MOSCOW, June 28 (RIA Novosti) - A senior Kremlin official said Wednesday that Russia should use favorable global energy markets to modernize its economy, but added that the country should be careful not to get carried away.
"Russia's objective is to take advantage of the current favorable situation and start modernization as soon as possible... But we must remember that [oil] prices can be high and can be low," said Vladislav Surkov, deputy head of the presidential administration.
Russia's economic recovery has been impressive since the August 1998 financial crisis, but has been largely attributed to growing oil and gas prices in the world. And the economy has remained dangerously sensitive to energy prices.
But the development of the crucial oil and gas sector has slowed down in Russia in recent years, affecting industrial growth. Last year, oil and gas condensate output increased by 2.2% and gas production by 1%, compared with about a 9% increase in oil and gas condensate production in 2004 and an 11% increase in 2003. This year, oil output is expected to grow at 2005 rates, or even close to zero, according to the Federal Energy Agency.
The decline in the energy sector has affected industrial output, which increased 4% in 2005, but declined on the previous year.
The government has said that Russia should avoid becoming a petrostate, and should instead look to diversify its economy and promote innovation.
