August 31, 2011
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№ 6 (June 2011)

MIOGE 2011: Modern Fuel and Energy

Modernization - Russian President Dmitriy Medvedev's favourite word - was the main symbol of this week's MIOGE 2011 oil and gas exhibit and the 9th Russian Petroleum Congress. Combined, the two events at the Moscow Exhibition Center brought together over 360 companies from 100 countries.

By Alexander Bratersky

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The Russian fuel and energy sector cannot avoid modernisation and that means building new refining capacity to increase light product output, Deputy Russian Energy Minister Sergey Kudryashov said in his opening remarks at the conference.

Kudryashov said the industry requires 150 billion roubles in investment over the next 10 years. He added that Russia intends to build another six oil and gas clusters in various parts of the country. "If all of these oil and gas and chemical projects are brought about, then the annual investment in GDP will be 650 billion roubles", he said.

In turn, Russian scientists promised the minister that they old not sit idle — the country should soon have another oil and gas institute which will accumulate innovation in the fuel and energy sector and help search for funding for prospective projects. Mikhail Silin, a rector at the Gubkin Oil and Gas Institute, demonstrated plans for developing the Russian Oil and Gas Institute to RPGC attendees, "I hope that the institute will become a good platform for science and the state", the academic said.

As part of the institute, which was inaugurate in May by Deputy Russian Prime Minister Igor Sechin, a national fuel and energy library will be established as well as a social network where scientists can share ideas among themselves and with businesses. Silin noted that science and business do not always find a common language, "Science does not see the entire picture – does not see what business will pay for", he said.

The head of the Union of Oil Industrialists, Gennadiy Shmal, called for a sober assessment of of oil reserves and lamented the fact that many figures are determined "without getting up from the computer". He said the true tate of affairs is not being reflected in reports, "The level of management of our fuel and energy sector is not very high", he said.

Passions were high at discussions on the role of the Russian fuel and energy complex on the world arena. This year, the issue of who should pay for modernising the Ukrainian gas transport system took centre stage.

Naftogaz Chair Yevgeniy Bakulin insisted on joint action, "We believe that modernisation is a task for both Russia and Ukraine and the EU. Without waiting for replies, Ukraine has today begun reconstruction using its own funds", he said at the conference.

However, the situation is changing rapidly and son after the conference, the Ukrainian side announced that Naftogaz could lose control over the gas transport system. Ukraine may soon give control over transport to Ukrtransgaz which could set up a joint venture with Gazprom to manage the pipeline system.

And that means Russia could get a real reason to invest money into modernisation, experts said.
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