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Meeting on developing Yamal Peninsula resource potential

October 27, 2021, Novo-Ogaryovo, Moscow Region

Vladimir Putin held a meeting, via videoconference, on developing the resource potential of the Yamal Peninsula.

Taking part in the meeting were Deputy Prime Minister Alexander Novak, Presidential Aide Maxim Oreshkin, Chairman of the Gazprom Board Alexei Miller, and Chairman of the NOVATEK Board Leonid Mikhelson.

* * *

President of Russia Vladimir Putin: Good afternoon, colleagues.

Today, we will review a number of advanced projects for the development of the Russian fuel-and-energy sector and the gas segment.

We regularly hold these discussions and this is very important, especially against the backdrop of the current developments in the world energy market. As you know, the situation remains very unstable.

Primarily, I am referring to the European natural gas market where prices on so-called spot, short-term contracts exceed a thousand dollars per thousand cubic metres, while the gas reserves in European underground storage are significantly below average for the past five years.

We have discussed the reasons for this situation, and I have spoken about it too. It is due to a reduction in Europe’s own gas production, and cuts in LNG supplies to European markets, primarily from the United States. They have removed a substantial amount of gas from European markets. Incidentally, Gazprom made up for this and even supplied more gas.

It is important to maintain sustainable, reliable energy cooperation. Gazprom is carrying out its long-term agreements with the European countries in full.

Mr Miller, when do you plan to complete filling up the Russian underground gas storage facilities?

Gazprom CEO Alexei Miller: Mr President, we plan to finish pumping gas into the underground storage facilities by November 1. The target is 72.6 billion cubic metres of gas.

However, given that you have made a decision on days off, during which there will definitely be a decrease in consumption on the domestic market, we believe that it is advisable to continue to pump this weekend. This will allow us to reliably increase gas distribution to our consumers in the winter.

Our pumping this year was carried out in a very intensive manner. The previous winter was cold and the spring was also fairly cool for a long time, and Gazprom set an all-time high in the volume of natural gas extracted from its underground storage facilities: we took out 10 billion cubic metres more, 60 billion cubic metres, in all. So, we pumped gas into our underground storage facilities this summer, and then in September and October in a very intensive manner.

But Europe also set a record in withdrawing gas from its underground storage facilities at 66 billion cubic metres of gas. Unlike us today, Mr President, as you noted, they are significantly behind the level they have had over the past five years.

Vladimir Putin: When do you plan to finish pumping to our underground storage facilities?

Alexei Miller: Mr President, on November 8. We will achieve the target indicator of 72.6 billion cubic metres by November 1, and will fully complete the pumping on November 8.

Vladimir Putin: To my knowledge, Gazprom also owns underground gas storage facilities in Europe.

Alexei Miller: Yes, Mr President, we have underground storage facilities in Europe, including Austria and Germany.

Vladimir Putin: What is the state of pumping into these UGS facilities?

Alexei Miller: At present, the volume of gas in these underground storage facilities is insignificant, literally very, very low, a little under 190,000 cubic metres of gas.

Vladimir Putin: Mr Miller, all right, after you complete the pumping of gas into Russia’s underground storage facilities by or on November 8, I would like you to start consistent and planned work on increasing the amount of gas in your underground depots in Europe – in Austria and Germany.

As we both understand, this will make it possible to fulfil our contractual commitments in a reliable, stable and consistent manner and to supply our European partners with gas in the autumn and winter. In addition, this will create a favourable situation, at any rate, a better situation in the European energy market in general.

Alexei Miller: Mr President, this is what we will do. As soon as we complete pumping gas into the underground storage tanks in the Russian Federation, we will start pumping Gazprom gas into the underground storage facilities in Europe. There is no doubt that, as you said, this will make gas supplies more reliable and stable in the autumn and winter.

Vladimir Putin Fine, do this, and keep me informed on your progress.

The main goal for us is to fully supply gas at stable prices to our domestic customers – to individuals, the housing and utilities sector, industry and other sectors. These supplies must be planned for the long-term perspective, with due account of our ambitious plans to provide the regions with gas – this is also important, this is also one of our priorities.

To ensure stable gas supplies both inside the country and to our foreign partners, the Russian fuel-and-energy complex is carrying out long-term development plans, putting into operation new fields and creating gas provinces, and we are doing all this in a timely manner.

As I said in the beginning, today we will review these projects, including those on further developing the resources on the Yamal Peninsula.

Importantly, the Yamal gas production centre is playing a key role in developing Russia’s gas industry in the 21st century. Gas reserves, Gazprom’s gas reserves alone exceed 20 trillion cubic metres. The total gas reserves in the Yamalo-Nenets Autonomous Area are over 50 trillion cubic metres.

Large-scale projects are being successfully implemented on the Yamal Peninsula; the largest field, Bovanenkovskoye, is being developed. Gas will be produced here for many decades, for 100 years, perhaps even longer.

Unique technical solutions are being tested in the harsh Arctic conditions – unique for Russia and the international gas industry alike. The efficiency of the technologies has been proven by the commissioning of new wells and the Bovanenkovo-Ukhta-2 gas pipeline.

In addition, with the participation of our foreign partners, projects for LNG production have been launched in Yamal. The Yamal LNG plant with a capacity of 19 million tonnes per year is operational; the Arctic LNG-2, which will annually produce almost 20 million tonnes of LNG, is under construction. The Arctic port of Sabetta has been built from scratch to service these centres.

These and other projects to develop the Russian Arctic will make it possible to meet demand on the domestic and international markets for the long run, and will make a large contribution to ensuring Eurasian energy security.

Here I want to emphasise one very important thing. Prices on global energy markets are high, and it is necessary to take advantage of this fact as much as possible not only for expanding the industry, but also for developing the production regions and creating new jobs and high-tech companies.

So, along with investment in developing the fields, it is necessary to concentrate on building centres for deep processing of raw materials in the Yamalo-Nenets Autonomous Area.

It is important to invest in infrastructure, including transport, including such large and significant projects as the Northern Latitudinal Railway, railway accesses to the port of Sabetta, and further development of the Northern Sea Route.

I am now addressing not only the management of Gazprom and NOVATEK who are present here, but other production companies as well: you must get more involved in this work and invest in infrastructure in the common interests of developing Yamal.

To reiterate, this will create the foundation for the confident, high-quality, and long-term development of this strategically important region of Russia.

Let us begin our discussion.

Mr Novak, you have the floor.

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October 27, 2021, Novo-Ogaryovo, Moscow Region