Russia's Gazprom Push Natural Gas As Motor Fuel

Tuesday , 11:15 am ET

MOSCOW -September 3 Dow Jones is reporting that Russia's OAO Gazprom , the world's largest gas producer, said Tuesday it wants to revive its attempts to promote natural gas as a motor fuel.

The move, if successful, could represent a small but uncharacteristically profitable market for its gas within Russia. At present, Gazprom relies on its export contracts to offset losses of over $700 million a year on the domestic market.

Gazprom management committee member Bogdan Budzulyak said the company could get about $130 for every 1,000 cubic meters of gas fuel, significantly higher than the domestic market current price of $25-$27/1,000 cm.

Gazprom's plan envisages sales of up to 3 billion cubic meters a year, powering as many as 1 million vehicles by 2020 and substituting an estimated 2.1-2.3 million metric tons a year of gasoline or other liquid fuels.

Gazprom pointed out that its plan doesn't need any revolution in engine design, since there already exist fuel converters capable of being fitted to standard gasoline-powered cars. These are too expensive for most Russian motorists, however.

Budzulyak acknowledged that Gazprom will need legislative support to implement its plan.

If the plan comes to fruition, it could affect the volume of emissions credits available to Russia under the Kyoto Protocol on greenhouse gases. Gazprom's program promises a reduction in emissions of 1.2 million tons by 2020.

President Vladimir Putin reaffirmed Tuesday that Russia intends to ratify the Kyoto Protocol, despite comments by Prime Minister Mikhail Kasyanov Monday that the government is yet to be convinced that it serves Russia's economic interest.