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Industry and Energy Minister Viktor Khristenko on the project of the Baltic Pipeline System: I would like to come back to one of the biggest projects in recent years – the Baltic Pipeline System. We had set the goal of completing the final stage of this project’s realisation in the first quarter of this year.

I want to inform you that this week will see the full completion of all the work on the project. I remind you that we began this project in 2000 and in 2001 we began the first stage of realisation with capacity of 12 million tons a year. By 2003 we had reached capacity of 30 million tons a year, by February 2004 capacity stood at 42 million tons and by August 2004 at 50 million tons. The completion of the final stage this week will take us to design capacity of 65 million tons a year. As from April the schedule for delivering oil through the Baltic Pipeline System will be drawn up based on this capacity of 65 million tons a year.

Over this period 1,600 kilometres of pipeline has been laid, 17 oil pumping stations have been built and so has a reservoir capacity for 800,000 tons. We have also built a new, specialised port and oil terminal at Primorsk. This port is equipped today (with the completion of work this week) to handle simultaneously four 100,000 ton-displacement tankers. In other words, it can load 400,000 tons of oil at once. This major project, which cost a total of around $2.2 billion, is now in its final stage.

There are two points I wanted to highlight in this respect. First, when the project began there was a lot of talk that it would create a real or potential environmental threat to the Baltic Sea. I can say in all responsibility that the Baltic Pipeline System project has been carried out according to the very highest standards for environmental safety, fire safety and so on. Indeed, it is a model today for many projects and for all terminals and oil handling systems in the Baltic. We can confidently propose to all the Baltic countries the Baltic Pipeline System project as a model to follow.

Second, the stage-by-stage implementation of the project made it a lot easier to manage financially as, starting from 2001, it was able to start earning money itself. Now, as we complete work on the project this week, we have essentially already repaid the loans that we took out to finance this project and are free to channel our finances into realising our new project – the pipeline linking Eastern Siberia to the Pacific coast.

President Vladimir Putin: How much oil is going through the port of Novorossiysk now?

Viktor Khristenko: We have 47 million tons going through Novorossiysk and another 24 million tons going through Ozereyevka from the Caspian Pipeline Consortium.

Vladimir Putin: Did we reach 65 million tons in five years here?

Viktor Khristenko: We went from zero to 65 million tons.

Vladimir Putin: I would like to congratulate everyone who took part in this work. Please pass my congratulations on to all your colleagues. This is a big event that is giving Russia the new and technologically advanced transport opportunities it needs to enter world markets. This is a success.

Now I would like to look at the question of high-tech equipment and the issue of making it easier to import it to our country so as to modernise our companies and modernise our economy in general. I know that decisions were taken in this regard recently, decisions that we had been saying for a long time now were necessary.

Deputy Prime Minister Alexander Zhukov on the decision to abolish some import duties: Yes, the government approved a decision to abolish import duties on almost 800 different types of goods that do not have Russian-made equivalents. This decision concerns equipment for the agriculture, oil and gas, timber processing, medical, metallurgical, aviation, shipbuilding and electronics sectors – practically all sectors of the economy. Before this decision was taken, the import duty on this kind of equipment came to 5–10 percent of its customs value. We estimated the costs of this decision and calculated that the budget could lose approximately half a billion dollars a year. But at the same time it is important to remember that abolishing import duties for this equipment will encourage our industry to modernise its facilities and this will make our companies more competitive and will ultimately have a greater positive impact, including in terms of revenue for the federal and regional budgets.

Vladimir Putin: Is there a time limit on this decision?

Alexander Zhukov: Yes, in keeping with our rules the decision has been taken for a period of nine months, but at the end of this time we will analyse the results and I think that it will be extended.

Vladimir Putin: This means that our economic actors, our companies, should quickly seize the opportunities the government decision provides and take the necessary steps to re-equip their companies and modernise entire sectors.

Alexander Zhukov: Yes, the decision will make imported equipment a lot more affordable now and I think that many companies will make long-term investment decisions.