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Meeting with Gazprom CEO Alexei Miller

September 17, 2014

Mr Miller briefed Vladimir Putin on Gazprom’s current activities.

Mr Miller reported in particular that gas supplies to European consumers are going ahead in accordance with contract obligations and updated the President on talks on gas supplies to China and on the company’s gas production plans this year.

Gazprom’s work within the programme to connect Russia’s regions to the gas network, which is being carried out in 67 regions, was also discussed.

 * * *

President of Russia Vladimir Putin: Mr Miller, it is already September and so the time is ripe to discuss preparations for the winter. This concerns above all basic energy supplies, primary gas sources, heating fuel and so on down the chain to thermal and electricity generation. Let’s start with Gazprom. First, how is Gazprom preparing for the coming season, and second, what are the company’s latest results as far as work is concerned. 

chairman of the Gazprom Management Committee Alexei Miller: Mr President, the company is working in stable fashion and keeping to its plans. Our expected production this year comes to 463 billion cubic metres. Overall, we can satisfy in full consumer needs at home and abroad.

We are working hard on the programme to connect the regions to the gas network. The programme is currently underway in 67 regions. Getting households connected and extending the gas network in the country’s eastern regions are big priorities. The average figure for gas network connection this year exceeds 65 percent, and stands at more than 54 percent in rural areas. Connection to the gas network is set to increase by 20 percent in rural areas since the programme began.

As for extending the network in the eastern regions, we are currently at work in Kamchatka, Primorye Territory, and Khabarovsk Territory. The network has been expanded in these last two regions thanks to completion of the Sakhalin-Khabarovsk-Vladivostok gas pipeline. With the start of work on the Power of Siberia pipeline, we will also be able to start extending the gas network in Sakha Republic (Yakutia) and Amur Region on a much greater scale.

Vladimir Putin: Is the work on the Power of Siberia pipeline going to schedule?

Alexei Miller: Yes, absolutely. We are in close contact with our Chinese colleagues. We have synchronised our work schedules and have also begun talks on gas supplies via the western route, which will carry resources from western Siberia to China.

Vladimir Putin: If you sign an agreement on this, what kind of volumes are we looking at? 

Alexei Miller: We plan to sign a contract for a volume of 30 billion cubic metres for 30 years, though the talks have also looked at other figures for new contracts concluded for the western route. We are looking at the possibilities for supplying 60 billion cubic metres or up to 100 billion cubic metres of gas to China.

Vladimir Putin: As far as I know, the western route could be even easier to build and operate than the eastern route.

Alexei Miller: This is certainly the case. The western route has two advantages. First, it would use the existing gas transport system in western Siberia, and second, western Siberia has no need to build gas chemical or gas processing facilities. In this sense, the amount of investment that would be needed for the western route is less than what is needed for the eastern route.

On the other hand, the potential is enormous. It is even greater than in Eastern Siberia and, without a doubt, we can increase the volume of gas supplies very quickly via the western route, depending on the growth in demand in the Chinese market.

Vladimir Putin: Let’s get back to Russia and preparations for winter.

Alexei Miller: Of course, today, the top priority in our work is to fill the underground storage facilities. We always prepare for winter in close cooperation with the Hydrometcentre. This covers daily and monthly schedules and forecasts for the autumn and winter period. This year, the Hydrometcentre forecasts a colder than usual winter.

Last winter, in 2013–2014, the climatological average for the Russian winter was lowered. And indeed, the Hydrometcentre’s forecast for last winter was justified. In winter 2013–2014, on January 30, we set an absolute record for gas supplies to consumers in the Russian Federation in all the history of our gas sector. We supplied nearly 2 billion cubic metres of gas in one day to all our consumers – 1.99 billion, to be precise. The reason was that we had anomalously low winter temperatures – an average of −25 degrees Celsius throughout the nation – in all key gas consumption centres. This led to such a drastic peak in demand.

Vladimir Putin: And what is happening now?

Alexei Miller: At the same time, that peak demand last winter was 13% higher than the previous winter. In this regard, we have increased the volume of gas we plan to pump into underground storage facilities up to 72 billion cubic metres.

Vladimir Putin: In Russia’s territory?

Alexei Miller: In the Russian Federation’s territory. This is the greatest volume that has ever been pumped in the Russian Federation in all of the sector’s history. As of today, 63.5 billion cubic metres have been pumped into underground storage, so a bit over 8.5 billion remains. And over the next 1.5 months, we will fully complete this work. This will allow us to increase the maximum daily production at our Russian underground gas storage facilities by 8% in the autumn-winter peak period of December through February.

Without a doubt, we are giving attention to pumping our Gazprom gas to Europe as well. Currently, we have pumped 3.8 billion cubic metres and plan to pump 5 billion. Naturally, we are giving careful attention to the European market and we see the role that Russian gas plays in the European market. Today, the share of Russian gas consumption in the European market is 30%, while imports are over 64%.

Vladimir Putin: There was information that Gazprom had supposedly stopped deliveries to our European gas consumers. What is actually happening?

Alexei Miller: Gazprom is conducting stable daily gas supplies to European gas consumers. We are fully meeting our contractual obligations. The issue concerned so-called extra volumes. And without a doubt, when we complete our pumping period, the active period of accumulating the necessary gas in our underground storage facilities, we will be able to meet the extra demand of our European consumers.

Vladimir Putin: In other words, if I understand you correctly, you are saying that you have fully and completely fulfilled all your obligations within the framework of your contractual obligations, but were unable to fully meet extra demands.

Alexei Miller: Yes, Mr President, precisely, they were talking about extra supplies. But if we are to talk overall about the total accumulated volume of gas exports, as of the beginning of September, it exceeds our planned volume by 3 billion cubic metres.

Vladimir Putin: Then the question arises of exports to the west and to the east. In the event that exports to our western neighbours increase, should our Chinese friends have any concerns about increasing needs in Europe? Will Gazprom be capable of providing for its consumers in that case?

Alexei Miller: Yes, we are fully prepared to satisfy the growing demand in the Chinese market, the east, and the demand in the European Union.

Vladimir Putin: Thank you.


September 17, 2014