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#21 - JRL 2007-87 - JRL Home
Russia Won't Use Alternative Fuel For Very Long Time - Economist

MOSCOW. April 12 (Interfax) - Russia will not replace oil and gas with alternative energy resources for a very long time, Economic Analysis Institute President Andrei Illarionov told a Thursday press conference in Moscow.

"The possible replacement of oil and gas with other energy resources in Russia is not a question of the next few days or years because Russia has huge hydrocarbon reserves and they are relatively cheap. I think that Russia will be predominantly using these energy resources for decades," he said.

"Rumors of the so-called 'raw material damnation' of Russia are a myth that will eventually become obvious and get listed amongst other world economic absurdities," he said.

At the same time, Illarionov "does not rule out the theoretical possibility of slower hydrocarbon production in Russia in favor of imports."

"This hypothetical situation may occur if OPEC ceases to exist at the initiative of Saudi Arabia and Al Riyadh gives access to national hydrocarbon deposits to domestic and foreign investors," he said. "If Saudi authorities decide that their subjects should live a more prosperous life, they will dissolve OPEC and Saudi crude will fill the world market."

In that case, world crude prices will be so small that "any disputes concerning alternative energy resources will cease," Illarionov said.

The economist also assessed the situation in Georgia and Ukraine. He disagreed with claims of economic chaos there.

"Despite dynamic political developments in Ukraine, which are a matter of common knowledge, this country provides for the protection of property rights, contracts and civil rights," he said.

The economic growth in Ukraine "was even higher than that in Russia, although Ukraine has to import energy resources," Illarionov said. The GDP per capita gap between Ukraine and Russia continues to reduce, he added.

Meanwhile, Georgia "is carrying out the most drastically liberal economic reform since the revolution," Illarionov said. "Conditions for business have much improved in that country. Despite certain economic restrictions imposed by Russia, the Georgian economy is developing at high rates," he said.