Transcript of the beginning of the meeting:
Dmitry Medvedev: Mr Mikhelson, you represent the smallest but very important group of independent gas suppliers, which is a positive thing in view of a number of innovative ideas which you have submitted to the Government to create a corresponding market and export opportunities. In addition to discussing Novatek’s development as an independent gas supplier, we will also talk about one more issue of clear social significance.
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I recently held a meeting on gas infrastructure development in the regions. The process began a long time ago but has greatly accelerated in the past seven or eight years. It is a fact that Gazprom has been working in this area very actively and has invested considerable funds. However, Novatek holds the leading position in a number of regions, because our gas market is segmented and the regions have different suppliers. I’d like to reopen that discussion, during which we mentioned a number of gas infrastructure projects in which Novatek could and should play a leading role.
In this regard I’d like to say, first, that I consider this to be a critical goal and that, given the specifics of the gas market, Novatek, even though it is an independent supplier and a private business, should handle the bulk of the project in the regions where it has a presence and should find suitable technological solutions. Because people do not care who is responsible for this in their region – Gazprom, Novatek or some other company. One of the examples cited during that meeting was the Kostroma Region. Please tell us in greater detail about it and about your possible contribution to this programme.
Leonid Mikhelson: Mr Medvedev, last year we produced and sold around 60 billion cubic metres (bcm) of gas on the domestic market, and we account for a major share of the domestic market. Since we coordinated our plans with Gazprom, two years ago it firmly insisted that we not only supply gas to large consumers but also to the regional network. The first region where we started doing this was the Chelyabinsk Region, or rather the largest part of it, where we started gas supplies on January 1, 2012, and which we use to accumulate the necessary experience.
We entered the Kostroma Region on January 1, 2013. The region is a minor gas consumer, with the exception of the Kostromskaya state district power plant: the region consumes only 4.5 bcm, of which 3.6 bcm are delivered to the power plant. It is clear that new consumers should be connected to the gas supply system in the Kostroma Region. The project was launched by Gazprom, which started building the Galich – Manturovo – Sharya branch. It has completed the first part of it, to Parfyonovka, but the trouble is that customers’ requests often deviate from reality in terms of the pipeline’s diameter and throughput capacity.
Dmitry Medvedev: Check the real consumption figures then.
Leonid Mikhelson: The pipeline with a design capacity of 500 million cubic metres, in which Gazprom has invested 2.5 billion roubles, is only working to 23% capacity.
Dmitry Medvedev: Please check all the figures.
Leonid Mikhelson: This is why we are now considering other scenarios, which do not necessarily provide for building pipelines. But one way or another, investment decisions will be definitely taken soon to ensure that Neya, Manturovo and Sharya receive gas. We will prepare these decisions.
Dmitry Medvedev: Good.
Leonid Mikhelson: And second, there are plans to build a pipeline to the town of Soligalich. In August, the Government approved an additional resolution on connecting it to the gas distribution network, which allows us to work with potential consumers. The local authorities are now choosing an investor for the planned cement plant, and we will discuss the issue with them. And lastly, as you correctly pointed out, we have never refused to work: if you are the main supplier in a region, you must fulfil your obligations.
Dmitry Medvedev: Let’s shake on this, because you are a rapidly developing company that is actively working on the domestic market. I am not talking about the LNG market, which is a separate big, strategic issue for you. The Government has adopted a number of documents on this issue. But speaking about gas supply, you should probably try out several technical methods for supplying gas to households in one of the regions which should be economically effective and, most importantly, ensure unhindered access to gas.
Leonid Mikhelson: I understand, Mr Medvedev.
Dmitry Medvedev: Please consider this seriously.
Leonid Mikhelson: I must point out one thing, which is that people must pay for gas.
Dmitry Medvedev: Yes, absolutely.
Leonid Mikhelson: The annual arrears have increased by 135% since we entered the Kostroma Region.
Dmitry Medvedev: We have coordinated a solution to this issue with Gazprom, but I still think that it would be wise to invite you to a meeting. I am planning to hold a meeting on debts, because the situation differs from one industrial producer to another and from one region to another. Some pay in full no matter what company supplies gas – Gazprom, Novatek or someone else – while others accumulate arrears, which has a negative impact on those who pay their bills and on investors. I have promised to hold a meeting on this issue, and I am inviting you to it.
Leonid Mikhelson: Thank you.
Dmitry Medvedev: Agreed then.<…>