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. Last Updated: 07/27/2016

Kremlin Urges UES to Burn More Coal

Itar-TassSergei Sobyanin
Kremlin Chief of Staff Sergei Sobyanin called in the nation's senior energy officials for talks on supplies for the nation's power stations amid growing signs of a looming energy crunch, Kommersant reported Tuesday.

Sobyanin asked electricity monopoly Unified Energy Systems to make greater use of coal instead of gas amid worries that Gazprom would not be able to produce enough gas this winter to meet surging demand at home and abroad, the report said.

The worries are about gas supplies over the next few years. But the late Monday meeting could still stoke jitters in Europe, which remains uneasy after a Russian price dispute with Ukraine disrupted gas supplies last winter.

Gazprom has denied that shortfalls could occur. It plans to boost production to 560 billion cubic meters by 2010 from 548 bcm in 2005.

It also plans, however, to boost exports from 151 bcm in 2005 to 180 bcm in 2010, while domestic gas use is rising at a rate of 4 percent per year, making a deficit inevitable, Kommersant said.

Shortages of gas could lead to a hike in electricity tariffs, a source close to UES was quoted as saying. UES already has to spend more on diesel fuel and coal to make up for current shortfalls, the source said.

UES chief executive Anatoly Chubais has grown increasingly vocal over his warnings that the country faces a domestic gas supply crunch as electricity consumption soars. The holding already had to resort to emergency plans to keep the country lit during an extreme cold spell last winter. The Paris-based International Energy Agency has also begun to warn that Gazprom may not be able to meet its supply contracts by 2010 due to underinvestment in boosting production. The agency has warned that the gas giant is spending too much on making acquisitions in other sectors, such as oil and electricity generation, while neglecting to invest enough in raising gas production before major new fields come online.

The Kremlin meeting was attended by Chubais; Industry and Energy Minister Viktor Khristenko; the head of the nation's tariff agency, Sergei Novikov; and Gazprom board member Kirill Seleznyov. It was the first in a series of discussions over the next few months on the energy crunch, Kommersant said, citing a source close to the presidential administration.