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President of Russia Vladimir Putin: Shall we talk about the performance of the fuel and energy sector?

Energy Minister Alexander Novak: Yes.

Vladimir Putin: Go ahead, please.

Alexander Novak: Thank you very much.

Mr President, I would like to begin by thanking you for your constant support and attention to this sector. In fact, this is a key sector that accounts for 25 percent of the gross domestic product and almost 45 percent of federal revenues.

In 2018, sectors within the fuel and energy complex performed steadily, ensuring national and regional energy security, as well as reliable supply to consumers of all the services and products of the fuel and energy complex.

Vladimir Putin: I would like to ask you to report, maybe later in your presentation, on how your sector is going through the autumn-winter season. What can you say on this topic? What are the latest developments? Do you see any issues that require special attention from the Government ministers?

Alexander Novak: Yes, of course. This is a matter of great importance for us. I would go as far as to say that ensuring that we safely make it through the autumn-winter period is a key priority for us right now.

We keep ourselves abreast of all the developments in this respect. Together with regional task forces, the Emergencies Ministry and the Housing and Utilities Ministry, we closely monitor how the winter season unfolds. So far, everything has been stable. All the required work to prepare for the winter season was performed, including maintenance and repairs, as well as fuel supplies.

We pay special attention to regions like Crimea, Kaliningrad, as well as the Yakutsk power grid, Russia’s Far East and Siberia, where temperatures can get very low. Make no mistake; this is a very important topic for us. Currently everything is operating normally.

Of course, outages do happen; there is no getting away from this. However, every time all systems are quickly put back into operation. We have formed the required number of response teams with a total of almost 120,000 people. The special equipment that we need is also working round the clock. There is an emergency response management task force and a situation room. What I can say is that as of today the accident rate declined by 5 percent for power grids and is down by about 15 percent for the power generating complex.

Speaking about our performance this year, I would like to provide several figures. I have also brought a presentation, which we can watch if this is possible.

Next, the oil industry. Overall, I would like to say that all our energy sectors reported record-high results and increased their export potential. In 2018, we produced 556 million tonnes of oil, which is 10 million tonnes or 1.6 percent more than in 2017. We launched the development of 54 oilfields, including several large ones such as Russkoye, Tagulskoye and Kuyumbinskoye in Krasnoyarsk Territory and the Yamal-Nenets Autonomous Area.

The gas sector broke an 18-year-old record, producing 725 billion cubic metres of natural gas. This is five percent more than in 2017.

Vladimir Putin: This is a lot.

Alexander Novak: Yes, it is. As for gas export, we increased it by 20 billion cubic metres to nearly 225 billion.

I would like to point out that pipeline gas deliveries went up by 4.1 percent. The opening of new facilities – two trains with an annual capacity of 5.5 million tonnes at the Yamal LNG project – the overall export of liquefied natural gas increased by 70 percent to nearly 26 billion cubic metres of gas. In other words, we are actively developing this sector.

We have launched the third phase of the Bovanenkovo oil and gas condensate field, which has brought its capacity to 115 billion cubic metres of gas. It is a huge source for expanding the gas supply system and increasing our export potential. We are actively building the gas infrastructure such as the Power of Siberia and TurkStream.

Vladimir Putin: We must not forget about connecting new domestic users to the gas supply system, which we discussed many times with Gazprom. We must promote these programmes together with the regions, to ensure that gas is supplied to all the end users, namely households and families.

Alexander Novak: One more major task apart from the construction of pipeline infrastructure is the connection of new users to the gas supply system, as you have said. Last year, the number of users connected to this system increased to 68.5 percent, or by approximately 0.5 percent. Nearly 500 boiler stations and whole towns and neighbourhoods have been connected to the gas supply network. Of course, we must accelerate the implementation of this project with due regard for the development of the pipeline system. As per your instructions, we are preparing a programme for discussion at the Presidential Commission for Strategic Development of the Fuel and Energy Sector.

Vladimir Putin: What about the power grid infrastructure?

Alexander Novak: Speaking of the power grid infrastructure and the entire power industry, I can report that we generated 1.6 percent more electricity throughout 2018. Consumption rates have topped one percent for the first time in the past few years. This means that new clients and new production facilities continue to emerge.

We commissioned 4,500 megawatt worth of power generating facilities, including 2.2 gigawatt worth of nuclear reactors and nuclear power plants. Thus, the Leningrad nuclear power plant started operating a 1,200 megawatt reactor, with a 1,000 megawatt reactor going on stream at the Rostov nuclear power plant. And we continue to launch additional renewable energy sources, including 370 megawatt worth of solar and wind power plants last year. This is already a good indicator, and the programme is attaining peak levels.

Mr President, the coal industry is also posting a good performance: in 2018, we produced 433 million tonnes of coal, exceeding 2020 targets, which stood at 430 million tonnes.

I would like to mention the following key event: in 2018, you chaired a meeting of the presidential commission in Kemerovo, with the participants charting new tasks to expand the coal industry, mainline infrastructure, as well as the railway infrastructure. We will post entirely different development rates. Some 1.5 trillion rubles will shortly be invested in the development of the coal industry and the port infrastructure.

Vladimir Putin: We need to finalise our Kemerovo agreements, to formulate them as instructions and to start implementing them together with the Presidential Executive Office. I recall various concerns linked with the industry’s possible overhaul and grid modernisation and alterations in this connection. We should, nevertheless, understand where we are headed, evaluate the pace of our development and possible investment volumes, including those in the development of railway transport for delivering coal to consumers.

Alexander Novak: Today, we are conducting this work together with the Transport Ministry and Russian Railways, with due consideration for the mid-term global market situation. The relevant statistics will be finalised, and the programme will be synchronised with due regard for the development of the coal industry and that of the railway infrastructure.

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