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President of Russia Dmitry Medvedev: Colleagues,

There has been much discussion of late on the need to build a new economy in Russia, and we realise that this new economy has to encompass the energy sector too. The energy sector traditionally plays a big part in our economy. It has been one of the foundations for our country’s development for many years now, a vital part of the global economy and a defining factor in our social situation, and this will remain the case for a long time yet to come. Our task therefore is to develop a modern energy sector and improve energy efficiency. This will be one of our key priorities over the coming years.

Russia’s Energy Strategy through to 2030 was approved in November. This policy document’s ultimate goal is to ensure energy security and Russia’s full-fledged participation in building the global energy security system. We plan to increase per capita consumption of various energy resources by 40 or more percent, in some cases by up to 80 percent compared to the 2005 consumption levels, and this will change the national economy’s structure and, most important of all, change people’s way of life.

One of our top priorities is innovative modernisation of production facilities, innovative modernisation and, where necessary, construction of energy infrastructure, development of new types of energy and advanced technology, and the serious scientific research that accompanies this process.

We will discuss the analysis of developments in this crucial economic sector today, and will also discuss it in the context of this year’s economic results at a general meeting later. I propose today that we focus on the international aspects of energy cooperation and a number of related issues.

This subject has become more and more important over recent years. A considerable number of new players have emerged on the global energy market, serious and strong players. Not only do we have to establish good relations with them, but we have to compete against them too, and competition can be quite fierce at times. We need to be prepared and we need to keep this situation in mind when planning our tactics and strategies.

At the same time, we must not lose sight of Russia’s leading role and of our overall vision of the global energy system’s development. It was with this in mind that Russia proposed looking at a new approach to building the legal framework for international energy cooperation in April this year. I spoke about this new approach in Helsinki [on April 20, 2009]. It builds on the earlier ideas on energy security that we discussed at the G8 summit in St Petersburg [in July 2006].

This conceptual approach has been discussed at various forums and received many countries’ support. At the same time, though, we cannot say that everyone seems to agree with us and wants to immediately start incorporating this approach into their routine energy policy. But discussion has begun at any rate, and I have raised this matter on various occasions during contacts with our European, American and other partners. Whatever the case, we need to reflect on creating a more solid legal foundation in this area.

We have formulated our proposals. I would like now to hear from you, from those responsible for this area in the Government, your ideas on how we can promote our proposals on international energy cooperation. Perhaps it would be good to clarify our position in more detail. Perhaps we need to draw up some more detailed documents.

To make a comparison with another subject that has been actively discussed – the European Security Treaty – my foreign colleagues often said that they are not very clear as to what our proposal actually entails. I have had to set this idea out on paper in wording that can be not just discussed but also signed, that is to say, wording that has been carefully thought through.

This energy security document [published on November 29, 2009], as we prepared it, essentially outlines a set of conceptual principles, but maybe the time has come to draft a full-fledged treaty that would perhaps be easier to discuss. I would like to hear from you on this matter at any rate.

The experts calculate that Russia produces around 10 percent of the world’s primary energy. Our energy sector produces not only the benefits, however, but is also one of the main sources of pollution and greenhouse gas emissions. This inevitably ties together the issues of energy development and climate change – both areas that we are working on actively now.

We are an active and willing participant in work to draft a new agreement on climate change for the post-Kyoto period, the period after 2012. This work needs to take into account Russia’s national interests, given our upcoming economic development plans, and at the same time the collective responsibility that we share with other big emitting countries for greenhouse gas emissions. I will discuss this subject with other world leaders when I go to Copenhagen [on December 17–18], but I think we can also give this issue some time today.

Global climate change must serve as the impetus for making our economy more competitive and improving our people’s quality of life. To repeat something I have already said on many occasions, I think the approach we should take is quite simple really. Even if all of the talk of global climate change and other environmental impacts turns out to be wrong, at the very least we lose nothing by increasing our energy efficiency, and the environment will benefit. This is a good thing. This is part of our responsibilities. And if all the scientists warn us about (taking various tones, it is true) does indeed come to pass, then we will have no choice but to take these steps anyway. And so, either way we win.

The global climate deal offers Russia real opportunities for expanding its scientific and innovative cooperation with foreign partners, creating a powerful development incentive not just for science but also for the processing sectors, and real chances to spread and develop the use of efficient modern technology, including low-emission technology. This is another part of the international dimension to our energy cooperation.

Aside from these points, I would also like to hear reports on the current situation in the sector in general and the results obtained this year. Of course, I want to hear about the problems too, above all the consequences of the accident at the Sayano-Shushenskaya Hydroelectric Station, the repair work underway, the monitoring work, and the investigation being carried out by Rostekhnadzor [Federal Service for Environmental, Technological and Nuclear Supervision] and the law enforcement agencies. I want to know to what extent the state, RusHydro [Russia’s biggest hydro-generating company and parent company for the Sayano-Shushenskaya Hydroelectric Station] and the other participants in this complex process are carrying out their financial and social obligations. Our task is clear: we must do everything to make sure such tragedies do not happen again. This is the Government’s responsibility. I want to receive a full report on the situation. I think the Energy Minister will say a few words on this subject.

I think we can turn now to the international issues. But before we continue our work behind closed doors, Mr Sechin, I ask you to say some words to the media about this year’s results (preliminary results, given that the year is not yet over), the energy sector’s contribution to the consolidated budget, and the main problems in the sector. And then I will give the floor to the Minister of Natural Resources and Environment Trutnev, to comment on the environmental problems.

Mr Sechin, you have the floor.

Deputy Prime Minister Igor Sechin: There are two main dimensions to the energy sector’s current development situation: exit and recovery from the crisis; and exit from the crisis and development of the post-crisis situation.

As far as the main results for the energy sector in 2009 go, we have the following figures.

For oil production, the estimated result, given that year is not yet over, as you said, is around 493 million tons. This is an increase on last year, slightly more than 101 percent against 2008 figures. Primary refining came to 235 million tons of oil. Oil exports came to 247.4 million tons – up 1.8 percent on last year’s result. The situation in exports of oil products improved slightly with a result of 123 million tons or 104.1 percent.

Gas production came to 575 billion cubic metres. Our biggest decline was in this sector, because of the crisis, and we have to work hard to keep hold of our markets. The domestic market for gas comes to 426.5 billion cubic metres – almost 93 percent of last year’s figure. The situation here is improving. We exported 170.6 billion cubic metres of gas – around 90 percent of last year’s figure. But I must stress the gas situation is improving towards the end of the year, and we are very close now to last year’s result.

Coal: we will have total production of around 296 million tons this year – slightly more than 90 percent of last year’s result. We are building up exports so as to support our coal industry. Exports this year will come to around 100 million tons, which is an increase of more than two percent compared to last year.

In the electricity sector we will produce around 989.5 billion kilowatt hours – around 95 percent of last year’s result. Keep in mind that the accident at the Sayano-Shushenskaya Hydroelectric Station has meant lost production. Consumption came to 974 billion kilowatt hours, which represents around 95.2 percent of last year’s consumption level.

As of December 14, energy exports have brought 1.8 trillion rubles in revenue to the federal budget – 131 percent of the target set in the Federal Budget Law. Crude oil exports brought in 1.1 trillion rubles – 149 percent of the target; natural gas exports earned us 378 billion rubles – 91 percent of the target; and oil products earned us 349 billion rubles – 142 percent of the export target figure. Those are the figures in brief.

Dmitry Medvedev: What contributed to the increase?

Igor Sechin: The increase in the oil sector was due to the fact that production began at new deposits, including the Vankor oil field, which Rosneft has launched. This made it possible to increase production. There is also the Talakan deposit, which Surgutneftegaz is developing, the Verkhnechonskoye deposit and others, in which companies have had investment programmes and have kept investment going. This has made it possible to get through the crisis period with minimal losses.

Dmitry Medvedev: I see. Thank you.

We will continue this conversation. Mr Trutnev, I ask you to say a few words now about our participation in the conference underway in Copenhagen, and what we need to do to ensure that the obligations the international community is discussing right now produce the desired results, that is to say, help make our economy more energy efficient, give our people a better quality of life, and improve the environmental situation, of course.

Minister of Natural Resources and Environment Yury Trutnev: Russia has a big group of experts working in Copenhagen. We believe that we share the global responsibility. You have already spoken about Russia’s confident position as one of the countries that has not only carried out in full its commitments under the Kyoto Protocol but has in many respects gone even further. We have saved a large number of emission credits. We still have around 33 percent of our overall balance unused, despite the fact that our economy is growing. This indicates that the measures we are already taking to improve energy efficiency are bearing fruit.

Regarding the post-Kyoto period, Russia is taking an active position, but at the same time, we think that all of the big emitting countries should take part in drawing up the post-Kyoto agreement. We should not have to bear the global responsibility alone, but should share it together with our colleagues in the United States, China, India, Brazil and other countries.

We also think that new agreements should give full consideration to countries’ specific situations, to the fact that Russia has large areas of emission-absorbing forests, for example. We think the post-Kyoto agreement should not simply set restrictions on economic activity, and indeed, be not so much a restrictive instrument, but should create opportunities for transferring environmental protection technology and open up access to financial resources markets. In other words, it should be an instrument for modernising the economy and at the same time ensuring that we all take common responsibility for looking after our planet.

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