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Good afternoon, colleagues.

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Today we will consider the current state of the national fuel 

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and energy complex and compare notes with the CEOs of major 

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Russian companies. We are talking about the oil,

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gas and coal industries.

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Power supply requires separate consideration at a future 

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Commission meeting.

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Before we begin, I would like to focus on a number of important 

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matters. In the past few years,

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the Russian fuel and energy complex and its base industries have 

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developed a good pace largely thanks to the decisions we 

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made in the previous years.

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I am referring primarily to incentives for the development of fields 

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in East Siberia and the shelf, as well as the stimulation of deep oil 

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refining and the launch of the production of high quality motor oils.

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These measures paved the way to unique discoveries of new reserves,

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including those on the Russian Arctic shelf, to enhance oil production,

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increase investment into deep oil refining and generally ensure overall 

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positive dynamics of qualitative change in the fuel and energy complex.

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I would like to remind you, just by way of information,

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of the Karskaya oil and gas-bearing province discovered on the Russian 

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Arctic shelf in 2014 with an overall resource base of about 

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87 billion barrels of oil.

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Today Russia is among the world leaders in oil and gas production.

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In 2014 Russia produced 527 million tonnes of oil.

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This is slightly less than Saudi Arabia and slightly more 

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than the United States: 12.

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9 percent for Saudi Arabia and 12.3 percent for the United States.

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The production of natural gas in Russia in 2014 amounted 

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to 578 billion cubic metres.

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We are implementing major projects to enhance the country’s 

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export potential. The Russian fuel and energy complex is actively 

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introducing new energy-saving environmentally friendly technologies.

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Thus, we have optimised the use of such an important 

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resource as associated petroleum gas.

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In the first six months of this year, for instance,

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we used 86.5 percent of associated gas,

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which is a 10.3 percent increase against 2012.

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We may not be moving at the rate we would have liked to,

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but we are gradually resolving the task we set ourselves 

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a few years ago concerning associated gas.

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Currently the fuel and energy complex accounts for 40 percent of all capital investment in the country.

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Our common goal is to retain the positive investment 

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dynamics in the sector.

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We must bear in mind that investment into the fuel and energy complex 

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has a positive effect on the entire national economy: it means 

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additional jobs and orders for associated industries.

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At the same time, the situation on the world energy markets is 

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unstable, as you know better than anyone else.

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Thus, compared to mid-2014, oil prices have gone down 

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by more than 50 percent.

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Gas prices followed with an almost 20 percent drop by the end 

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of the first half of this year.

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World coal prices continue falling: from a peak in 2011,

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they have gone down by an average 50 percent.

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As a result, the crisis in the world energy sector forced international 

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companies to cut investment into complex low-profit projects,

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which could have been implemented in conditions of higher 

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prices of hydrocarbons.

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For your information, though I am sure you know this already,

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but I would like to remind you that by international expert assessment,

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the reduction of world investment into the oil and gas sector might 

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reach $300 billion in 2015.

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Over the past five years, the total losses incurred by producers 

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of hard to extract shale oil in the United States amounted to about 

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$150 billion, while in the first six months of this year 

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they lost $62 billion.

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Obviously, this is not the first or the last crisis on the world market.

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The key issue today is funding the fuel and energy complex investment 

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programmes so it can continue acting as the driver 

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of the national economy as a whole.

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We need to keep our eyes on the development horizon and ensure there 

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are no pauses in investment.

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We must ensure the implementation of the long-term strategic goals 

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facing the industry and, if necessary,

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adjust the draft national energy strategy along with the general 

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development plans for the oil and gas sector and the coal 

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industry development programme.

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By the way, the draft energy strategy envisages a significant growth 

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in investment into the fuel and energy complex.

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I would like to ask that you approach this issue with the utmost 

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responsibility, indicating the sources of financing for investment 

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programmes and determining measures for ensuring their success.

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As you know, investment cycles in the fuel and energy 

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sector are fairly lengthy.

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The decisions made today will provide initial results 

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in 5–7 years at the earliest.

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Here is where I want to draw attention first and foremost.

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It is imperative to ensure that infrastructure projects with 

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participation by the state are linked with energy companies’ investment 

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programmes, focusing personnel and financial resources there.

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Second, the fuel and energy sector traditionally plays a leading role 

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in the federal budget’s revenues.

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With this in mind, we need to very carefully assess the efficacy 

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of decisions we make concerning the industry’s tax burden 

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and the impact they will have on the nation’s economy overall.

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We must strive to ensure that additional withdrawals from the industry 

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do not lead to cuts in energy companies’ investment programmes and do 

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not have a negative multiplier effect on related industries.

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I know the discussions that were held in the industry, and indeed,

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I agree to an extent with the Finance Ministry,

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but we certainly need to constantly monitor the situation 

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developing in the sector.

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Let’s return to this issue at an upcoming meeting of the Commission,

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after monitoring the situation,

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to see what is happening in the industry.

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Third, we must increase the level of localisation for technologies 

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and equipment that are needed by Russian companies and are in demand 

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among domestic consumers.

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Naturally, it is important to also abide by the price-quality parameter 

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and, moreover, we need to increase transparency of these orders by all 

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mineral developers, regardless of the structure of their share capital.

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I ask that you report today about what has been done in this area.

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Corresponding financial mechanisms should play an important role 

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in developing import substitution of equipment for the fuel and energy 

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sector, including relevant loans, leasing,

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and interest subsidies for equipment manufacturers.

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I ask participants in this meeting to share their thoughts 

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on the efficiency of these instruments.

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Fourth, it is imperative to continue our work to diversify exports 

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of Russian energy resources.

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It is important to not only maintain our position in the traditional 

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regions where we have a presence,

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but also enter new markets and know how to respond flexibly 

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to changes in trends.

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In recent years, the growth points have been moving 

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to nations in the Asia-Pacific Region.

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In spite of the fluctuations we are all aware of,

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this is a stable trend.

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The states in this region are becoming key hydrocarbon consumers.

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This is true of the liquefied natural gas market as well.

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Russia has the opportunity to increase its share of the LNG market 

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and the planned large-scale projects in the LNG field 

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should certainly be implemented.

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Furthermore, it is imperative to continue work to improve stock 

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exchange mechanisms in trading oil,

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oil products and natural gas.

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A year ago, we launched trade of natural gas on the St Petersburg 

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International Mercantile Exchange,

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in fulfilling the decisions of our Commission.

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Over that period of time, the volume of trade came to 6.

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8 billion cubic metres.

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In developing exchange trade, it is imperative to create independent 

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national price indicators for main types of fuel and energy products.

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And in this respect, I would like to touch on another fundamentally 

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important issue for developing the fuel and energy sector 

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as well as the economy overall.

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I am talking about finally stopping the practice of using foreign 

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currencies in domestic settlements.

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Mr Siluanov [Finance Minister], our law prohibits such payments,

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but what really happens? The prices for transhipment of crude oil 

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and oil products in Russian ports of Novorossiysk, Taman, Ust-Luga,

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Kozmino, Primorsk and others are either set directly in US dollars 

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or are denominated in US dollars in the online system 

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practically in real-time mode.

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And this, of course, is unacceptable,

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it is in direct contradiction to current legislation.

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I do not understand, what are the monitoring agencies doing 

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in this case?

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We need to start serious work on the complex issue of strengthening 

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the role of the ruble in payments,

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including for Russian fuel and energy sector products.

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National currencies should be used more widely in transactions with 

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nations that we have active trade with.

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We are constantly discussing this with colleagues at an interstate 

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level and we certainly need to strive to ensure 

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a transition to this type of payment.

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Of course, I am fully aware of what our companies’ interests are.

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We need to do this carefully, so that the economic actors do not 

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suffer – on the contrary, it should be beneficial to them.

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And finally, we must systematically improve the competitive environment 

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in our domestic market, first and foremost the oil products market.

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We need to stop the production and trade in counterfeit goods.

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Their circulation harms not only the companies that have made serious 

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investments in modernisation and production of high-quality fuel,

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but overall, it is defrauding the population,

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directly deceiving consumers.

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In this respect, today we will consider applying common 

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requirements to all oil producers.

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And in conclusion, I suggest that at our next meeting we take 

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a detailed look at the issue of monitoring the execution 

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of previous decisions and instructions.

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Let’s discuss today’s agenda.