The generating giant warned that it would have to cut power by 25 percent unless its needs were fulfilled. Under last week's compromise, Gazprom will supply more gas, but not as much as UES wanted. The electricity system will instead use more coal, a fuel that is bound to make Russia's poor environment worse. The problem is that Russia has suffered from declining investment in gas production at a time when its export commitments have soared. Domestic shortages have resulted because Gazprom charges its domestic gas customers only about one-fortieth of the amount that it can get from export markets like Turkey.
Domestic prices are too low to support new investment.
Without rational energy pricing, the troubles are likely to go on. But energy is already difficult for many Russians to afford. The problem may not be solved even if Gazprom agrees to buy more gas from Turkmenistan under a proposed 30-year deal. So far, Russia has offered to pay much less for the gas than it would charge to Turkey, but the price would still be much more than it can get from its own citizens. Meanwhile questions persist about Turkey's forecasts of its future gas demand.