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President of Russia Vladimir Putin: Good afternoon,

Today we've got two big events, not only for the Russian Far East, but for the entire Russian economy. Today we are taking stock of two major infrastructure projects: the Eastern Siberia–Pacific Ocean pipeline and Kuznetsovsky Tunnel. Both of these facilities will significantly expand the infrastructure capacity of eastern Russia. This means new jobs, wages for the people, technological development and new opportunities for the growth of human resources.

The decision to build the Eastern Siberia–Pacific Ocean pipeline was made back in 2004. Construction was launched in 2005 and the first phase up to Skovorodino was completed by 2009. During this period, production began on a number of oil fields in Eastern Siberia, almost 3,000 kilometres of pipeline (2,700 km) was laid, seven pumping stations were built and a large number of new high-tech jobs were created. In the period until 2011, our efforts were directed at entering the Chinese market and we created infrastructure for the supply of resources to China.

Today we will take stock of the second stage of the pipeline system with access to the Pacific Ocean. This is, I repeat, a significant event for the entire economy. In the past year our product was sold to partners from Japan, China, the United States, the Philippines, South Korea, Indonesia, Singapore, Taiwan and Malaysia.

Now there is a new oil brand called Eastern Siberia–Pacific Ocean in the international market. Our opportunities will expand greatly after the completion of the pipeline’s second stage and its capacity will increase from 30 to 45 million tonnes a year. This is an important event, and I can see a lot of people in the conference room, many of our colleagues who will now tell us about the construction process and its completion.

I want to congratulate all of you on the completion of this huge project, to thank for your work and wish you every success for the future. Thank you.

Mr Tokarev, you have the floor.

chairman of the Board of Directors and President of Transneft Nikolai Tokarev: Good afternoon, Mr President,

I report from Khabarovsk, from the administrative building of the Transneft subsidiary Far Eastern Oil Pipelines. Here we have the operations control centre for managing the second stage of the ESPO. Today we will witness an event of great importance: the construction of an integrated pipeline system, from the Baltic to the Pacific, has been completed.

Many thousands of Transneft employees lived and breathed ESPO for the past seven years. In that time, we have built nearly 5,000 kilometres of the pipeline’s linear part, 20 pumping stations, thousands of kilometres were laid along roads and power lines. In total, 23,000 people worked on the project in the entire period of the ESPO construction.

Today, 8,000 new jobs were created, of which 6,200 are held by the local residents of the region through which the pipeline runs. We built a large number of social infrastructure facilities: kindergartens, schools, hospitals, sports and cultural facilities, 700 flats, and in the next two years we will build 700 more apartments. Moreover, we have contributed 43 billion rubles [$1.4 billion] to the regional budgets.

On behalf of all those present here and all those who took part in the construction, I would like to express my gratitude to you, Mr President, for your close involvement in this project, for all the support and assistance you have provided to us, and for sharing this momentous occasion with us today.

Request permission to launch the system.

Vladimir Putin: Go ahead, please.

<…>

Operator: The Eastern Siberia–Pacific Ocean pipeline has been launched.

Vladimir Putin: Well done! Congratulations once again!

Mr Tokarev, apart from the supply of oil for export, there are plans for the development of local petrochemical and oil refining industries.

According to your assessments, how much time would you need to develop the pipeline system in the Russian Federation in order to satisfy the demand of potential consumers at refineries and petrochemical plants?

Nikolai Tokarev: Mr President,

The launch of ESPO will be a major factor in the development of the oil industry. Now industry professionals will have access to the new Zapolyarye-Purpe oilfields in the Yurubcheno-Tokhomskaya group of the Kuyumbinskoye deposits. And as we increase production, our vision for the general development of the industry is that ESPO’s capacity will satisfy all of this new demand by 2018.

The Transneft development plan, which has been approved by the Board of Directors, envisions the supply of oil by 2018 to the Komsomolsk Refinery, the Khabarovsk Refinery and the Eastern Petrochemical Complex, which Rosneft is planning to build in Nakhodka.

So we are confident that the ESPO will fully meet the needs of oil companies. Besides, it is an additional incentive for the development of the regional economy. Therefore, a multiplier effect is guaranteed.

Vladimir Putin: Thank you.

Mr Novak, would you like to add anything?

Energy Minister Alexander Novak: Mr President, Mr Tokarev, colleagues,

Indeed, according to the preliminary balance of ESPO-2, the resource base will increase, and we see that from 2014 there will be a further 6 million tonnes as a resource base at the ESPO-2 starting point, and 35.5 million tonnes from 2015. These are the fields that are to be developed in East Siberia.

Supplies to the domestic market are also planned. Together with Transneft we are considering (within the eastern part of the oil industry development programme) branch pipelines to the Khabarovsk Refinery, which will supply 6 million tonnes of oil via pipelines to the Khabarovsk Refinery from 2014, and the deliveries to the Komsomolsk Refinery will start at 4.5 million tonnes in 2014 and reach 7.5 million tonnes by 2016.

These new infrastructure projects require additional resources, including for the construction of pipelines, and Transneft will invest in the projects. Therefore, it will give a huge impetus to the overall development of the Far East, create new jobs and boost tax revenues.

Vladimir Putin: Thank you very much.

Mr Tokarev, once again I congratulate you and all your colleagues on the completion of construction. I wish you every success.

Nikolai Tokarev: Thank you, Mr President.

Vladimir Putin: Let's move on to the next project, the Kuznetsovsky Tunnel.

Good afternoon, colleagues,

I salute all those who gathered today near the Kuznetsovsky Tunnel, and I want to stress that we have made a very important step towards strengthening the transport infrastructure of the Far East. You have eliminated a bottleneck that hindered the development of freight transportation via BAM in the direction of the Vanino and Sovetskaya Gavan sea ports and created a very good basis for the development of Far Eastern ports, increasing exports, and upgrading the industrial base of Russia’s eastern regions.

Kuznetsovsky Tunnel was built a long time ago, in 1945. Now the tunnel was practically built anew. In the course of construction we have repeatedly reviewed the progress made at the site. I want to note that everything was done at a high level and on time.

I want to congratulate all the workers, engineers and construction managers on this remarkable result. This is a very good example of cooperation between business, the state and local authorities. The total funding was about 28 billion rubles [$905 million]. It is an expensive, but very worthwhile project.

Congratulations once again, and now I give the floor to Mr Yakunin.

President of Russian Railways Vladimir Yakunin: Mr President,

On behalf of all the construction workers involved in this project I want to congratulate you on its completion. It was made possible thanks to your support and the support of the Government. We are reporting from the eastern portal of the Kuznetsovsky Tunnel, where the first train will pass today.

As you have rightly noted, this event marks the start of a new era in the delivery of freight to the Far East ports Sovetskaya Gavan and Vanino. If today we can transport only about 19 million tonnes, with the launch of this tunnel we will be able to carry 29 million tons, and at the end of the project in 2016 that figure will increase to 36 million tonnes of cargoes.

I would like to emphasise that this is a very effective investment for the state. The state has invested 17.26 billion rubles, and only Khabarovsk received 2 billion rubles in taxes this year, and next year it will receive 4 billion. In total, our railroad pays 10 billion rubles in taxes in the Far East. Thus, expediency for the budget is very high indeed.

In addition I would like to point out that these investments and this construction projects are not enough. Today we have proposals and requests from businesses for the transportation of over 50 million tonnes per annum. We need about 120 billion rubles to eliminate all the bottlenecks [$4 billion].

We have not forgotten the problems of passenger transport either. We listened to your speech at the news conference with great attention. I would like to report that Russian Railways, together with the regions and businesses is looking at ways to keep the Tynda and Komsomolsk-on-Amur trains. We will report on the results.

Now, with your permission, we will announce the first freight train.

Mr President, I would also like to thank you for your constant attention to the problems of the industry. I can see the Ministers at your side, and would also like to thank them for their support of this programme and to express special thanks to the Transport Ministry, which supported our joint work on the public-private contract signed in October 2008. The construction was completed six months ahead of schedule.

Vladimir Putin: Well done.

Vladimir Yakunin: The first freight train that will pass through the tunnel is approaching.

Vladimir Putin: Well done! Congratulations. I give the floor to the minister. Mr Sokolov, please.

Transport Minister Maxim Sokolov: Mr President, Mr Yakunin, colleagues,

Indeed, this is one of the most significant projects in terms of the development of our rail infrastructure. What is particularly important, it is one of the key projects in improving the transport infrastructure of the Far East. It is absolutely true that we will see a multiplier effect in the growth of rail traffic, as well as in the increase in cargo handling in our Far Eastern ports. All of the project’s parameters have been considered and interrelated with the Transport Development Strategy to 2030, and, most importantly, the State Programme to 2020, which was recently approved by the Government.

This project will absorb and utilise 60 billion rubles in investments. Today we are marking the first part of this project, a vitally important one: the opening of the tunnel. The second stage, which will last until 2016, provides the construction of shunting loops checkpoints, and other infrastructure on the approaches to the Kuznetsovsky Tunnel, as well as the development of other railway approaches. This stage will be financed by Russian Railways, which was also involved in the first stage: they invested 43 billion rubles of the total 60 billion.

Of course, it is very important to bear in mind the prospects until 2020. We believe that we could take another close look at the priorities of railway infrastructure development. On the eve of the opening of Kuzetsovsky Tunnel, we saw a surge in investor interest in the development of the terminals at our ports Sovgavan and Vanino. Therefore, we believe that this project is a catalyst for the development of the entire railway system in the east of the country and may attract new investment in transport infrastructure.

Vladimir Putin: I want to once again congratulate and thank all those who took part in the work at the site, and to wish a happy New Year to everyone who has gathered near the Kuznetsovsky Tunnel and at all the ESPO facilities.

Thank you very much and good luck!