Russia’s energy sector plays an essential role for the Russian economy, its energy security and global hydrocarbon supplies. Russia holds among the world’s largest resources of gas, oil and coal. Its liquids production has reached historical highs, yet major additional upstream investments and technology upgrades will be needed to sustain these levels in the long term. Its gas production is also at high levels, with Gazprom being the dominant producer, and with other companies now taking significant roles. Since the last IEA review of Russia’s energy policies in 2002, the power sector has also liberalised considerably.
The Russian economy remains largely inefficient, with twice as much energy used per GDP compared with IEA member countries. Ambitious energy efficiency policies have been introduced but have not led to significant improvements so far. At the same time, the electricity and district heating infrastructure is ageing and requires rapid investments. Attracting these investments from private domestic and foreign companies will require further regulatory, tariff and fiscal changes as well as a strong focus on policy implementation. Russia’s overall energy sector would benefit considerably from a more competitive, marketoriented environment.
While a number of policies aimed at modernising the energy sector and increasing its efficiency and sustainability are being developed or implemented, further reforms are needed. In 2014, Russia is preparing a new Energy Strategy to 2035 – offering a timely look at these challenges and opportunities.
This review analyses the energy policy challenges facing Russia and provides critiques and recommendations for further policy improvements. It is intended to help guide the country towards a more sustainable energy future.