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President of Russia Vladimir Putin: Mr Miller, I have several questions to start our discussion, and then we will look at things in more detail. Did total production grow or decrease last year? What is the situation with demand on the domestic market, the situation with export supplies, and what are your most promising projects right now?

Gazprom CEO Alexei Miller: Gazprom produced 418.5 billion cubic metres of gas last year. This was sufficient to cover in full reliable and stable supplies for export markets and for our own country’s needs. Supplies of Gazprom’s own gas to the domestic market came to 205 billion cubic metres.

Vladimir Putin: Is that more or less than in 2014?

Alexei Miller: It is less than in 2014. As for export supplies, they came to 159.4 billion cubic metres. This covers deliveries to markets beyond the CIS countries and gas supplies to Europe. These exports increased by 11.8 billion cubic metres. Total gas exports increased by 8 percent. Looking at the current trends, total gas exports have increased by 37.5 percent since the start of 2016.

Last year, Germany set a record for Russian gas purchases with 43.5 billion cubic metres. This is an increase of 6 billion cubic metres on 2014. But this year, we see that gas supplies to Germany and other large European countries are growing even faster. Gas supplies to Germany are up by 44 percent since the start of the year, up by 42 percent to Italy, 73 percent to France, and 52 percent to Austria. Total export growth came to 11.8 billion cubic metres in 2015, but the overall figure was already up by 7.5 billion cubic metres in the first two months of this year alone.

There is therefore no doubt that the projects to build new gas transport routes to Europe, to northwest Europe, are economically justified and backed up by the growing demand that we see right now.

Vladimir Putin: I know that you discussed one of these projects and signed the relevant documents in Rome.

 Alexei Miller: Yes, we signed a memorandum in Rome on evaluating the need to build a gas pipeline from Russia via the Black Sea to other countries. The route would head to Greece and then on to Italy. Under the memorandum’s terms, the feasibility studies and economic assessments will be completed by the end of 2016. Our departure point with our European partners in this work is the Poseidon project, which we drafted at one point with our Greek, Italian and French colleagues. This project planned for transport of 12 billion cubic metres of Azerbaijani gas from Greece across the Ionian Sea to southern Italy.

I met yesterday with Italy’s Economic Development Minister. Italy supports this project. The Greek Foreign Ministry’s General Secretary was also present at the signing. The Greek Government has also expressed support for this project.

Vladimir Putin: Mr Miller, what was the situation with the programme to expand the gas network in Russia’s regions, and what are the plans for this year?

Alexei Miller: Mr President, last year, Gazprom built 1,275 kilometres of gas pipelines and distribution networks as part of this programme, and linked 206 communities to the supply network.

As far as the programme’s results stand at January 1, 2016, we have reached a level of connection to the gas network of 66.2 percent for the country as a whole. This is 13 percent more than in 2005, when we began this large-scale programme.

The increase is more marked in rural areas than in cities. Over 56 percent of rural areas are now connected to the gas network. Mr President, if you recall, when you first set the task of carrying out this big programme to extend the gas network, the level of connection in rural areas was only around 34 percent. Over the years since then, we have built 27,800 kilometres of pipelines and have connected more than 3,500 communities to the network.

Financing for the programme this year remains at the level it was last year. We have planned 25 billion rubles for the programme this year.

Vladimir Putin: You need to synchronise your work with the regional authorities. In some cases, you have built pipelines to deliver the gas onwards from the mainline pipelines, but this gas does not always reach the final consumers.

The best example is probably the mountain cluster in Krasnodar Territory, where the Olympics took place. Not everyone there who wanted to get connected to the network actually succeeded. That is just one example. I ask you to discuss this issue with the Krasnodar Territory authorities and resolve the outstanding problems. You should do the same thing in the other regions too.

I understand, of course, that this is not Gazprom’s job, but nonetheless, I ask you to give this your attention and work in coordination with the Government and the regional authorities.

Alexei Miller: Mr President, we will continue this work.

Indeed, since the programme began, in 67 regions where we are carrying out the programme, more than 1,000 boiler houses have yet to be built and around 140,000 houses and apartments still have to be connected. In other words, the supply capacity has been built and the gas has reached the villages, but the regional and local authorities have not always synchronised their efforts and the work is not complete yet.

We know now how to intensify these efforts and have been working actively with the Government and the regions. I spoke with Federation Council Speaker Valentina Matviyenko. We prepared for her a review of the gas network extension programme for the country as a whole, showing the regions that have carried out their obligations in full.

Vladimir Putin: Give me this information and, as I said, we will look together with the Government and the regional authorities at what needs to be done to resolve these tasks.

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