ECN publication
Russian energy markets: current situation and opportunities for co-operation
Published by: Publication date:
ECN Policy Studies 1-2-1999
ECN report number: Document type:
ECN-C--99-027 ECN publication
Number of pages: Full text:
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The Russian economy has been and is characterised by a relatively veryhigh energy intensity, abundantly available energy supplies and resources and central planning. In the transition towards a more market-oriented economy the energy sector plays an important role, because of its relative importance to the Russian economy and to stop the wasteful use of the energy resources necessary for a sustainable long run development of the Russian economy and European supply security. In this study it is clearly shown that, although the major policy objectives in Russia are in practice more or less the same as in the European Union (EU), insufficient attention is paid to energy saving and efficiency improvement of end-use in all economic sectors. In order to increase the competitiveness of the Russian economy it is necessary for the government, local authorities, etc., to pay more attention to the development of efficiency programmes and policies, to enhance the skills, knowledge and particularly payment of the energy bills by consumers (currently the average non-payment is about 80%). With respect to supply, the abundant reserves of gas, oil and coal did lead to an inefficient exploration, production and distribution. Therefore, it is necessary to gradually implement cost based pricing of fuels for production, transport, distribution and trade, which will result into a more efficient supply to consumers and allocation of fuels between regions. The gas market, with Gazprom as the major supplier, should continue its plans for a more efficient production, transmission and distribution of natural gas. It should also pay attention to appropriate pricing of gas, namely based on interfuel substitution. Furthermore, stabilisation of the economy should also allow and encourage more joint ventures to invest in energy projects, particularly in the field of improvement of efficiency of production, transport and distribution of gas, oil, coal and electricity. As a consequence of improving the efficiency of the entire energy sector, including end-use in economic sectors, trade between Russia and EU member states can be enhanced, which is to the benefit of both the EU as well as the Russian Federation. 15 refs.

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