13 Jan 2011 13:22

Gas demand in Russia to fall as new power plants built, prices rise - Slobodin

MOSCOW. Jan 13 (Interfax) - Demand for gas in Russia could fall as new resource-efficient power plants enter service and gas prices rise, Mikhail Slobodin, the outgoing chief of power company IES Holding, said in an interview with the Vedomosti newspaper.

Slobodin replaces Viktor Vekselberg as TNK-BP's executive director, gas, on January 14. Vekselberg is leaving TNK-BP's management, but will still be a co-owner and board member.

Slobodin told Vedomosti that he did not think demand for Russian gas would increase. "In Europe due to fierce competition, while Russia can expect a drop in consumption," he said. Demand for gas will also fall due to the implementation of energy-efficient technologies. "25 gigawatts of new capacity will replace old power plants with a drop in gas consumption. Each new nuclear plant reactor means 2.5 bcm less gas, and we are seeing a real shift towards lower consumption in heating. These two sectors alone consume more than half the gas in the country," he said.

"In general, demand for gas will correct as prices grow in Russia - we are seeing this in Ukraine," he said.

Slobodin also said he thought rules for long-term access to the Unified Gas Supply System ought to emerge within five years. "When Gazprom isn't letting oil companies into its pipe with their associated gas, people are forced to build their own generating capacity at fields. That way they are substituting power generation at conventional plants that use Gazprom's gas. Gazprom has nothing to gain from this. Its market is decreasing anyway - only the economy is spending spare money building new generating capacity where old capacity is not fully used," Slobodin said.