VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
Vladimir Putin: Let us start with the domestic market. How is the work going?
Alexei Miller: Gazprom is successfully implementing the plans it made for 2008. First of all, I would like to note that consumption in the domestic market is growing very rapidly. This has been the case not only this year, but in the last three years.
In the last three years consumption in the domestic market has grown by more than 25 billion cubic meters of gas. This is the highest growth in the country's history. Actually it is vivid proof of the fact that Russia's economy is developing rapidly.
25 billion cubic meters is a significant amount, comparable to the annual amount that Gazprom exports to Italy, for example. Of course, in this connection Gazprom is increasing the funding of the gasification programme. This year the funding of the programme increased compared with 2007.
We are also expanding gasification regionally. Last year we worked in 58 regions, this year we are working in 64 regions, primarily expanding our activities into Eastern Siberia and the Far East. New gas extraction projects in the region will be implemented on a priority basis for the domestic market. As for gas exports...
Vladimir Putin: Just a second. We will discuss exports a bit later. How are you working with the regions, with the regional authorities on the gasification programmes?
Alexei Miller: Regarding gasification programmes in the regions, we are synchronising our plans. That is, we have signed a synchronisation plan with every region, a plan that identifies all the facilities to be commissioned and the amount of funding allocated by Gazprom and by the regions, with the understanding that the regions finance the networks inside the communities and residential quarters.
Vladimir Putin: How are these plans progressing?
Alexei Miller: More than 40% of Russian regions have implemented the synchronisation plans for gasification a hundred percent. A small proportion, about 7% to 8% of the regions, are lagging behind. The remaining regions are basically on schedule.
Vladimir Putin: You have undertaken commitments with some regions that are unable to cope even with their obligations under previous agreements. I am referring in particular to Dagestan.
Alexei Miller: Regarding Dagestan, we are working in accordance with your instructions. This applies first of all to the Botlikh District. We recently had a meeting with the Dagestan President to discuss progress. Gazprom and the Dagestan authorities agree that work is proceeding strictly on schedule.
Vladimir Putin: Let us now look at your export commitments.
Alexei Miller: Last year we exported a little over 168 billion cubic meters of gas to the European Union markets and a little over 100 billion to the CIS and the Baltic countries. Gas exports are growing year in and year out, but they are now outstripped by the growth of consumption in the domestic market. Today the domestic market is emerging as a serious rival to our foreign markets.
Part of the reason for this increased demand is the Government's decision to introduce domestic prices that bring revenues on a par with export prices. The volume is growing faster inside the Russian Federation. That is why we say that the domestic market is a serious challenge to the exports.
As for gas prices, the situation for the end user is quite dramatic. We believe that by the end of 2008 the average European price will be over $500 per 1000 cubic meters.
Vladimir Putin: What about domestic pricing?
Alexei Miller: Domestic prices are currently regulated by the Government and are still lower than the external prices. The Government has decided to increase these prices by about 25% every year. But it is understood that as of January 1, 2011 the price formula will ensure equal revenues from gas supplies to the domestic and foreign markets.
Vladimir Putin: What is the difference between the export and domestic prices today?
Alexei Miller: The difference is almost fivefold. But the gap will be gradually bridged. Residential prices will enjoy government regulation even beyond 2011. Gazprom assumes that the Government will regulate residential gas prices based on the rate of inflation.
Vladimir Putin: When we took the decision last year on leveling the incomes from domestic and export gas prices we agreed with the company that residential households would enjoy a separate regulation schedule. The transition for them will be much smoother. We have even left open the question of when we will finally level domestic and export prices. In any case, for now we will regulate residential prices.
Alexei Miller: As for high gas prices in Europe, against this background the Central Asian countries have good reason to seek higher purchasing prices for gas. We can expect that the price of gas we buy from these countries will more than double in 2009 compared with the level at which Gazprom buys it this year. On the other hand, transport and supply of Central Asian gas to external markets will be commercially most attractive if it goes through Russia along the Central Asia-Centre corridor. Considering the positive and successful experience of the purchase of gas from the Central Asian countries in recent years Gazprom is contemplating expansion of the geography of purchases to other gas-producing countries.
Vladimir Putin: You mean to buy gas in order to sell it in the world markets?
Alexei Miller: Yes, to buy gas in order to sell it in the world markets. To buy it in order to optimise our gas balance based on the understanding that Gazprom has a far-flung gas transportation infrastructure. Our transport capacity today is the largest in the world: Gazprom has the biggest portfolio of export contracts and in this connection we have great opportunities to optimise our purchases and optimise supplies and the logistics of gas distribution to external markets.
Vladimir Putin: What does your company do to develop new fields?
Alexei Miller: Regarding new fields, over the past three years Gazprom has ensured the reserves growth coefficient of more than unity. In other words, we increase our reserves by more than we extract in a year. In 2007, reserves increased by more than 590 billion cubic meters of gas. Subsequently Gazprom will proceed on the assumption that we will increase our reserves by more than the annual extraction figure every year. The main gas producing regions today are the Ob-Tazov Bay, the Barents Sea continental shelf and, of course, Yamal. By 2010 we plan to produce 570 billion cubic meters of gas. Last year Gazprom produced 548 billion cubic meters, but that is because of the unusually warm winter in Europe and Russia. This year we plan to reach 560 billion cubic meters.
Developing gas fields on Sakhalin and in the Far East is a special issue because the Government regards the social and economic development of that region as a priority. Work to develop its resources has already begun. This applies particularly to Sakhalin 3. The Government's decision assumes that Gazprom as a whole, in making its production plans, proceeds on the basis that it should produce as much gas as the domestic and external markets demand. In the future, I can assure you that Gazprom will fully meet the demands of all its consumers.
