According to the CEO of Gazprom Alexey Miller, the low cost of gas in Russia removes incentives for developing innovative products and new technologies. According to Mr. Miller, the difference in the cost of energy – and, more specifically, the cost of natural gas – puts Russian companies at an undue advantage and allows them to enjoy steady cashflow from the sale of products manufactured through the use of an old-style technological process. Mr. Miller thinks that the low cost of energy to Russian producers discourages creativity. The complete modernization of Russia’s economy and the establishment of fundamentally different business arrangements in the country will be achieved only after domestic manufacturers lose the opportunity to profit from the difference of domestic and foreign energy prices. Otherwise, according to Alexey Miller, there will not be an incentive to raise energy efficiency, and to organize intelligent production.

A new economic structure focused on innovation can only exist under a new regime of balanced energy consumption. “The new structure of the fuel and energy balance is inter-fuel competition that currently does not exist in the fuel and energy sector,” Mr. Miller noted. Gazprom itself has been put on the list of strategic innovation companies. In 2008, Gazprom’s allocations for research and development stood at RUR 11.4 billion. In 2009, Gazprom’s R&D outlays were more than RUR 12 billion. While Gazprom executives realize that investing in R&D provides the company significant benefits on the Russian market and helps advance the country’s technological modernization, the extent of Gazprom’s influence on innovation is limited to the oil and gas sector. Gazprom currently operates scientific institutes, schools, research groups, and experimental facilities.

Still, according to Mr. Miller, the formation of a new economic sector that would be capable of exporting innovation, instead of gas is very slow. Scientific research, however, is not at all self-sustaining. Alexey Miller concedes that at the end of the day everything depends on energy demand on the foreign and domestic markets: “The scope of innovation in Russia is inevitably tied to the price of a barrel of oil.”