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On the Development of Transportation Infrastructure

First Deputy Prime Minister Sergei Ivanov: Yesterday afternoon I was with the Minister of Transport, the head of Transneft, and the head of Russia's biggest shipping company, Sovkomflot, at the Primorsk port in the Leningrad Region. This is presently our biggest port for the transfer and export of oil and oil products. When you were there in in 2001 for the opening of the port, the volume of oil shipped through the terminal was 12 million tonnes a year. Today it handles 74 million tonnes. Its capacity both onshore and at sea, by virtue of the breakwater, the moorage area, and the availability of modern Russian tankers, will enable us to increase exports, especially to the European market, to 106 million tonnes. So there is considerable potential for expanding this port.

I have been particularly concerned about environmental issues. In fact, today the port meets the highest environmental standards in the world. Authorities even check the ballast water of every single tanker entering the port of Primorsk. There have been a number of instances in which we found that the ballast water did not meet established standards, and these boats were obliged to return to international waters in order to put things right.

At the same time, as I have already pointed out, today there are plans for the further development of Primorsk, in particular using the Investment Fund to lay a new railway line and, therefore, improve the shunting facilities and to increase the capacity for delivery of oil and oil products. In fact, Transnefteprodukt is building a second terminal for the oil exports right next to Primorsk. Overall, Primorsk is one of our leading ports and I am quite optimistic now about its development.

No major supplementary investment in the port's facilities from the budget is needed at the moment.

President Vladimir Putin: You are about to leave for the South.

Sergei Ivanov: Yes, tomorrow I am going on a business trip to the Krasnodar Region. This trip is also linked to transportation infrastructure. There is a meeting in Novorossiisk with the Marine Collegium to consider two questions. First, the development of ports in the Russian Federation on the Black Sea and the Azov Sea. Second, the implementation of the special federal programme for establishing coastal bases for the Black Sea Fleet in the Krasnodar Region. In addition we are examining, as we discussed in Murmansk, the mandate of the State Council and the Marine Collegium Board concerning the development of our ports. As you know, in the South we have plans in addition to Novorossisk. These involve Taman and the development of ports on the Azov Sea, including Rostov, via a river and sea system. (At the last State Council meeting, the governor [of Rostov] also raised this matter.) Above all we want to increase the volume of supplies passing through our ports and create an attractive environment for investors, so that all transportation companies, Russian and foreign, will find it advantageous to use our ports for shipping their goods.

These plans are linked to the realisation of the Burgas-Alexandroupolis pipeline project. This will also increase our shipping capacity. As for the shipbuilding industry, by the end of the year [Director General of Sovkomflot] Sergei Ottovich Frank is planning to buy three large, modern, ice-resistant tankers to sail under the Russian flag and transport our oil from the Baltic Sea. He also has plans for the Black Sea basin. We believe that Sovkomflot is fully capable of providing additional energy resources from the coastal regions of the Black Sea by using its own resources. At least in the offshore area near Bulgaria we are already capable of doing this.

In addition, I plan to visit the site where the Gelendzhik airport is currently being constructed to see how work is proceeding. And now this subject has taken on new meaning in light of what you were saying earlier about the Olympics. We must build high capacity transportation infrastructure on the coast, and not only in Sochi. In Sochi we are also planning, by the way, a maritime passenger terminal with marine facilities and sea access so that deep draught ships and cruise ships can bring tourists and guests to the Olympics by sea.

As far as the Adler airport is concerned, you know how things are going there. In general, we are studying the whole transportation infrastructure.

On Cooperation between Russia and Uzbekistan

Sergei Ivanov: In Uzbekistan we had a working meeting of the two co-chairmen of the Russian-Uzbek Commission. I was accompanied by a large delegation representing all the ministries and agencies concerned. We first signed a comprehensive agreement regarding immigration issues with Uzbekistan. This included the fight against illegal immigration, a readmission accord, and the protection of the rights of immigrants who work in both countries.

In addition, at the request of Uzbekistan, we have more or less determined the future of the Chkalov Aircraft Building Corporation based in Tashkent. Uzbekistan has agreed to accept the United Aircraft Building Corporation as a partner in this project. We have a rough idea of the product line that can be manufactured under this agreement. It includes components of the IL-76 but, above all, there is the very promising IL-114 turbo propeller, which can also be used for transportation. I know that some of our foreign partners have already expressed an interest in buying this particular aircraft.

We also discussed at some length the energy issues related to your commitments and arrangements with Islam Karimov on the upgrading and modernisation of the Central Asia-Centre gas pipeline. We also talked about the creation of a second, parallel natural gas pipeline with a capacity of about 20 billion cubic metres a year. This is already a commercial project in which Gazprom is actively involved, and there were representatives of Gazprom at the meeting.

I believe that the possibility of cooperation in mining and enriching uranium in Uzbekistan is another important subject. First of all, there are the project and the procedures we have already decided upon concerning Angarsk, an international centre. That project already includes a number of countries, in particular Kazakhstan and Ukraine. I suggested exactly the same system to Uzbekistan. They promised to provide a concrete response to Rosatom's proposal in the very near future. I was accompanied by representatives of the Vneshekonombank, including its CEO, Vladimir Dmitriev, and the head of the Eurasian Development Bank. I informed our partners that we are willing to extend more credit for our exports to Uzbekistan, in order to promote trade and economic cooperation, although economic relations between us are already quite good. This year trade grew by 43 percent.

Vladimir Putin: Excellent. And what about the subject of helicopters?

Sergei Ivanov: On the subject of helicopters we have created a joint venture called Uzrosavia in the city of Chirchik near Tashkent at the request of Uzbekistan. This allows Uzbekistan to repair and service its helicopter equipment according to certification protocols and technical documentation, both Mi-24 helicopter gunships and Mi-8 transport helicopters. The legal problems have been resolved. The Uzbek party must decide on the value of assets it will contribute to our joint venture, and, as far as we are concerned, we simply provide documentation and technical assistance with repairs. Islam Karimov expressed his gratitude for this agreement.

Vladimir Putin: From what I saw in your written account, taken all round Uzbekistan welcomed the opportunity to link up with the Caspian pipeline as a result of increase in oil and gas production.

Sergei Ivanov: Yes. That certainly is possible. By the way, improvements in oil and gas production in recent years amount to 12 billion cubic metres. So when we talk about the second branch, the new gas pipeline, we can have differing assessments of the potential for additional production in Turkmenistan. But the fact that 12 billion cubic metres are already being extracted in Uzbekistan by our companies, especially Gazprom and Lukoil, simply means that there is an urgent need for new transportation routes. Otherwise, we will start producing gas that we simply cannot export.

Vladimir Putin: We must definitely elaborate on this with our friends in Kazakhstan and Turkmenistan, so that everyone is aware of the issue, and also aware of the importance and desirability of this for all concerned. Everybody should be engaged in this.

First Deputy Prime Minister Dmitrii Medvedev: Both the government and Gazprom will be working on it.

Vladimir Putin: Good. Thank you.