Russia's Novak Sets Out Energy Priorities

Alexander Novak, having just stepped down as Russia's long-serving energy minister, has set out what he views as priorities for the country's energy sector.

The Russian government said on November 10 that Novak had been appointed as one of the county's 10 deputy prime ministers. The reasons for the move, part of a broader government reshuffle, are unclear. However, Novak will continue to oversee energy policy in his new position and will remain Russia's representative in Opec+ talks.

Novak sees the development of hard-to-recover oil reserves in Western Siberia, LNG, petrochemicals and hydrogen, as well as the monetisation of Eastern Siberian gas and gasification, as Russia's key priorities in energy, he told reporters on November 9 according to Interfax. They will also be his main focuses over the next five years as deputy PM.

Russia has the potential to produce 120-140mn metric tons/yr of LNG by 2035, Novak said, giving the country a 20% share of the global market. He also wants to expand the use of LNG and compressed natural gas as a transport fuel, to lower costs and reduce emissions. The government has already introduced a number of demand- and supply-side subsidies to support the sector.

Novak also called for Russia to pick up the pace of gasification. While western Russia is well-gasified, many households in Siberia and the Far East rely on LPG canisters for their heating. Power plants, except for regions with gas production, use alternative fuels such as coal, hydro and nuclear energy.

The government's target is to bring gas to 83% of the population by 2030, compared with just above 70% at present. The programme will cost some rubles 1.9 trillion ($25bn) over the next decade, which is a sum that state-owned Gazprom cannot bear alone without causing "a drop in federal revenues," Novatek wrote in the energy ministry's magazine on November 9. Gazprom pays half of its profit to the government and other shareholders in the form of dividends.

In related news, Gazprom said on November 11 it had reached an agreement with authorities in the southern Astrakhan region on a 2021-2025 programme for gas supply and gasification. The company expects to invest some rubles 18.6bn in the region over the period, which is 3.3 times more than it spent in 2016-2020.

Gazprom's work in the region will include building 363 km of inter-settlement pipelines and 302 km of branch lines with gas distribution stations, while the government will construct 604 km of inter-settlement pipelines. Astrakhan is already well-gasified, with 92% of the population having access to gas.

The two sides also agreed to work together to develop a gas-based petrochemical complex to produce plastics. The complex will run on ethane from the Astrakhan gas processing plant.