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Meeting with Minister of Natural Resources and Environment Sergei Donskoy

October 23, 2015, The Kremlin, Moscow

Vladimir Putin had a meeting with Minister of Natural Resources and Environment Sergei Donskoy.

The results of geological exploration work carried out this year, the situation with investment in subsoil exploration, and measures to stimulate investment activity were the main subjects of discussion.

* * *

President of Russia Vladimir Putin: Mr Donskoy, let us talk about geological exploration. What reserves do we have?

Minister of Natural Resources and the Environment Sergei Donskoy: Mr President, allow me to report on the results of this year’s geological exploration. The following situation has developed. First, the scope of geological exploration financed in 2015 from the federal budget, considering the state of the budget, was smaller compared to 2014, but it had been growing in previous years. The funding has gone down by 20 percent to reach 28.4 billion rubles.

As regards the funds of subsoil users, the situation is different. Though private investment has also gone down (we predicted this in view of the investment limitations) by 10 percent compared to last year and stood at 310 billion rubles, we nevertheless have to take into account the fact that last year we had the maximum level of investment in 20 years, practically in the entire post-Soviet period.

It should be noted here that the physical volumes of exploration drilling and seismic exploration have also gone down by about 10 percent along with private investment.

Revenues from single payments to the federal budget amounted to around 37 billion rubles. This is about 8 billion more than planned. The planned figures, however, were also lower than last year. Previously, the situation was somewhat more positive, in a manner of speaking.

The most significant reductions were on the shelf. The companies continue drilling, but not at the same rate as, say, last year. There is an almost 50 percent reduction.

Vladimir Putin: This is natural. It is happening all over the world.

Sergei Donskoy: However, despite this, we recently had another meeting with the companies and assessed the situation with reserves increment. Here we can say that we will have simple reproduction, or compensation for the production we plan for this year (both we and the Energy Ministry predict about 530 million tons) both in liquid hydrocarbons and gas.

We expect about an increment of 710 million tonnes in oil reserves, and about 700 billion cubic metres in gas reserves. These figures cover only the first 9 months of the year, because we do expect the companies to submit reports to the state commission on reserves increment for the last 3 months of the year. Besides, we are working on the evidence base and booking the reserves.

The companies are mainly working on subsoil blocks they have been developing, not on the new ones. However, this is also natural because at present long-term investment stimulates the companies to cut risks and focus on additional exploration. They increase the reserves of their fields through missed deposits or through the reserves that are on their licence blocks. Work is underway and I will repeat that we will have replacement of oil and gas reserves this year.

Now over to our stimulation measures, because in the current situation investment activity needs to be stimulated, of course, along with the users of mineral reserves. In 2014, we introduced the so-called declarative principle, I told you about it at the end of last year. This is when the user of subsoil resources receives a license for geological exploration without any delay for a block where there are no known reserves. As we simplified the procedure, now, instead of compiling a list over the course of the year as we did before, subsoil users come to us on the declarative principle and we allot them a block of 100 square kilometres for geological exploration. Thus, this year we will have allotted 215 blocks for geological exploration, but the demand is very high. These are small companies, and they mainly deal with solid minerals.

This actually means that even in this complicated situation when prices of most mineral resources are going down, subsoil users are ready to explore new sites. The most important thing is to let them do it.

In addition to this, in line with your instructions and the executive orders that you signed, this year we have completed the creation of a state geological exploration company – Rosgeologiya. We have fully consolidated all the geological exploration agencies in public ownership, involved both in seismic exploration and drilling. Now we are working on enhancing the efficiency of this company.

A number of important, in my view, documents have been adopted. These are the documents that fully resolve the matters of geological information, including the creation of a corresponding geological information fund. We have already made good progress and I believe this law allows us to say that once it is fully implemented, our geological information circulation will be on an international level. The law has been passed and we can say that we are working on its implementation.

In addition to that, this year we have also adopted amendments to the law to simplify drilling operations. Thus, we removed a large number of expert assessments, which simplifies the procedure, and we shortened the process in terms of drawing up project documentation on drilling. In our view, this is very important, especially given the fact that companies now receive fewer restrictions on drilling.

Also, one of the laws passed this year deals with guarantees for obtaining licences for use of subsoil blocks on the Baltic Sea. There too we have implemented all the instructions.

Vladimir Putin: Ok, thank you.


October 23, 2015, The Kremlin, Moscow