Regulations on the flaring and utilisation of associated petroleum gas (APG) have been in place since the early 1980s. Their purpose is environmental conservation and the effective use of limited natural resources. The formation on international frameworks, such as the World Bank’s Global Gas Flaring Reduction, which was launched in the 2000s, and the raising of environmental awareness in emerging and developing countries have also decreased the amount of APG flaring around the world. In Russia, however, the situation on APG utilization and flaring is entirely different. Here, the utilisation of APG has not improved since the 1990s. Even now, Russia remains the world’s largest APG-flaring country. This means that it is now explicitly confronted with problems on APG flaring and utilisation, while it struggles to adapt to global environmental protection trends and to modernise its economy.
President Putin regards this problem as one of Russia’s most urgent tasks. On the 26 April 2007, at the Presidential Address to the Federal Assembly, he ordered his government to design solutions to achieve a more than 95% effective APG-usage level (less than 5 % flaring). In addition, the 7th government decision was selected, a policy that can enforce a fine for flaring over 5% of all APG and also for the use of infrastructure in oil fields that does not meet standards of approval. Nevertheless, the effectiveness of this fine policy remains limited. This situation suggests that the APG-flaring-and-utilisation problem in Russia has its own specificity and that it should not only be analysed from the current situation, but from the perspective of the continuity or incoherence of the Soviet Union actors, policies and institutions surrounding it, during this country’s transition to a market economy.
As mentioned above, the APG utilisation and flaring in Russia is one of the most urgent environmental and economic problems among this country’s hydrocarbon industries. This study attempts to give some explanation on this situation. First, it analyses long-term APG-utilisation trends in Russia. Then, actors, policies and institutions involved in Russia’s APG utilization and flaring are traced. Finally, through the above-mentioned analysis, this paper tries to explain the situation and factors of Russia currently being the largest flaring country.
JEL classification codes: L71, P28, Q35, Q40