Russia ministry seeks end to $13 B/yr gas waste

Russia's resources ministry asked the new prime minister to approve its plan to make oil firms spend billions of dollars on cutting the amount of gas wastefully flared off during oil production. The measure would protect the environment and save billions of cubic meters of gas that is burnt at oilfields because there is no infrastructure to process it for use.
"It will be possible only through the joint efforts of a number of ministries," a Natural Resources Ministry statement quoted its minister, Yuri Trutnev, as telling Prime Minister Viktor Zubkov in a letter. The ministry said oil firms should be allowed to develop oil fields only if they had a clear plan on how to use the associated gas. "Some 95 percent of associated gas should be used and not flared by 2011," it said. 
Only 26% of Russia's annual associated gas production of 55 Bm3 is processed, while some 27% is flared off and 47% is used at fields or wasted. If all the gas was processed it would be enough to meet the annual gas demand of a country such as France. 
The ministry said Russia was losing up to $13 B/yr due to gas waste. It said it had proposed a system of progressive fines for gas flaring and measures to force gas monopoly Gazprom to give producers of processed gas from oilfields unrestricted access to its pipelines. It said it had also proposed tax and customs breaks for firms implementing gas processing projects but gave no details. 
Russian oil firms have repeatedly said that building costly gas facilities would be loss-making unless there was state support and Gazprom was willing to buy the gas at good prices.  Analysts say Gazprom, the world's largest gas producer, will be increasingly willing to buy gas amid declining output at its own fields and uncertainty over gas purchases from Central Asia. Gazprom produces around 550 Bm3y.

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