladimir Putin: Please, finish this by the end of this month.