OREANDA-NEWS. October 3, 2011. Putin and Miller discussed Gazprom’s domestic and export operations. They focused on the recent “dawn raids” at Gazprom’s affiliates in Europe. Putin said “the Russian government will closely monitor developments involving Gazprom.”

Transcript of the beginning of the meeting:

Vladimir Putin: Mr Miller, the latest data show that the consumption of energy, including gas, in Russia has reached, and even surpassed pre-crisis levels. This is proof that the economy is picking up steam, which is a very good sign. What do you have to report about Gazprom’s performance in this country and its export operations?

Alexei Miller: Gazprom can report very good results for the first nine months of this year. Consumption on the domestic market has exceeded figures for the same period of the pre-crisis year 2008. This certainly means that Russia has emerged from the crisis. We see [energy] consumption growing in the key industries – iron-and-steel, power generation, and cement and fertiliser production.

We also see positive trends in our export operations. Over the first nine months of 2011, we exported 25 billion cubic metres of gas more than in the same period last year. Of course, we see some instability in Europe, with consumption dynamics differing from country to country. But the growth in consumption was due above all to increased gas deliveries to the leading EU economies. We see that this trend will continue along with the growth of Russia’s gas supplies to Europe. It is obvious that our next task is to build new transport systems to deliver increased gas volumes to the EU countries.

Vladimir Putin: Are you referring to the possibility of building the second stage of Nord Stream and to the South Stream project?

Alexei Miller: Yes. As for increasing Nord Stream capacity, we may consider building additional lines through the same corridor. The first line has been completed; the pipe is now at the pre-start-up stage and is being filled with gas. I can tell you the exact date when the pipeline will come on stream: November 8, 2011, in time for the November holidays, as they always say.

Vladimir Putin: That’s good.

Alexei Miller: As for the second line, we have already laid over 700 kilometres of pipe or about 60% of the total length. Now that we have launched the first line, we will proceed to the second very important and responsible stage: environmental monitoring. As you know, 100 million euros was allocated for this purpose during the first stage of environmental studies, which involved design and construction. Allocations for permanent environmental monitoring over the first three years have been approved at 40 million euros. Measurements are being taken and will be taken at thousands of places along the pipeline; we will comply with all the requisite environmental standards.

Vladimir Putin: And what about South Stream?

Alexei Miller: We have completed the consolidated feasibility study for South Stream. It is based on the feasibility study of the offshore segment and the onshore parts of the pipeline in the countries where it will be built. The consolidated feasibility study shows that the project will be economically effective and is technically feasible. So we have proceeded to the next stage – project documentation. We are on schedule and I can assure you that the South Stream pipeline will be completed, with commercial gas flowing to customers, by December 2015.

Vladimir Putin: Excellent. What can you tell me about the inspections at Gazprom’s affiliates in Europe? What’s up?

Alexei Miller: These so called “dawn raids” have taken place and documents have been seized at Gazprom’s affiliates at the initiative of the European Commission, although Gazprom’s operation in European markets is based on the principle of equal partner relations with its customers. Our contractual obligations are also based on intergovernmental agreements and on the principles of commercial expediency and so fully correspond to market conditions. Of course, these inspections came as an unpleasant surprise. Mind you, Gazprom has always been open to dialogue. We hope that Gazprom’s legitimate interests will be respected. We will comply in full with our contractual obligations to our European partners under existing contracts. Gazprom retains all of its rights and is prepared to defend them in court.

Vladimir Putin: At the same time, you should cooperate with the authorities of the host countries, be open to assisting the inspecting agencies and provide objective and complete information to them. The Russian government will closely monitor developments involving Gazprom. Please, keep me posted.

Alexei Miller: Mr Putin, we will report on all the developments related to the inspections of Gazprom in Europe.

Vladimir Putin: I hope no one has been arrested or imprisoned in Europe for contracts with Gazprom?

Alexei Miller: No, no one has been arrested yet.

Vladimir Putin: Thank God.

The Asian markets appear secure and we have several good projects there in nearly every key area: with Korea (South Korea) and China. Our Japanese colleagues have recently shown considerable interest in developing energy relations with us as well. Can you report on these developments?

Alexei Miller: After launching the Sakhalin-Khabarovsk-Vladivostok trunk line, we will start building a similar pipeline from Yakutia to Vladivostok via Khabarovsk and create the necessary infrastructure in eastern Russia, the Russian Far East, to ensure the growth of gas consumption, bearing in mind that our priority is the domestic market, as the government has indicated. We will connect new customers to the gas distribution network and establish new gas processing and chemical facilities, which could work in the interests of both the domestic and foreign markets.

As for exports, we expect the eastern direction of our export policy to produce positive results in the near future. The volume of Russian gas our Asian partners plan to buy in the mid-term could reach the volumes we are supplying to the European market.

Vladimir Putin: We should seriously consider this, including gas liquefaction for Japan and the construction of pipelines. The possible destinations could be South Korea and China. I expect you to submit the details of all the proposals regarding the development of cooperation in Asia without delay.

Alexei Miller: Certainly, Mr Putin.

Vladimir Putin: Thank you.