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President of Russia Vladimir Putin: Mr Mikhelson, let’s discuss the company’s development, the situation with your big projects, and your current activities, of course.

Chairman of the Board of NOVATEK Leonid Mikhelson: Mr President, I briefed you last year on NOVATEK’s work. We have launched a number of big investment projects and they have produced some very positive results as far as the figures go this year. For example, our liquid hydrocarbons production is up by more than 30 percent now.

I would like to brief you on the big investment projects that NOVATEK and SIBUR are carrying out. I have already briefed you on the Yamal LNG project.

Vladimir Putin: Yes, you have built a whole town up there.

Leonid Mikhelson: That’s right. The project is going to plan. What is important here is that we decided in 2013 on this investment plan worth the equivalent of $27 billion, and these estimates have proven accurate. We are not overstepping this budget.

Overall, the project is around 68 percent complete now and the first stage [the liquefied natural gas production plant] is around 85 percent complete. We plan to bring the plant on line at the end of 2017.

There are now more than 22,000 people working in Sabetta and we have created just as many jobs there. We estimate the total volume of orders around Russia at approximately 580 billion rubles. Some 650 companies are engaged in fulfilling these orders and this, we estimate, represents around 60,000 jobs.

Your timely support for our obtaining money from the National Welfare Fund gave our project a big boost. We had not organised external financing in time before the sanctions were imposed, and the support you gave us has enabled us to keep the project going to plan despite the changing situation.

The project has now received all investment in full. The shareholders financed $13 billion, we received $4 billion in rubles from Russian banks, and we have $12 billion from Chinese banks.

The first reservoirs needed for the project’s first stage will be ready for operation in the first quarter of next year. The first stage of the electric power plant will be ready for launch at the end of next year. I think we will be able to invite you to see the first tanker getting filled in exactly 12 months’ time.

Over the time the project has been underway, more than 10 million tonnes of freight have been delivered and unloaded in Sabetta.

Vladimir Putin: Does the port work year-round?

Leonid Mikhelson: Yes, it has been working year-round for three years now.

The next slide shows the unloading ramp. We have already assembled the unloading modules and will be ready to test the tankers’ docking system starting in the first quarter of next year.

Vladimir Putin: Good.

Leonid Mikhelson: We have received practically all of the programmed state investment on time and the work is going to schedule. Work to deepen the seabed, involving around 68 million cubic metres, is also on schedule and the needed facilities under federal ownership have been built.

We have four icebreakers working for us now, including two atomic-powered icebreakers. Atomflot built two port-based tugboats especially for this project, and two icebreaker tugboats will be built next year. Another large port-based icebreaker is also under construction and will enter service in 2018.

We have contracts signed for nearly the entire volume – 96 percent – of the future LNG production. The first tanker, which we have named Christophe de Margerie, is going through its first tests now. The project is progressing very well.

I also want to show you the work underway on the SIBUR project, ZapSibNeftekhim, in Tobolsk.

Vladimir Putin: This is part of the first stage?

Leonid Mikhelson: No, this is a separate plant. You were present for the launch of a plant that can produce 500,000 tonnes of polypropylene. This plant is more than four times bigger.

Vladimir Putin: This will be one of the biggest projects.

Leonid Mikhelson: It will be the biggest plant of its type in Europe. It will have capacity to carry out pyrolysis of around 3 million tonnes of liquefied gases, producing 1.5 million tonnes of ethylene and 500,000 tonnes of propylene. This will be a huge production facility.

This project has an overall budget of around $9.5 billion. The budget is 57-percent financed by SIBUR, and around 20 percent has come from the National Welfare Fund.

Vladimir Putin: Have the decisions already been made?

Leonid Mikhelson: Yes, the financing is underway and completely open.

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