Kremlin seeks more coal use in Russia amid gas shortage: report

Moscow (Platts)--19Sep2006

The Kremlin has started developing a new energy strategy to increase
coal usage by domestic consumers amid a gas shortage on local Russian markets,
Russia's Kommersant daily said Tuesday.
To compensate for the gas shortage, which currently reaches up to 30% of
total Russian demand, Russian authorities plan to increase supplies of coal
and fuel oil to domestic electricity utilities, the newspaper said, citing an
unnamed source at the Kremlin.
The move will allow Gazprom to secure its export obligations but will
raise electricity prices within the country, the newspaper said.
Gazprom has agreed to sell 100.5 billion cubic meters of gas to Russia's
UES power monopoly in 2006, 10% less than in 2005, at a price of $45-55 per
1,000 cubic meters. In January through August, UES has already consumed 90
Bcm, the newspaper said, citing a source close to UES.
Gazprom refused to sell more gas to UES even at a higher price, saying
that export deliveries were still more profitable, the newspaper said.
Meanwhile, the source closed to UES told the newspaper that the power
utilities need at least 140 Bcm/year "without taking into account a current
power shortage and planned expansion of the electricity facilities".
--Nadia Rodova, nadia_rodova@platts.com

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