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President Vladimir Putin: Sergei Borisovich (talking to Sergei Ivanov), let us start with the training that you held with our American partners. I know that you have plans to continue this cooperation. Please tell us about them.

Sergei Ivanov: We only conducted the first part of joint Russian-American training of infantry troops at the base of our training ground near Solnechnogorsk. There were two intensified groups: one Russian and one American. To start with, they worked on staff activities, and then practical actively connected with utilising Russian armoured tank equipment, artillery systems and rifle weapons.

These training exercises took place successfully. Yesterday our company left for Germany, where they will continue the second part of training on the territory of the American training ground in Bavaria. Russian soldiers will make use of and train exclusively with American military equipment.

We planned this training within the framework of Russia and NATO working together, it is planned training and will be completed on 3 June. I will report to you separately on the final results.

Vladimir Putin: Good, thank you. Once more: When is the second phase in Bavaria scheduled to take place?

Sergei Ivanov: It will begin tomorrow, first there will be staff training, and on 3 June there will be the active phase, with shooting and using equipment.

Vladimir Putin: I see. Viktor Borisovich (talking to Viktor Khristenko), please tell us about the oil pipeline Taishet-Nakhodka. What is the state of affairs there?

Viktor Khristenko: In accordance with your order of 31 December, the Government passed the decree to project and build the eastern pipeline on the route Taishet-Nakhodka. This decree stipulated for a number of departments to conduct work on ratifying stages of construction, preparing a plan to develop the resources of Eastern Siberia, and joining transport positions on this project. What of this has been done so far?

On 26 April, a decree of the Ministry of industry and energy was signed, coordinated with the Ministry of economic development and the Ministry of conservation, on steps to build the pipeline Taishet-Nakhodka. In accordance with this decree, the first step involves the creation of a pipeline system in the area of Taishet, the Ust-Kut region, Kazachinskoe, Tynda and Skovorodino. The capacity of the first stage is 30 million tons. This first stage is designed to carry western Siberian oil. The second important part of the first stage is to create an oil-loading terminal at the same time in the bay of Perevoznaya, which will be able to transfer 30 million tons of crude oil. In the area of Skovorodino, an oil-loading rack is being constructed which will be able to transfer the first oil by this route to the oil-loading terminal, transferring it to railway cisterns.

As for the beginning of construction, and the schedule for development of the first stage. Currently, work is being completed on projecting, this should be completed in July. Then the project will be submitted to appropriate inspections. We expect that the first stage will be completed by 2008. In 2008, the first stage of the oil pipeline will be built. Parallel work is underway with oil companies, not just on requests for use of capacities of the first stage, but on developing issues connected with connecting oil fields in Eastern Siberia to the new infrastructure. This work is being conducted with companies which already have licenses to develop oil fields in Eastern Siberia – Surgetneftegaz, YUKOS and so on – in connecting their oil fields in the region of Taishet and Kazachinskoe. This will make it possible to synchronise the work of mining companies so that the second stage can begin with an understanding of the prospects of its capacity.

Furthermore, the Ministry of natural resources is completing coordination of a programme on providing oilfields of Eastern Siberia for use, which have not yet been allocated, so that they make up the main base for the second stage of realising the project. The project envisages, furthermore, expanding the existing system of oil pipelines in the area of Western Siberia to Taishet. According decisions on this matter, including a decision by the Federal service on tariffs, have been passed. And today we are already beginning work on expanding the capacities from Western Siberia to Taishet to 30 million tons.

We hope that the timeframes that I have outlined will be observed precisely.

We are holding parallel work on structuring financial obligations connected with the creation of this project, and work with debtors is underway. It is expected that these capacities will created exclusively by bringing in resources without special decisions on this by the Government, without special preferential measures.

At the same time, the Ministry of economic development and I reached a proposal to concentrate the dividends and profit of companies for the previous year for resolving these strategic issues, including as a measure of top-priority support of this project.

Vladimir Putin: This needs to be synchronised with the efforts and the plans that are currently being carried out by RJD, to avoid parallel work. Do you know that they also plan several actions on increasing transfer of oil and oil products there as well? So we need to make sure that this is all done in synchronisation and according to a common, unified plan.

As for the crisis at Mosenergo, the appropriate services are currently studying the situation. I would ask you to involve yourselves as actively as possible, and report to me on Saturday at a restricted session of the Security Council.