OREANDA-NEWS. 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 informed Vladimir Putin of the Company’s performance in 2015, particularly gas production, domestic supply, and the implementation of the Russian Regions Gasification Program. He also spoke about gas exports to non-CIS countries, mentioning the trends and outcomes of 2015 and early 2016. The meeting also touched on the Memorandum of Understanding on natural gas deliveries across the Black Sea from Russia via third countries to Greece and from Greece to Italy, signed in Rome.

Shorthand record

Vladimir Putin: I’d like to ask you a couple of questions to commence the discussion. We will then address certain issues in detail. Did the overall production rise or fall last year? Please elaborate on the domestic consumption, exports and your most interesting projects to date.

Alexey Miller: Last year Gazprom produced 418.5 billion cubic meters of gas. This fully ensured a reliable and stable supply for domestic and export purposes. Gazprom delivered 205 billion cubic meters of gas to the domestic market.

Vladimir Putin: Is it an increase or a decrease compared to 2014?

Alexey Miller: It is a decrease. As for export, it totaled 159.4 billion cubic meters supplied to Europe. Exports grew by 8 per cent in 2015, which translated to 11.8 billion cubic meters. Speaking about current trends, exports have expanded by 37.5 per cent since the beginning of 2016.

Germany’s imports of Russian gas reached a record high last year and amounted to 43.5 billion cubic meters, which was 6 billion cubic meters more than in 2014. And this year we expect an even greater increase in gas exports to Germany and other large European countries. Since the beginning of this year gas supply has grown by 44 per cent in Germany, 42 per cent in Italy, 73 per cent in France, and 52 per cent in Austria. While the absolute gas export increase in 2015 was 11.8 billion cubic meters, the first two months of this year alone have seen an increase of 7.5 billion cubic meters in terms of absolute numbers.

Therefore all the construction projects regarding new gas transmission routes to Europe, in particular to Northwestern Europe, are indisputably economically feasible, which is reflected by the current growing demand.

Vladimir Putin: I know that you have discussed one of those projects and even signed the corresponding documents in Rome.

Alexey Miller: Yes, Rome hosted the signing of the Memorandum of Understanding on assessing the construction feasibility of a gas pipeline across the Black Sea from Russia via third countries to Greece and then to Italy. Pursuant to the Memorandum, a feasibility study shall be completed before the end of 2016. Together with our European partners we draw on the project which was prepared and developed jointly by our Greek, Italian and French colleagues. That project, known as Poseidon, was aimed to transport 12 billion cubic meters of Azerbaijani gas from Greece to Southern Italy across the Ionian Sea.

I had a meeting with the Italian Minister of Economic Development. Italy expresses its support for the project. The signing ceremony was attended by the Greek Foreign Ministry’s Secretary General. We also have support from the Greek side, namely the Greek government.

Vladimir Putin: As far as gasification projects in Russia are concerned, how successful were your plans last year and what are the prospects for 2016?

Alexey Miller: Speaking of the Gasification Program, Gazprom built 1,275 kilometers of gas pipeline branches and distribution systems last year, providing 206 localities with gas.

As a result of this program, 66.2 per cent of Russian households are supplied with gas as of January 1, 2016. That figure is 13 per cent higher than in 2005 when we initiated the large-scale Gasification Program.

The growth rate is higher in rural areas than in cities and towns. Rural gasification exceeds 56 per cent today. You remember, of course, that when you set the task to implement a large-scale gasification program, the level of rural gasification in Russia was as low as 34 per cent. We have built 27,800 kilometers of pipelines and brought gas to more than 3,500 localities over those years.

The financing level will remain unchanged from last year. We plan to allocate RUB 25 billion for the program in 2016.

Vladimir Putin: Your activities should be coordinated with the regional authorities. Sometimes gas that flows through the pipelines branching out from your trunklines does not reach the final consumer.

The mountain cluster in the Krasnodar Region where the Olympics were held is the most glaring example. Far from every consumer has been supplied with gas. That’s just one example; I’m asking you to address and resolve that issue with the Krasnodar authorities. The same has to be done in other constituent entities of the Russian Federation.

I realize, of course, that it is not your concern; however, you should take it into account when working in conjunction with the Government and regional authorities.

Alexey Miller: We will certainly continue working on it.

Unfortunately, 67 constituent entities covered by our program have failed to build over 1,000 boiler houses, and gas therefore has not reached about 140,000 households and apartments. That is, we have built the capacities and brought gas to certain localities, but, regrettably, local authorities in some constituent entities have yet to fulfill all of their obligations with regard to harmonizing our activities.

We now have a vision of enhancing those efforts, as we are actively working with the Russian Government and regional authorities. I have spoken to Valentina Matvienko, Speaker of the Federation Council. We have compiled an overview of the Gasification Program in Russia for her, listing the regions that fully comply with their obligations.

Vladimir Putin: I would also like to receive that overview, so that we, together with the Government and regional authorities, could identify further steps to deal with those issues.