OREANDA-NEWS. Vladimir Putin held a meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security.

The meeting was examining the resource base’s current state and development issues, including developing Russia’s continental shelf, drafting a state industrial security policy concept, and energy exports.

The meeting also examined measures for guaranteeing transparency at energy sector companies with state stakes.

* * *

Speech at a meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security

PRESIDENT OF RUSSIA VLADIMIR PUTIN: Colleagues,

We have a very busy agenda for today’s meeting of the Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security.

Before we start our work though, you have all heard about the passing of Rem Vyakhirev, former CEO of Gazprom and a person who did a great deal to develop Russia’s energy sector, the gas sector in particular of course, but also the energy sector in general. I ask you to honour his memory now.

(Minute of silence)

We will start today by looking at the resource base’s development and effective use. Investors show great interest in our fields, and there is also a lot of interest in financial investment in this sector.

Our archaic estimation methods meant that Russia’s resource base has been undervalued. This has a direct impact on how attractive our energy sector companies are for investors. The market actors – the energy companies and the investors – have to have accurate information about reserves, and our natural assets must have a proven, clear and objective value.

We are to develop and approve new methods for classifying reserves that follow international standards as closely as possible. We discussed this matter just before with our Government colleagues, company representatives, and the Commission’s secretary. The specialists think that our estimation system has a lot of positive aspects, and our task will therefore be to bring it as close as possible to the methods our colleagues abroad use and make it more comprehensible for them.

I think it is also time to look at declassifying data on reserves. These kinds of confidentiality rules are obviously outdated now, when we have foreign investors working in the Russian energy sector and our companies’ reserves go through international audits. We have nothing to keep secret here, after all, nothing to hide, and so these rules are only harmful.

Further, all subsoil resource users must comply with the field development rules and fully extract reserves across the whole territory and not simply ‘skim off the cream’. Above all of course, this means using the right technology.

Let me give an example. If you take a field and just start with uncontrolled extraction of all the gas, the oil will go to waste. As for extracting oil using hydraulic fracturing and other rather barbaric techniques, you know what this leads to. The specialists are well aware of the consequences.

We should introduce obligatory rules for developing and exploring fields, and of course fields should go through a very thorough comprehensive evaluation right at the first stage of project development. All factors influencing production effectiveness should be taken into account.

In this regard, I ask you to look at the matter of granting Rosnedra [Russian subsoil resources agency] the powers to carry out state evaluation studies. The central commission for approving project feasibility studies should become a collegial body that will include representatives from the ministries and agencies, the companies, and also environmentalists, scientists, and experts.

I stress the point that our final objective is to ensure that our fields operate as effectively as possible and coordinate their development with regional, local, sector, and infrastructure development plans and strategies. At the same time, we must decide how to replenish our resource base and step up geological prospecting work in yet little studied but promising regions.

Of course, reality also confronts with the question of how to encourage development of fields with reserves that are difficult to extract. When doing so we will take objective criteria alone as our guideline. The specialists are very familiar with these criteria. The tax breaks that were approved last spring apply to this category of fields. Let’s discuss today how well these mechanisms are working in practice.