Coal price hikes may affect Russia’s gas exports

New price hikes for steam coal have pushed it above $US150 per tonne. While coal producers enjoy high revenues and create new investment projects, energy producers are facing new costs.

Russia’s government will outline a new 20-year energy strategy, taking into account coal’s role and the need to balance risks.

The soaring price of coal could hamper the process.

“High coal prices have led producers who had planned to use coal to switch back to gas,” said Igor Kogukhovsky, head of the economic policy department at UES Russia.

But analysts consider the coal price bulge will not affect the government’s diversification plans.

“It’s the temporary event,” Georgy Bugenitsa, analyst at Unicredit ATON has told RT.  He has forecasted the prices will be decreasing starting from 2010. “When this government plan will be implemented, steam coal will be at the affordable level,” the analyst said.

The government wants to switch to coal in order to free more gas for export.