Commission on Fuel and Energy Issues. The Presidential Commission on Energy will be given additional powers

Deputy Energy Minister Kirill Molodtsov, who held this position since 2013, resigned from the ministry due to a transfer to another job. Now he is tipped for a position in the presidential administration (AP). According to Kommersant’s sources, the presidential commission on the fuel and energy complex, which is historically considered the headquarters of Rosneft head Igor Sechin, will come under the jurisdiction of Mr. Molodtsov.

Deputy head of the Ministry of Energy Kirill Molodtsov resigned from the ministry due to a transfer to another job. July 5 was Mr. Molodtsov’s last day at the ministry. He may get one of the positions in the administration of the President of the Russian Federation: in particular, assistant or adviser to the President of the Russian Federation, or assistant to the head of the Presidential Administration Anton Vaino, Kommersant sources say (RBC also reported this).

In addition, Kommersant’s sources say that Mr. Molodtsov wanted to get a position at Zarubezhneft, whose board of directors he headed in 2015–2016. According to one of Kommersant’s interlocutors, the head of the Ministry of Energy, Alexander Novak, opposed such a transition.

Rumors about the resignation of the deputy minister have been circulating for several years and escalated in March.

Then Kirill Molodtsov was deprived of his supervision: the departments of transportation and processing of hydrocarbons were transferred to Deputy Minister of Energy Pavel Sorokin. It is still unclear whether the Ministry of Energy will look for a replacement for Mr. Molodtsov. Let us recall that in mid-2016, Kirill Molodtsov joined the presidential commission on the fuel and energy complex (it will meet for the first time in three years, as RBC reported, on August 27) instead of the then adviser to the President of the Russian Federation Anton Ustinov, who then headed Sogaz.

Perhaps Mr. Molodtsov will become Mr. Ustinov’s successor and in the position of presidential adviser, his supervision will include the presidential commission on the fuel and energy complex (the responsible secretary is the head of Rosneft, Igor Sechin). Let us recall that Mr. Molodtsov came to the Ministry of Energy in 2013 from the position of head of the second phase of Gazprom’s Shtokman project.

Dmitry Kozlov

How Vladimir Putin formed his administration

Vladimir Putin signed decrees that reassigned the Security Council apparatus and most heads of departments of the presidential administration (AP). The head of the Chechen government, Abubakar Edelgeriev, became the president's adviser. The expert did not rule out that this appointment may be a consequence of a change in the model of behavior of the federal center in the North Caucasus. It was also officially announced that Boris Yeltsin’s son-in-law, Valentin Yumashev, was appointed advisor to the president on a voluntary basis. Over the 18 years that he allegedly holds this position, his functionality has never been defined.

August 27, Kemerovo. - The president Russian Federation Vladimir Putin chaired a meeting of the Commission on the strategy for the development of the fuel and energy complex and environmental safety.

Opening the meeting, the head of state noted that the domestic fuel and energy complex plays an important role in increasing the pace and quality of economic growth. “The fuel and energy sector accounts for about 22 percent of the country’s GDP, almost 60 percent of exports and 40 percent of federal budget revenue.

The President added that at the end of 2017, Russia confirmed its status as one of the leaders in the global energy market: “We took first place in the world in terms of oil production, second in gas production. Russia is one of the leading countries in terms of electricity generation and coal production: in terms of electricity – in fourth place, in terms of coal – sixth place in the world.” According to Vladimir Putin, last year the amount of investment in the industry increased by 10 percent and amounted to 3.5 trillion rubles.

Speaking about coal exports, the head of state noted that in 2017, domestic companies sold more than 190 million tons of coal abroad. “According to this indicator, our country confidently ranks third in the world. The current situation provides an opportunity to expand Russia’s presence in the global coal market, strengthen its position and increase its share,” the President said.

The topic was continued by the Minister of Energy of the Russian Federation Alexander Novak, making a keynote speech on “Increasing the efficiency of logistics solutions that ensure an increase in Russian coal export volumes.” The head of the energy department drew the attention of the Commission members to what last years A number of fundamental decisions and strategically important documents on the development of the coal industry were adopted. Among the first of them is the Long-term program for the development of the Russian coal industry for the period until 2030. “The coal industry has successfully overcome the period of deep decline in prices on world markets and is developing steadily. From 2012 to 2017, Russian coal production increased by 15.5 percent to 410 million tons. The 420 million tonne mark will be exceeded this year, and we are likely to surpass the Soviet-era maximum production level reached in 1988. The enrichment volume will increase to 195 million tons, an increase of 28 percent. Investments will reach 130 billion rubles a year, tax deductions will exceed 100 billion rubles,” Alexander Novak cited statistics.

The minister noted that the industry is developing significantly ahead of the long-term program: “The production targets that were set for 2030 have already been achieved.”

Alexander Novak reported that the structure of coal mining was also changed in favor of safer, open method. In five years, its share has grown from 70 percent to 75 percent. “There is a concentration of production at the most efficient enterprises, the load on the mining face and on mining transport equipment is growing. Over the past five years, the labor productivity of coal mining workers has increased by one and a half times. This year alone, Russian miners have set seven world records,” the Minister emphasized.

Separately, the head of the energy department focused on the issue of safety in the coal industry: “In 2017, the lowest specific rate of fatal injuries in the entire history of the industry and the highest level of costs to ensure safe conditions were recorded. Based on the results of the work of the interdepartmental commission under the auspices of the Ministry of Energy, coal companies in 2016 developed and are implementing medium-term measures to improve industrial safety.”

The minister noted that it is advisable to provide state support for the investment process in the coal industry. In this regard, it is necessary to make wider use of the mechanisms of territories of advanced socio-economic development, the Free Port of Vladivostok, and special investment contracts for investment projects in the coal industry. “We will continue to take measures to reduce the import dependence of the coal industry, including the creation of domestic mining equipment and materials, personal protective equipment, automation and software that ensure safe conditions for mining. To stimulate the use of modern domestic technological solutions in coal generation as part of the selection of projects for the modernization of generating facilities of thermal power plants, primarily in the regions of Siberia and Far East, where coal is the main fuel,” the Minister said.

According to Alexander Novak, it is fundamentally important to assess the prospects for strengthening Russia’s position in global export markets. Export has been the key driver of industry growth over the past decade, and will continue to be so. “Analysis of the situation on global coal markets shows that Russia, as the world’s third-largest coal exporter, is opening a new window of opportunity in the medium term.

Last year, growth in global coal consumption resumed, including due to Southeast Asia, India, Turkey and a number of other countries. International trade in thermal coking coal has increased and has already exceeded 1.3 billion tons,” said the head of the energy department. “In 2018, coal exports from Russia, according to our estimates, are expected to exceed 200 million tons: about 100 million tons in the western direction and about 100 million tons in the eastern direction. In the western direction, our prospects so far seem extremely limited due to the plans of EU countries to reduce coal consumption, as well as due to projected competition from suppliers from Colombia and the United States. In general, it must be said that today Russia’s share in European markets is almost 40 percent and is quite high,” said Alexander Novak.

In Kemerovo on August 27, for the first time since October 2015, a meeting of the presidential commission on the fuel and energy complex will be held, two government sources told RBC. It is planned to discuss the tax maneuver in the oil sector and the problems of the coal industry

Photo: Anton Vaganov / Kommersant

After a three-year break, meetings of the presidential commission on strategy for the development of the fuel and energy complex and environmental safety (fuel and energy complex commission), the executive secretary of which is Rosneft Chief Executive Officer Igor Sechin, may resume at the end of summer. Two sources in two relevant departments told RBC about this.

According to RBC's interlocutors, the meeting is scheduled for August 27 in Kemerovo, the agenda is currently being prepared. Among the issues that are planned to be discussed at the commission is the tax maneuver in the oil industry and its impact on fuel prices and the development of the coal industry. But the number of issues on the agenda will expand, RBC sources say.

Vladimir Putin's press secretary Dmitry Peskov declined to comment. “We traditionally don’t make such announcements,” he said. Representatives of the Ministry of Energy and Rosneft also declined to comment.

The Fuel and Energy Commission was created in June 2012 after Vladimir Putin returned to the presidency, and Sechin, who oversaw fuel and energy issues in the government, headed Rosneft. The commission includes the heads of the largest oil and gas companies, as well as Transneft and Rosatom, relevant ministers, heads of the FAS and FSB, etc. In 2012-2013, meetings of the commission were held twice a year, issues such as liberalization of gas exports, tax maneuver in the oil and gas industry. In 2014 and 2015 there was only one meeting of the commission. After October 2015, there were several attempts to resume the work of the commission with different agendas - in 2016 and 2017, but in the end the meetings were postponed and then cancelled. As Kommersant wrote, the agenda of the commission’s meeting in 2017, scheduled first for February, then for April, was supposed to include electricity issues.

The last meeting of the Presidential Commission on the Fuel and Energy Complex took place on October 27, 2015. At that time, issues of import substitution in the fuel and energy complex, development of the domestic gas market and taxation were discussed. And the minutes of the meeting of this commission were signed only six months later - on February 9, 2016. It instructs the relevant departments and companies to work out a unified tariff for gas transportation and storage for Gazprom and independent gas producers by June 1, 2016. The document also proposed to develop and implement a mechanism for a guaranteeing gas supplier for the needs of the regions, dividing this burden between Gazprom and its competitors. At the same meeting, proposals from the head of the Federal Antimonopoly Service (FAS) Igor Artemyev to consider the possibility of dividing Gazprom and liberalizing gas exports.

The President held a meeting of the Commission on the strategy for the development of the fuel and energy complex and environmental safety in Kemerovo.

Before the meeting, the head of state inspected models of facilities planned for construction in Kemerovo. V. Putin was shown, in particular, the project of a cultural, educational and museum-exhibition complex, which will house branches of the Mariinsky Theater, the Russian Museum, Russian Academy music named after the Gnessins, a multifunctional concert hall, and also talked about the construction of the Kemerovo Presidential Cadet School.

Verbatim report of the meeting of the Commission on the strategy for the development of the fuel and energy complex and environmental safety

V. Putin: Dear colleagues, good afternoon!

It is no accident that we are holding a meeting of the Commission on the development of the fuel and energy complex in Kuzbass, of course. We all understand that Kuzbass is one of the world’s largest coal mining centers, indeed world centers. And, among other things, the day before, that is, yesterday, there was a holiday for those who work here and in the industry as a whole - Miner’s Day. On my own behalf and on behalf of everyone present here, I want to congratulate the miners on their professional holiday, wish them health, all the best, success in a very difficult, but very necessary work for the country.

Dear colleagues, today we have a busy agenda. Together with business representatives and regional leaders, we will discuss the current situation in the Russian fuel and energy sector, consider the key directions and guidelines for the development of the industry and, of course, evaluate how the previously adopted decisions of our Commission are being implemented.

The fuel and energy complex plays an important role in increasing the pace and quality of economic growth in our country. The fuel and energy sector accounts for about 22 percent of the country's GDP, almost 60 percent of exports and 40 percent of federal budget revenue.

In the conditions of difficult market conditions in recent years and artificial external restrictions, the Russian fuel and energy complex has managed to effectively respond to the challenges facing it. At the end of last year, Russia once again confirmed its status as one of the leaders in the global energy market. We took first place in the world in terms of oil production, second in gas production. Russia is one of the leading countries in terms of electricity generation and coal production: in terms of electricity – in fourth place, in terms of coal – sixth place in the world.

Russian energy companies are increasing investments in development. Last year, the amount of investment increased by 10 percent and amounted to 3.5 trillion rubles.

New hydrocarbon deposits are being developed, and the transport infrastructure of the fuel and energy complex is being developed. At the same time, I want to emphasize that the level of gasification in the region, including rural areas, is growing at an insufficient pace. Now we were at the Chernigov open-pit mine together with the acting governor. Right on the spot, a small group of people, a small group of workers from this enterprise, one of them raised the issue of gasification. This is a natural question, because the pace, unfortunately, is not what we expected in Lately. This requires coordination between federal authorities, between Gazprom, between independent producers and local regional authorities, because the “last mile” is usually the problem. It all needs to be lined up in one chain. We need more dynamics on this issue. I propose to discuss this very issue at one of the next meetings of our Commission.

Russian energy companies maintain stable positions in foreign markets. Thus, the volume of natural gas exports reached its absolute maximum for two years in a row. It is necessary to develop the export potential of Russian energy.

I would like to note that in recent years, competition in the global energy market has noticeably intensified, so it is extremely important to effectively use our competitive advantages, diversify supply routes, and enter and gain a foothold in new markets.

One of the most attractive destinations, as we all know well, is the Asia-Pacific region. Demand for a wide range of goods is growing here, and this opens up great opportunities for Russian companies. In this regard, I would like to note one important initiative. In June of this year, during a visit to China, we agreed with Chinese President Xi Jinping to organize a Russian-Chinese energy business forum. I am confident that this platform will allow us to expand cooperation between our countries, find new directions for mutual investment, to launch promising projects in the energy sector. The first forum is planned to be held in November this year in Beijing. I know that the Russian side has already expressed interest in participating in about 40 companies. A representative delegation is also expected from our Chinese friends. Please let me know today how the work on organizing this forum is progressing.

Of course, Russia is open to cooperation with all countries, both in the east and in the west. Here it is important not only to conquer new markets, but also to feel confident in our traditional markets. Today, within the framework of our Commission, we will separately discuss the prospects for the development of such interaction in the field of coal supplies. Last year, domestic companies exported more than 190 million tons of coal. According to this indicator, our country confidently ranks third in the world. The current situation provides an opportunity to expand Russia’s presence in the global coal market, strengthen its position and increase our share. To take advantage of these opportunities, you need to solve a whole range of problems. This is an increase in the profitability and safety of coal mining facilities, their modernization both in traditional coal mining areas (Kuzbass, Khakassia, Yakutia) and in new ones (Eastern Siberia and the Far East).

And of course, it is necessary to improve logistics, expand export corridors, especially the capacity of railways, for which coal companies are anchor shippers. As you know, the development of the eastern test site railways, debottlenecking on the BAM and Trans-Siberian Railways are designated as priority goals for the development of Russia's transport infrastructure in the coming years. I would like to emphasize again that there must be a constant connection between the plans of coal companies to increase production with the development programs of Russian Railways, as well as with investment projects of seaports. It is important to ensure a balanced, A complex approach to expand the capacity of railways, to take into account the needs of not only coal companies, but also shippers of container transportation of bulk and liquid cargo. It is necessary to work out the issue of consolidating the mutual obligations of carriers and consumers, and to use long-term contracts in this area. This approach will contribute to the successful implementation of investment plans of both shippers and transport companies.

I would like to point out one more fundamental thing. It is necessary to resolve issues of development of the coal industry on the basis of the most modern technologies, which should provide not only an economic effect, but above all ensure improved working conditions for miners and their safety. It is necessary to more widely introduce advanced operating standards in the coal industry and pay increased attention to the protection environment, especially in ports and coal transshipment areas. Caring for people’s lives and health, and the environmental well-being of cities and towns should be an absolute priority. The entire chain must become environmentally friendly - from coal mining to its transshipment in seaports.

I ask the Commission to keep these issues under constant control and propose to consider conducting an audit of compliance by subsoil users with approved models of field development, as well as the regulatory framework and practice of its application in terms of environmental and industrial safety, in order to harmonize legislation in this area.

And one more topic before we move on to the reports. We are talking about the modernization of thermal power plants. In recent years, it has been possible to significantly increase the capabilities of thermal generation, update its structure, and increase the stability and efficiency of the stations. The mechanism of power supply contracts played a decisive role in this process. It was based on the obligations of investors to commission new capacities after the privatization of energy facilities on conditions that were quite comfortable for business.

Today we are talking about the construction of resource-saving environmental stations that will replace outdated, unreliable installations with low environmental standards and economic returns. Moreover, this must be done with maximum reliance on domestically produced equipment, up to its 100% localization, if the initial source is our foreign partners. It is necessary to identify stable sources of financing for the modernization of thermal energy. I ask the Ministry of Energy to take this issue very carefully and analyze all market reserves.

At the same time, I would like to emphasize again that capital investments should not be transferred to the shoulders of consumers. Today, some regions have developed the practice of pushing through unjustified tariff increases. As a result, the proceeds do not go to the development of regional energy, but, accordingly, into the pockets of specific individuals close to those who make decisions of this kind. There is a proposal to change this situation by introducing a reference principle for tariff formation. We will also discuss this approach today.

This is what I would like to say at the beginning. Thank you for your attention and I give the floor to Alexander Valentinovich Novak. Please, Alexander Valentinovich.

A. Novak: Dear Vladimir Vladimirovich ! Dear Colleagues!

In recent years, a number of fundamental decisions and strategically important documents on the development of the coal industry have been adopted. Among the first of them is the Long-term program for the development of the Russian coal industry for the period until 2030, which was approved by you, Vladimir Vladimirovich, right here in Kuzbass in January 2012.

Undoubtedly, measures were taken to develop this program, and most importantly - a single vector targeted actions all interested parties: these are ministries, departments, coal companies, energy companies, Russian Railways and administrations of coal regions. All this has had a significant effect; the coal industry has successfully overcome the period of deep decline in prices on world markets and is developing steadily.

I'll give you a few numbers. From 2012 to 2017, Russian coal production increased by 15.5 percent to 410 million tons. The 420 million tonne mark will be exceeded this year, and we are likely to surpass the Soviet-era maximum production level reached in 1988. We also expect the enrichment volume to increase to 195 million tons, which is 28 percent more. Investments will reach 130 billion rubles per year, and tax deductions will exceed 100 billion rubles.

As a result of the measures taken on your instructions, Vladimir Vladimirovich, the production targets that were set for 2030 have already been achieved. That is, we are significantly ahead of the long-term development program. If we compare it with the updated program of 2014, we are three years ahead. Therefore, of course, in general, the program itself requires adjustments, as well as the setting of more ambitious goals for the commissioning of capacities, the quality of supplied coal, and the share of exports in supplies.