Putin backs gas power for Russia's transport

MOSCOW Tue May 14, 2013 1:35pm EDT

Russian President Vladimir Putin makes a speech during the official opening of the Hanover Messe, industrial trade fair, in Hanover April 7, 2013. REUTERS/Fabian Bimmer

Russian President Vladimir Putin makes a speech during the official opening of the Hanover Messe, industrial trade fair, in Hanover April 7, 2013.

Credit: Reuters/Fabian Bimmer

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MOSCOW (Reuters) - President Vladimir Putin threw his weight behind a drive to fuel more Russian vehicles with cleaner-burning and cheaper natural gas on Tuesday, saying the economic and environmental benefits were clear.

A transition to using gas as a transportation fuel would reduce emissions in Russia - the world's fourth biggest emitter of greenhouse gases - by two to three times, Putin said.

That would also boost the fortunes of state energy giant Gazprom whose net profit fell 10 percent in 2012 due to weak gas prices and flagging demand from austerity-ravaged Europe.

"Gas is cheaper than gasoline or diesel fuel, besides it reduces emissions," Putin said at a meeting.

"Twenty percent of (global) natural gas is concentrated in Russia and this is a clear competitive advantage," he added.

Prime Minister Dimitry Medvedev has also called for more gas-fuelled transport, saying Russia cannot not afford to ignore the global trend.

According to a resolution Medvedev signed on Monday, more than 50 percent of buses in major Russian cities will be switched to run on natural gas.

China last year had 1.48 million vehicles driving on natural gas, up 48 percent on 2011 thanks to a government initiative to encourage use of the cheaper alternative to gasoline and diesel.

EXPLODING BUS

Russian Energy Minister Alexander Novak said there remained significant challenges to wide-spread, gas-powered transport in Russia including no regulatory framework and a lack of refueling infrastructure, with only 200 stations in the country.

The Russian government spent 3.5 billion roubles ($112 million) on gas-powered buses in 2012, he said at the meeting with Putin.

Gazprom plans to invest 1 billion roubles ($31.92 million) and build 17 gas stations in 2013 to service new vehicles, while Russia's top oil producer Rosneft plans to allocate 60 billion roubles to build 1,000 stations, according to Novak.

"In the whole world today there are 17 million cars using gas fuel, while in Russia there are 103,000 vehicles... the gas-powered transportation boom is only just beginning," he said.

However, Russia's shift to using the cleaner fuel has not been without hiccups.

On Thursday, as Russian's celebrated Victory Day to mark the end of World War II, an empty gas-powered bus blew up in north-west Moscow after one of its cylinders exploded, state news agency RIA Novosti reported.

Russia recently lost its position as the world's top gas producer, falling behind the United States because of the shale gas production boom which transformed the global supply landscape and put pressure on once sky-high prices.

($1 = 31.3252 Russian roubles)

(Reporting By Darya Korsunskaya, Writing by Alessandra Prentice, editing by William Hardy)

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