Ruhrgas AG, the German natural gas giant, is planning an ambitious $1.3 billion gas-saving project in Western Siberia which it says will bring Russia billions in income and reduce pollution.


The plan would involve building gas-refining facilities and pipelines to recover natural gas released during drilling of Siberian oil wells, said Ulrich Scholer, Ruhrgas' vice president in charge of Eastern European projects.


The prospective Russian partners in the project are gas monopoly Gazprom, the oil company Purneftegas and the Sibneftegaspererabotka refinery, he said.


Because they lack refining equipment, oil wells in Western Siberia flare off most of the natural gas they produce, or at least 10 billion cubic meters a year, said Scholer.


Cutting back on gas torches by building more gas refineries and pipelines could recover an estimated 6 billion cubic meters of gas per year and bring $3 billion in profits over 20 years, according to Scholer.


He said the Russian government is expected to raise $2 billion over 20 years in additional tax revenues as part of the project.


"Everyone would profit from the project," Scholer said. "The government would receive a lot in tax revenues, Russian companies would receive their part for producing and transporting the gas, and we will make money by exporting it to Germany."


Under the plan, Purneftegas would produce gas, which then would be refined by Sibneftegaspererabotka and transported by Gazprom. Ruhrgas would sell it to the German market, where gas consumption is expected to double in 10 years. Russian construction companies would build refineries and pipelines using German equipment, he said.


Scholer also said the project would help reduce pollution caused by burning off natural gas.