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Vladimir Putin Held a Business Meeting with Nikolay Tokarev, President of Transneft

Date of publication: 30 June 2015 Printable version

Vladimir Putin held a business meeting with Nikolay Tokarev, Chairman of the Management Board and President of Transneft, to discuss prospects of the Company’s development and progress in implementing a series of major investment projects.

V. Putin: Nikolay Petrovich, let us focus on the long-term plans for the Company's development – naturally, with an eye to your investment program.

N. Tokarev: Vladimir Vladimirovich, last year the Government scrutinized and approved the long-term development program, for the time span of five years – from 2015 to 2020. The program is comprised by two sections. The first is the investment program as such, embracing greenfield development. The second section covers the Technical Upgrading, Revamping and Overhaul Program. The budget of the former amounts to RUB690 bn, and for the latter totals RUB1,320 bn.

The investment program foresees completing construction of the Zapolarye – Purpe oil pipeline, which is close to the finish line: we intend to put the line into operation in late Q4 2016. This is a new oil field, which will link the entire Transneft system to this northern site where a surge in production is expected. We were looking at 45 m tons per annum, and now arrive at 32 m.

The Kuyumba – Taishet oil pipeline will likewise be completed the next year. This is Krasnoyarsk Krai, 700-km-long, a rich oil province where Gazprom, Rosneft and a bunch of other companies operate. We do our job in line with the timeframe envisaged in the Government order and expect that oilers will be able to quickly tap these regions and bring new deposits online.

Moreover, since revamping is to be completed at many refineries (all of them must accomplish this program in the next year or two, subject to a quadrilateral agreement), a boost in the volumes of diesel is awaited on the market. And, to address this challenge Transneft started looking at new pipeline routes well in advance. One of them goes north: we have converted an oil pipe to transport oil products and will accept deliveries in two phases: first 8 m tons, then 25 m tons.

Towards south, from Volgograd Refinery, a group of Krasnodar refineries, to Novorossiysk, the so-called Yug Project; it will likewise be commissioned in phases, but within four years Russia will gain additional capacities at 35-40 m tons of oil products. In the point of fact, these are the largest and capacious parts of the greenfield development.

As for the Technical Upgrading and Overhaul, each year we shall replace lines of 1,500 km long, i.e. an overage pipe requiring replacement, the tank farm, mechanical energy equipment, pumps, electric drives. This stipulates for the serious budget of RUB1,300 bn. The operations have been underway in line with the timeframes set by the Government in the schedule. Apart from bringing crucial social effect, the program implementation will create seven thousands of additional jobs. This also covers the adjacent social infrastructure, new roads, housing, and bridges.

So we can maintain that we keep up with the schedule, the funding sources have been ensured and estimated, so no problems exist. In the scope of the program we have another segment related to import substitution, but it has emerged not due to the sanctions. We started this effort three years ago, so to speak in the thrifty manner, since deliveries of the pumping equipment were often frustrated from the monopolistic manufacturing plants in Ukraine. Unfortunately no main line pumps have been manufactured in Russia so far. Now we have been completing construction of a huge factory, to crown three-year-long work, and in December plan to launch a full-cycle production at the factory in Chelyabinsk. We hope to invite you there.

V. Putin: Very good, thank you.

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Photo: Press and Information Office of the President of the Russian Federation

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