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Implementation of the Yamal LNG project was the subject of discussion.

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Novatek Ceo Leonid Mikhelson: Mr President, I want to update you on the Yamal LNG project that we are carrying out together with our partners CNPC and Total, in accordance with the Government resolution.

We have lost an excellent partner – Christophe de Margerie. We decided to ask his family for permission to give his name to one of our tankers. He was involved in this project from the outset. I think this would be the right thing to do. He was someone who had earned tremendous respect around the world. 

President of Russia Vladimir Putin: Yes, he was a man of great integrity and honour, and it would of course be right to immortalise his memory. He was an excellent and very reliable partner.

Leonid Mikhelson: Regarding the project itself, investment now comes to more than $27 billion according to the decisions taken last year. The important thing is that the partners are taking on the financing in full. The amount of investment made by shareholders will come to around $8 billion by the end of this year. 

We completed the drilling today, using the machinery that we developed together with Uralmash for our specific working conditions. We placed an order for four more such machines with Uralmash. It is a pleasure working with this company. We have drilled 20 exploratory wells so far. This is around 35 percent of the wells needed for the project’s first stage.

We have around 7,000 builders working at the site. Housing and facilities for 12,000 builders are nearly complete now and the same goes for facilities for 1,500 operating personnel. Construction is underway on two LNG reservoirs for the project’s first stage. Here is a photo taken in June, and here is one taken yesterday. In that short time, we have built these reservoirs 50 metres high and 90 metres in diameter.

Work is nearing completion on the airport. We have received the operating permit and the certification process is underway now. I think that we will be ready to start flights by the end of the year.

We are finishing work on the freight port. It unloaded over half a million tonnes last year and this year will reach a figure of around 1.5 million tonnes of construction materials. Work has begun on the port’s main facilities. I want to thank you for the support and for the fact that the needed government decisions were all adopted in good time so that we were able to get this site built as planned.

We already have contracts for 100 percent of our LNG. You can see the breakdown here: 27 percent to China, 36 percent to other Asia-Pacific region countries, and we have sold around 3 million tonnes to the Indian market through Gazprom Export. We have contracts for the entire output. 

We have signed a long-term contract with Atomflot for the use of their icebreakers. Yamal LNG will provide work for two nuclear-powered icebreakers, including the new LK-60 currently under construction. We have also ordered five ships from Vyborg Shipyard JSC.

The sanctions have imposed some financial restrictions on the project, because NOVATEK was included on the list of sanctioned companies. But thanks to your support, the possibility of receiving money from the National Welfare Fund is being examined at the moment. This would not be such a big sum – 18 percent of our total needed financing. It is very important though for everyone to see that the state authorities support this project.

As far as the structure of our external financing goes, this has been settled with all of the banks concerned, mostly Chinese and Russian banks. We hope to have all of the necessary loan documents ready by the end of the year so as to start receiving external financing in the first or second quarter of next year. Until then, our shareholders have sufficient financing to make sure that everything keeps to the timetable. Our deadline is 2017 and we confirm that we will be ready to meet this deadline.

Vladimir Putin: Good. This is important and needed work. I am aware of the complicated matters that you mentioned. I have discussed the options with the Government and the need to give this project our support, and we have decided that we will give you the help you need. I therefore want to wish you success.

Leonid Mikhelson: Thank you.

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