To: Hawkmoon who wrote (36943 ) 7/11/1999 7:47:00 PM From: goldsnow Respond to of 116768
Minister: Crisis Threatens Russian Energy Supply MOSCOW, Jul 9, 1999 -- (Reuters) The crisis in Russia's energy sector caused by tax and price policies, non-payment, and weak government regulation is so severe that energy supplies to the population are at risk, the Energy Minister said on Friday. "If the current macroeconomic conditions remain, the energy supply to the country could be placed under threat and export deliveries will have to be sharply cut," Viktor Kalyuzhny told a congress of the Union of Oil and Gas Industries. "Unless a range of measures is taken to normalise the financial position and the creation of essential investment resources in oil production and refining... then output by 2005 could fall to around 200-250 million tonnes per year," he said. Russia produced 303.3 million tonnes (6.09 million barrels per day) of crude oil and gas condensate last year, Fuel and Energy Ministry data showed. The situation was just as bad in the gas sector, he added, saying that gas output of 571 billion cubic meters (bcm) in 1997 was the lowest in 10 years. Although this rose by 20 bcm in 1998, he said, the position of the gas sector remained unstable. "Massive non-payment has led to a reduction of capital investment in the sector by more than half," he said, adding that several vital projects including compressor stations and trunk pipelines had fallen victim to the lack of cash. He added that demand for Russian gas was forecast at up to 680 bcm by 2005, or 15 percent higher than in 1998. "To secure such a growth in production it is essential to intensify investment in the gas industry...But the current financial position of (gas monopoly) Gazprom does not allow it to decide on this without extra measures being taken," he said. Unless radical steps were taken, Kalyuzhny warned that investment in Gazprom would fall to half of what was required, so that production in 2005 could fall to 450 to 480 bcm, some 200 bcm less than forecast demand. If priority were given to supplying the domestic market, "then it would be necessary to stop practically all exports of gas, and 25 percent of the country's hard currency revenues would be lost, not to mention the loss of the foreign market for Russian gas in the future." ((c) 1999 Reuters)