The Kremlin Activates Coal
// To help Gazprom meet its export orders
The Russian presidential administration has developed fuel strategy for Russian electricity. Kommersant has learned that it will not emphasize growing gas supplies, of which, experts say, there is already a 30-percent deficit, but coal. Thus, Russian authorities will convert domestic consumers to coal and heating oil, which will unavoidably lead to higher electricity prices, but guarantee that Gazprom meets its export plans.
Head of the presidential executive administration Sergey Sobyanin held a meeting yesterday devoted to the fuel balance in Russian electricity for the coming years. A Kommersant source said that it was the first of several meetings relating to that topic planned for the next several months with the goal of creating an energy strategy through 2015. Minister of Industry and Energy Viktor Khristenko, RAO UES of Russia head Anatoly Chubais, Federal Tariff Service chairman Sergey Novikov and Gazprom management board member and Mezhregiongaz general Director Kirill Seleznev were present at the meeting. The discussed fuel for the next heating season and the coming years and, in particular, compensating for the shortage of natural gas on the domestic market.
Gazprom has allotted 100.5 billion cu. m. of natural gas for Russian electricity this year, 11 billion cu. m. less than in 2005. RAO had used 90 billion cu. m. of that amount by the end of last month. Gazprom explains that less gas was allotted for RAO because several of the companies that have split off from it are buying gas independently. RAO states that it is already experiencing a gas shortage that it has had to compensate for using heating oil (consumption of which exceed the target by 34 percent last year) and coal (the volume of which had to be raised by 8.4 percent). Heating oil, according to Chubais, is more than three times more expensive than natural gas, which RAO buys for $45-55 per 1000 cu. m. It was agreed at the meeting yesterday that the price of electricity had to be raised. However, a Kommersant source in RAO says that it is unlikely that it can be done this year.
Sources say that RAO will likely receive even less natural gas next year, since it is more profitable to export it. They say that a minimum of 140 billion cu. m. of natural gas are needed by RAO and 160 billion cu. m. would be ideal. And that demand will be growing. Gazprom says that there is no gas shortage in Russian electricity generating.
Gas consumption is rising faster than foreseen by the state gas monopoly. It was predicted to rise by 1 percent this year, but the real figure is 4 percent. Although Gazprom plans to increase production from 548 billion cu. m. in 2005 to 560 billion cu. m. in 2010, it also plans to increase exports from 151 billion cu. m. in 2005 to 180 billion cu. m. in 2010. Thus, the domestic shortage of gas will also increase.
Electricity generators are being offered coal as an alternative to natural gas. The construction of new coal production facilities in various regions of the country was also discussed yesterday. Although no coal industry representatives were present at the meeting, statistics were presented to indicate that coal supplies are sufficient to take care of the growth in energy demand through 2030. There are now about 20 electric stations in Russia today that can run on natural gas or coal. According to the Institute for the Problems of Natural Monopolies, converting those stations to exclusive coal use would save 27 billion cu. m. of natural gas per year.
Industry analysts say that the new strategy has been developed with the interests of Gazprom, not Russian consumers, in mind. Troika Dialog analyst Valery Nesterov said that current conditions make it politically and economically more expedient to export natural gas than to supply to Russian consumers. First Deputy Prime Minister Dmitry Medvedev, who is also chairman of the Gazprom board of directors, is responsible for guaranteeing Gazprom's presence on European markets and for seeing to its entrance onto Chinese and American markets.
Ekaterina Grishkovets, Natalia Grib
All the Article in Russian as of Sep. 19, 2006
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