A working meeting took place between Vladimir Putin, President of the Russian Federation, and Alexey Miller, Chairman of the Gazprom Management Committee.

Particular attention at the meeting was paid to the ongoing gasification of Russian regions.

Gazprom website Editorial Board

SHORTHAND RECORD

Vladimir Putin: Mr. Miller, let us talk about what has been achieved so far this year.

My second concern is related to the “Direct Line” program: there are many issues with gas access. Those are perennial problems mentioned regularly on “Direct Line,” and we go beyond just discussing them: I am aware of the fact that you develop concrete solutions jointly with regional authorities, as Gazprom cannot handle those issues on its own. However, I would like to go back to that matter.

Alexey Miller: Mr. Putin, in the first half of 2017 Gazprom ramped up its gas production by 36.2 billion cubic meters against the same period of 2016, an increase of 18.4 per cent. It can be attributed to the growing domestic consumption, which is remarkable. Gas consumption climbed by 4.6 per cent for the population, by 9.5 per cent for the power sector, by 20.6 per cent for agrochemical businesses, and by 28.2 per cent for the metals industry, with an average of 9.7 per cent and an overall growth of 11.2 billion cubic meters. It is a sign of undeniable economic advances in those fields.

The fact that the public is consuming more gas means that provision of gas supplies undoubtedly remains essential and highly important. Gazprom continues to carry out the national Gasification Program that we started implementing following your order in mid-2005.

This year, the Program covers 68 regions, with RUB 25,700 million allocated for its execution. Construction is underway for 3,700 kilometers of gas pipelines under the Gasification Program. This year, we will bring into operation 1,700 kilometers of pipelines in 31 regions and connect to gas 160 boiler houses and 75,800 apartments and households, providing gas to upward of 200 population centers.

There are outstanding issues in a number of regions. We have 19 regions that systematically fail to comply with their obligations under work synchronization plans that we sign with regional authorities every year.

Vladimir Putin: Do they fail to provide gas to end consumers?

Alexey Miller: Indeed. After all, Gazprom is responsible for bringing gas to the border of a given population center, while distribution networks within settlements or individual buildings, along with efforts for preparing consumers to receive gas, fall within the domain of regional authorities.

Of course, based on the first six months of this year, Gazprom will have to consider reallocating funds in the regions that failed to meet their obligations during that period and giving additional resources to the best-performing regions.

As of early 2017, the average gas penetration level in Russia stood at 67.2 per cent, with 70.9 per cent in cities and towns and 57.1 per cent in rural areas.

Year-on-year, our investments yield diminishing returns due to the fact that our gasification efforts focus on increasingly remote areas. It should be noted, however, that in 2017 we allocated considerable funds to such regions as the Primorye Territory in light of the Russian Government’s policy for accelerated development in the Far East. At the moment, we have invested the largest amount in the Primorye Territory as far as the Gasification Program is concerned.

I would also like to point out that the regions headed by new top officials, namely acting governors, engage in constructive working dialogue with us. I would like to give a special mention to the Yaroslavl Region where we had a working meeting with the governor and outlined rather ambitious plans for ensuring gas access within the Region.

Of course, Eastern Siberia currently plays a crucial role in our Program. I would also like to mention the Novosibirsk Region, in which we have invested a significant amount, and Karelia in the northwest of the country.

I could probably also list the regions that, for various reasons, have systematically failed to meet their obligations, such as Dagestan and, I am sorry to say, the Volgograd Region. Those regions constantly fall behind in fulfilling the obligations they undertake.

Gazprom has been financing the Program at a steady pace. In the first half of the year, we allocated exactly 50 per cent of the amount indicated in the Program. It is planned to bring the new infrastructure in operation by the 2017–2018 autumn/winter season.

Vladimir Putin: Very good.