HomeMediaMedia PublicationsAnalyticsThe Energy Strategy-2050: pro et contra

The Energy Strategy-2050: pro et contra

29 September 2023

Belogoryev Alexey M. Research and Development Director, Director of the Center for Energy strategic analysis and forecasting
Тип: Analytics

The TEKFACE magazine published an interview with Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance on the topic " The Energy Strategy-2050: pro et contra".

According to Belogoryev, the Energy Strategy in the part concerning the oil industry should be based on demand. How do we expect external demand, its peak, taking into account the embargo imposed by Europe? And domestic demand: what do we see the role of petroleum products in Russia in the 30-40s and 50s? Considering that, for example, quite ambitious goals are being set in parallel for the development of the gas engine fuel market, which directly competes with petroleum products. Plans for electric vehicles and hydrogen fuel also need to be taken into account.

"We need to understand how it all fits together. But neither the Energy strategies until 2035 nor the Oil General scheme consider these issues in detail," Belogoryev emphasizes.

In addition to the general demand orientation, the energy strategy should include organizational solutions, how the industry is organized, relations between the state and private business, and the organization of the market. Moreover, according to the expert, there is no need for any drastic changes here. Belogoryev does not believe that something fundamentally new can be prescribed for oil in the strategy, especially since no one fully understands what will happen to foreign markets. On the other hand, it should be borne in mind that oil is tightly linked to a low-carbon strategy.

"If we are really aiming for zero emissions by 2060, of course, we need to do something, somehow discourage the consumption of petroleum products in transport," the expert says. – But how to do it, and how to replace petroleum products? These issues are also not reflected anywhere."

The situation with gas is different. The oil industry was reformed in the first half of the 1990s, while the rudiments of a planned economy still remain in the gas industry. We are currently discussing what to do with the gas industry, given the drop in export revenues.

The Energy strategy regarding gas, according to the expert, should imply some kind of political determination, there should be a clear position of the state, political will, as was the case with the reforms of the power generation industry or the Russian Railways.

The expert believes that the key problem of the gas industry now is price. Gazprom openly calls for an increase in gas prices for domestic consumers as a way to compensate for export losses. This can be framed in different ways: indexation ahead of inflation (now such a scenario has already been adopted for 2024-2025), or price liberalization for commercial consumers. The state needs to decide what is more important for it: to maintain the price availability of gas for consumers and thereby continue to subsidize the economy and the population (and this subsidization was largely provided by money received from supplies to Europe), or to raise prices by discouraging gas demand, which will improve the financial situation of gas producers and they will receive more investment opportunities (the price increase is expected to outpace the narrowing of demand). In addition, the reduction in gas demand is good from the point of view of low-carbon development and energy efficiency (given that the Russian economy is excessively gas-intensive). But in this case, it is necessary to take into account the increase in costs for the economy as a whole and the social tension caused by the increase in prices.

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