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Vladimir Putin: Mr Tokarev, let us begin with the company’s results over the first nine months of the year and then move on to some specific matters.

President of Transneft Nikolai Tokarev: Mr President, the company’s operations are stable, activities are proceeding as planned and we are set to meet our targets for this year. This concerns all areas — production, financial and economic activity, new construction, and the complete overhaul, reconstruction and modernisation of existing facilities.

We have allocated a total budget of 349 billion rubles for this work this year. Of this, 159 billion rubles is for new construction and the rest is for the complete overhaul and modernisation of existing facilities.

Taxes and wages are paid on time. By the way, the average wage in the company is around 75,000 rubles. Wages are lower in the central regions. In Bryansk Region, for example, the average wage for the region as a whole is 28,000 rubles, but our company’s workers in this region earn 38,000–39,000 on average, and in the northern regions our workers earn 110,000–115,000 rubles.

Vladimir Putin: It is tough work they do up there.

Nikolai Tokarev: It is, and the conditions are completely different there. We pay special rates for working in the Far North. This is why wages are higher there.

Overall, we can guarantee that the facilities we planned to complete this year will be ready by the end of the year. This includes our biggest projects that we have been carrying out over these last four years. The Zapolyarye-Purpe project is in itself a unique undertaking that will give oil workers access to new fields in the Far North, beyond the Polar Circle.

Our developers and designers received a state prize from the Government for new and very original engineering solutions that were used in building this oil pipeline.

We have already defended more than 30 international patents for these developments. In general, when this pipeline starts operation, it will make it possible to compensate in a large part for the noticeably reduced volumes produced at the West Siberian fields today. Planned capacity is 45 million tonnes and the first stage will give us a capacity of 32 million tonnes. The oil producers have already started delivering oil. We received our first batch from Lukoil. Now we will test all the equipment in start-up mode.

We thought at first that we would encounter problems with ensuring sufficient oil supplies for the pipeline given the delays in developing new fields, but we think things are moving along at a good pace now and the oil pipeline will be working at a comfortable level.

Vladimir Putin: Which of the new facilities do you consider the most important?

Nikolai Tokarev: We have spent four years on the Zapolyarye-Purpe project and it cost more than 200 billion rubles. In December this year, we will complete another mainline pipeline, the Kuyumba-Taishet pipeline, which will also give oil workers access to a region of abundant fields and will link up with the East Siberia–Pacific Ocean (ESPO) system. We have been working on this project for three years and it is now in commissioning and start-up phase. This is a major contribution to increasing production volumes and maintaining them at the level the Energy Ministry planned.

This year, we plan to ship around 482 million tonnes of oil. This is 1.5 million tonnes more than in 2015. Of this total, 238 million tonnes are to be exported, while 244 million tonnes will go to refineries here in Russia. Our domestic refining volumes have somewhat increased after new capacity was added through reconstruction, and then this is a market with a good premium.

At the same time, we are also increasing the throughput capacity of the East Siberia–Pacific Ocean pipeline, bringing it up to design capacity. By 2020, we plan to have 80 million tonnes going through ESPO-1, and 50 million tonnes going through ESPO-2, from Skovorodino to Kozmino. This is the maximum capacity for which the project was designed and built. This involves the construction of ten new pump stations, with construction and assembly work already underway on four of them, and project and prospecting work underway for the rest.

In this respect, we are fully meeting our obligations to the People’s Republic of China. We are ensuring work for our refineries in the region. Overall, the project makes it possible to develop capacity at Kozmino more intensively. Today, our Chinese partners take around 60 percent, even 67 percent, of the oil at Kozmino. Fifteen percent go to Japanese consumers, and then come Malaysia and Singapore, and in small amounts of 1.5 percent — other consumers in the region.

We are working today and have increased Kozmino’s capacity. It will be possible to load 150,000 tonne tankers there now, and this will make it possible to work more intensively.

As far as construction of petroleum product transport routes goes, in accordance with Government instructions, we have redirected freight flows from the Baltic ports of Ventspils and Riga to our own Baltic ports of Ust-Luga and Primorsk, and also to Novorossiisk.

Last year, around 9 million tonnes were shipped through the Baltic ports, while this year the figure was 5 million tonnes. By 2018, we will reduce this flow to the Baltic ports to zero and will direct it to our ports instead, as we have surplus capacity.

The refineries currently provide up to 32 million tonnes of petroleum products for shipping through our mainline system, and capacity currently not needed for crude oil transport will be re-profiled to ship petroleum products. This will enable us to ship up to 25 million tonnes of diesel fuel to Primorsk, and to Novorossiisk from the Volgograd refinery within the Krasnodar Territory group of refineries.

Vladimir Putin: Good.

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