Gazprom Makes Its Case to Drivers

Former Gazprom CEO Rem Vyakhirev tried not to breathe too deeply on his way to the gas monopoly's headquarters in southwest Moscow.

Usually a landmark visible for kilometers, the blue and white skyscraper disappeared into the thick smog that covered most of Moscow on Tuesday.

"I don't know how you people live here," Vyakhirev said. "I feel lucky that I only have to come into the city once in a while."

It was in this manner that Vyakhirev opened the latest meeting of a federal commission whose members hope to convince Russians to start filling up their cars with natural gas instead of gasoline.

In addition, the group plans to submit to the State Duma this fall a bill that would encourage the use of "blue fuel" by offering tax breaks to drivers and operators of propane-butane filling stations.

Vehicles that run on natural gas emit a fraction of the carbon gases and particles released by traditional cars and trucks, and supporters say widespread use of clean fuels would decrease the amount of air pollution gasoline-powered vehicles contribute to Russia's atmosphere.

Most engines that run on natural gas-based fuels adhere to European emission standards. This is one option for the nation's automobile manufacturers, who are under pressure from Prime Minister Mikhail Kasyanov to start producing cars that adhere to these standards.

Converting cars from gasoline to gas would not come cheap: Investment is to total 3.86 billion rubles ($122 million) from 2003-05. Roughly 20 percent is expected to come from the federal budget. During this period, the number of vehicles equipped to run on natural gas is supposed to double to 35,000-40,000.

Gazprom, the world's largest natural gas producer, has a vested interest in seeing demand for its core product increase. The movement, however, has its fair share of enemies. U.S. oil companies until recently have lobbied to keep alternative sources of fuel under wraps.

Russian companies are no different, said Viktor Stativko, deputy head of Gazprom's transportation department.

Since its inception in 1994, the commission has tried to get legislation passed. In the '90s, a law that would have removed many barriers to widespread natural gas use in transportation went through six hearings in both the lower and upper chambers of parliament.

The bill, however, was a victim of unfortunate timing and a powerful oil lobby, Stativko said. Former President Boris Yeltsin was supposed to sign off on the bill in November 1999, but didn't.

"No one really knows why he didn't," Stativko said. "We weren't that disappointed. As you see, we're still hard at work, and we have been given the impression that [President Vladimir] Putin approves. This time we should be more successful."

A LUKoil spokeswoman said the industry doesn't plan to lobby this time around."We have no problem with the draft bill," she said. "We are well aware of the pluses and minuses of using natural gas as a fuel for cars."

In contrast to 1999, LUKoil now has big plans to diversify into natural gas production. The company in February said it wanted to increase gas production 14 fold to 70 billion cubic meters in 2010.

Supply from independent producers such as LUKoil would be instrumental in meeting gas demand for transportation uses, estimated to reach 2 bcm in the next decade.