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Vladimir Putin Meets with President of Transneft Nikolay Tokarev

Date of publication: 28 May 2020


Photo: Press Service and Information Directorate of the President of Russia

Vladimir Putin has held a working meeting with Board Chairman and President of Transneft Nikolay Tokarev. They discussed the Company’s performance in 2019 and promising business areas.

Vladimir Putin: Nikolay Petrovich, not so long ago we reviewed the current situation in the national transport industry, but did not dwell on pipeline transport, although this is an important constituent of our huge transport system as it plays a conspicuous role in national economy.

So, I’d like to listen to your assessments of what’s going on in your Company, because it is directly related to hydrocarbon supplies both to the domestic market and abroad where, as we all know, turbulent events are happening. That’s the first thing.

Secondly: Your investment plans are very important for national economy as a whole, because Transneft is one of major customers at our industrial facilities. How do things stand here?

And generally speaking, what can you say about the current situation in your Company? I also mean today’s challenging epidemiological situation. Please.

Nikolay Tokarev: Vladimir Vladimirovich, in 2019 all key performance indicators of the Company’s industrial, financial and operational activities were generally in good, positive dynamics as compared to the previous year.  The freight turnover has risen 2.5%, whereas crude oil volumes fed to the Transneft system increased by 1.5%. Despite all the spiteful prophesying, the export of crude oil from Russia grew by 4% in 2019.

The financial performance is also rather positive. The revenue went up; for the first time in its history Transneft can boast the revenue of more than RUB 1tr. The tax deductions increased by 14%; the investment programme worth RUB 270 billion was carried out in its totality. And we kept all our commitments on loans and borrowings, by footing the bills.

On the whole, the previous year completed the cycle of major strategic projects. We reached the planned milestones in the first and second phases of ESPO - Eastern Siberia - Pacific Ocean oil pipeline. From Tayshet to the Chinese border the oil pipeline’s capacity today comes to 80 million tonnes, and from Skovorodino to Kozmino on the Pacific coast today’s capacity stands at 50 million tonnes. In the meantime, the capacity of the oil seaport Kozmino reached 36 million tonnes. In other words, this export route is in highest demand today and oil companies are eager to trade their resources in this Asia Pacific market.

We built 10 new oil pumping stations and another six ones were revamped. And in addition to those 9,500 jobs that had already been created at ESPO, 1,100 new workplaces appeared in the region.

What’s more, large-scale revamping, so to say, of the petroleum products infrastructure was completed in the Moscow area. Now all consumers in the region can be certain that both motor and jet fuel will be available. This infrastructure has been created in no time with the leverage of state-of-the-art technologies, new automation tools, supervisory control. In other words, the Moscow area is one of the most advanced and up-to-date regions, to put it bluntly.

A factory in Tatarstan built from scratch as part of the import substitution programme has been commissioned; it produces drag reducing agents. So now we totally fill the needs of Transneft and consumers in the near-abroad states. This actually means that we turn from importers into exporters ready to enter overseas markets.

Generally speaking, if we look at what Transneft has done for the recent decade, according to our calculations we’ve invested RUB 2.5 trillion in new oil trunk pipelines, overhaul and modernisation of existing networks; we’ve built 19,000 km of new oil and petroleum products pipelines, three ports, whereas during three recent years we’ve built from the ground up and commissioned three large factories within the framework of the import substitution programme: two in Chelyabinsk, one in Tatarstan, and we have markedly expanded production lines at our plant in Tyumen.  This production capacity can fully meet the need of Transneft for mainline pumps, electric drives and motors. These products are in demand not only in the oil sector; shipbuilders will also use this potential. Alternative wind power engineering will also use the best practice of our factories.

Overall, 25 earlier imported products are now manufactured by our plants, as part of the import substitution programme. Today import substitution covers 96% of our needs, only 4% of all products are still imported.

And if we look at the social dimension, the Company’s headcount is 117,000 employees, with 30,000 retired workers getting our corporate pensions. The Company buys medical insurance for its employees and provides them with generous benefits packages.

As to our plans for 2020, we have to elaborate on some new stress options of our budget, minding the pandemic and the well-known OPEC deal, in order not to slash our investment programme which is planned at the level of RUB 257 billion.  We hope to succeed in this undertaking, even though the revenue and freight turnover are sagging by about 10%, according to preliminary calculations. We’ve already forwarded our proposals to the government on how to avoid the money shortfall and leave the programme as it is. These are different proposals and they are backed. I think we’ll find acceptable solutions.

V.P.: This is very important. I ask you to pay special attention to this matter.

N.T.: Now the main emphasis for Transneft is upgrading, revamping and overhaul of existing infrastructure, given that roughly 40% of our networks are overstretched in terms of technical resources; mechanical, energy and process equipment as well as the line part of our oil pipelines are in need of replacement. And we’ll certainly focus on this work in five years to come. This strategy has been finalised and approved by the Board of Directors. Hopefully, in the near future we’ll be through with the revision of all our stress options and will certainly find appropriate solutions.

V.P.: OK.

N.T.: As for the situation with the pandemic,

about 23,000 of our employees currently work remotely. This means that the Company’s IT resources enabled us to install production online communications literally during several days.

In case any emergency regimes are introduced in any regions, we have reserve groups of our employees in key positions, always ready to respond: dispatchers, operators, specialists of oil pumping stations. If need be, we have this emergency plan,

in addition to 6,000 rotation workers. We’ve taken measures to roughly double rotational allowances, to increase a period of recreation between shifts as well as the shift itself to three months. Our people do understand that this is a forced measure. We’ll try to make sure everything is done correctly and taken care of.

In other words, the situation is under control, local emergency operations centres functioning in concert with Moscow. In my opinion, there should be no surprises.

V.P.: OK.


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