RUSSIA CONSIDERS INCREASING COAL USE TO FACILITATE GAS EXPORTS

A series of deadly incidents has dealt Russia’s coal industry a serious blow, as the sector’s safety standards apparently remain low. Nonetheless, the Russian government is still considering long-range plans to increase the use of coal in power generation in order to reduce natural gas consumption and maximize gas exports.

Russia’s regulators claimed that a rush for profits by private operators was behind the country’s worst coal mining accidents in decades. On May 24, a methane explosion at the Yubileinaya mine in Siberia’s Kuzbass region, Russia’s major coal producing area in Siberia, killed 39 workers. This accident came on the heels of a similar methane blast in March that killed 110 coal miners at the nearby Ulyanovskaya mine.

On June 6, Konstantin Pulikovsky, head of the Federal Service for Ecological, Technological, and Atomic Inspection (Rostekhnadzor), said tampering with a safety system had caused the explosions in Kemerovo region. Investigators claimed that the equipment that measured methane levels had been disabled to ensure that mining operations would not be halted because of high gas levels. Pulikovsky said the methane detection system at both mines had been blocked in “a rush for super-profits” (Itar-Tass, June 6).

Both the Yubileinaya and Ulyanovskaya mines are owned and operated by the privately owned Yuzhkuzbassugol. Georgy Lavrik, Yuzhkuzbassugol CEO, was one of 35 officials implicated in Rostekhnadzor’s report on the explosion. Lavrik had failed to provide sufficiently safe working conditions, the report said (Interfax, June 8).

Meanwhile, the ongoing probe into the deadly methane blasts has already sparked a bitter dispute between federal and regional officials. On June 8 Aman Tuleyev, governor of Kemerovo, some 4,000 kilometers east of Moscow, announced that he had filed a libel lawsuit against Pulikovsky for allegations that regional authorities were aware of safety violations at the mine before the accident. Pulikovsky dismissed Tuleyev’s accusations but refrained from filing a counter-suit (Interfax, June 8).

The deadly explosions revealed the Russian coal industry’s endemic problems, which have struggled to survive since the fall of the Soviet Union in late 1991. With government subsidies slashed during the 1990s, many mines were unable to make ends meet. The industry’s problems were further compounded by frequent, often fatal, accidents due to obsolete equipment and declining safety standards.

During the Soviet era, the government kept old mines operating long after their ability to make a profit had been exhausted. The Russian government also has been reluctant to close spent pits to avoid social unrest. The main union, the Russian Union of Coal Industry Workers (Rosugleprof), once had nearly 800,000 members, and it was one of the best organized of Russia’s unions.

The Russian miners’ strikes were widely seen as instrumental to the collapse of the last Soviet government and helped bring Boris Yeltsin to power. In the late 1990s, miners picketed the White House, the Russian government building in Moscow, to protest pay arrears. However, in recent years miners’ wages have improved significantly and workers became reluctant to stage any protests.

Yet despite safety and other problems, the coal industry still remains a major element of Russia’s energy sector. Roughly one-quarter of Russia’s electricity is produced in coal-fired power stations. Total coal reserves are estimated at three trillion tons, the second-largest coal reserves in the world, with some four-fifths of coal deposits located in Siberia.

Russia’s total coal production has increased from 240 million tons in 1998 up to more than 300 million tons of coal last year. In 2006 Russia exported 91.4 million tons of coal, up 15% over 2005, according to the Russian Federal Customs Service. In January-March, Russia exported 24 million tons of coal, an increase of about 21%, out of its total quarterly production of 80 million tons.

Russia exports its coal to 45 countries. Some 37% of coal exports went to Western Europe, 10% to Eastern Europe, 12% to former Soviet republics, 24% to the Middle East, and 17% to the Asia-Pacific.

The Russian government has repeatedly pledged to reduce natural gas consumption in power generation and increase coal use, in order to maximize gas exports. Earlier this year, Russian President Vladimir Putin also suggested that coal be given a greater role. But this goal would require large-scale construction of coal-fired power generation facilities, totaling some 40 gigawatts by 2020.

Current plans see coal-fired power stations producing some 40% of Russia’s electricity between now and 2020. Russia’s domestic coal demand in the power generation sector is expected to rise from the current 121 million tons a year to 300 million tons by 2020 (RBK Daily, May 22).

Earlier this year the gas giant Gazprom indicated plans to take over Russia’s major coal producer, the Siberian Coal Energy Company (SUEK), sparking talk of yet another state-controlled energy giant. In 2006 SUEK produced about 90 million tons of coal.

As Russia faces a growing domestic appetite for electricity, the country’s government and energy executives appear to be seeking alternative ways to meet the demand. Moscow apparently prefers to cover the gap through increased coal use, as that would free up Gazprom to meet increasing export commitments.