Russia

Natural Gas

Russia is also one of the world's largest natural gas producers. Its proven reserves have been estimated at 49 billion cubic meters, or roughly 35 percent of the world's total. Natural gas has also been one of the most successful parts of the Russian economy. In the early 1980s, it replaced oil as the Soviet "growth fuel," offering cheaper extraction and transportation. Although output has dropped in the 1990s, the decline has not been as severe as that for other energy sources or the rest of the economy. Natural gas production peaked in 1991 at 727 million cubic meters, then dropped throughout the early 1990s. But 1995 production, 596 million cubic meters, was an increase from the previous year. After European gas fields in the Volga-Ural region dominated the industry through the 1970s, production shifted to giant fields in Siberia. The Urengoy and Yamburg fields in the West Siberia region are among the most productive; the former is the largest field in the world. Soviet plans called for rapid development of new reserves in the Yamal Peninsula in the Arctic Ocean north of Urengoy, but environmental problems and infrastructure costs slowed development. Hasty construction and poor maintenance have caused chronic breakdowns and accidents in the long pipelines of Russia's natural gas delivery system (see Transportation, this ch.).

The State Natural Gas Company (Gazprom) has a virtual monopoly over Russia's gas production and transmission. A vertically organized enterprise, the company has been reorganized into a joint-stock company, in which 40 percent of the shares remain under state control. Company employees hold another 15 percent, managers of the company hold 10 percent, and the remaining 35 percent were sold at public auction. Gazprom controls a network of regional production associations. Its management, which once was headed by Prime Minister Viktor Chernomyrdin, has been accused of corruption and tax evasion.