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Russian energy policy review

Hydrocarbon Engineering,

A new report from the IEA has said that by attaching largest investments to modernise its aging power generating and transmission systems as well as district heating supply chain, and by dramatically improving energy efficiency in the building and industrial sectors, Russia could develop new economic pillars that reach beyond the oil and gas sector.

In depth review information

The IEA have conducted an indepth review of Russia’s energy policy over the past year and has identified energy sector improvements that could contribute to putting the Russian economy on a robust and sustainable growth path. The report says that to maintain a leading position in hydrocarbon production and exports and to ensure sustained federal budget revenue combinations, the country must focus on developing the most cost effective oil and gas resources and fostering competition in markets.

A turning point

The IEA believes that Russia’s energy sectors are at a turning point. The country has made considerable achievements in its oil and gas sectors in terms of investments and production as well as market reforms in the energy sector. However, very large private domestic and foreign investments are needed to replace aging infrastructure; investments and unprecedented technology upgrades are required in the oil and gas upstream sectors; and the very comprehensive and ambitious energy efficiency policy framework that has been developed over past years has so far failed to deliver any changes. For example, the amount of energy Russia needs to produce a unit of GDP is still approximately two times higher than the average of IEA member countries.

Future recommendations

The IEA report recommends that Russian policy makers make district heating sector reform one of the top priorities, and that they integrate such reform with energy efficiency policies, especially in the building sector. Setting up a regulatory framework that encourages more investment and stronger consumer involvement is essential.

The IEA encourages Russia to give priority to enhanced oil recovery and tight oil development and to further develop its export potential, such as to Asian markets. This is because Russia’s oil, gas and coal exports are making an important contribution to the global energy supply and will continue to do so.

The review also points out that Russia’s energy sector and its economy would become more efficient and competitive by progressively phasing out subsidies and cross subsidies, removing regulated prices and delinking social policy from energy policy while focussing more on consumer protection and quality of service.

Adapted from press release by Claira Lloyd

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