Economically more feasible to build data centers using coal energy rather than gas, gas is expensive - Russian Energy Ministry

ST. PETERSBURG. June 19 (Interfax) - Gas extraction is becoming increasingly costly and coal should be used to power data centers, the Russian Energy Ministry said.

The cost of gas extraction has become very high, especially as Russia transitions to hard-to-recover reserves in both oil and gas, First Deputy Energy Minister Pavel Sorokin said at the 2025 St. Petersburg International Economic Forum (SPIEF 2025).

"We need to employ technologies comparable in complexity to space technologies, building infrastructure that costs enormous sums. We must account for financing costs, which in Russia are objectively higher than in other countries - to build a 4,000 km pipeline, the financing and material costs to deliver it to Eastern Siberia would be astronomical. Therefore, when managing our strategic resources, we must consider economics," he said.

"We assume gas is cheap, but this isn't true. If we continue thinking this way, there will be no gas left anywhere. The Soviet legacy reserves are depleting, the same applies to oil, while new sources like Sakhalin and Kirinskoye involve very expensive gas," he said. The Russian president has repeatedly said not to increase cross-subsidization as it leads to disastrous results, Sorokin said.

"If we assume gas will remain at a low-indexed domestic price, the party will eventually end," he said.

"We must move towards a balanced energy mix where cost allows meeting certain needs with cheaper sources, meaning not prices regulated by the FAS [Federal Antimonopoly Service], but real production costs," he said.

The world fought against coal for 10 years, though despite CO2 emissions, "combating it wouldn't have saved the world from warming, so we only succeeded in raising the world's average energy costs," he said.

"The same applies to us. Our coal industry is currently in a difficult position. Why use expensive gas now to create additional computing capacity [data centers] when each kilowatt [from gas] would be underpriced? We can build power plants at open-pit mines - yes, it's expensive now, but options exist - we immediately save $50-$60 in transport costs per tonne, save on electricity transmission, and free up gas supplies to develop fertilizers in the Far East, gas-intensive industries, or meet existing supply commitments," he said.

Sorokin also proposed focusing on energy efficiency. "Don't assume gas and electricity are infinite - we need to find a more optimal balance," he said.