Billionaire Oleg Deripaska's automaker GAZ is investing $20 million to develop a natural-gas engine in cooperation with Canada's Westport, as the government pushes for greater use of the cleaner and cheaper fuel.
GAZ subsidiary Yaroslavl Motor Plant and the Vancouver-based company on Thursday signed an agreement to develop an engine for buses, minivans, light trucks, construction and farm vehicles, the companies said in separate statements.
GAZ Group produces much of the equipment. In the latest deal, the group announced at the end of May that it will supply 4.7 billion rubles ($152 million) worth of buses to Moscow City in the course of this year.
The new methane-burning engine, planned to start rolling off the line in Yaroslavl next year, will incorporate Westport's components and technology into an existing Yaroslavl motor, Westport said.
Prime Minister Dmitry Medvedev has recently backed a plan for half of public transport and road utility fleets in major cities to switch to natural gas by 2020.
State-controlled Gazprom said 90,000 vehicles run on natural gas in Russia now. Gazprom is at the forefront of the efforts to increase that number.
It has stepped up talks with regional governments in recent months to push for more filling stations, hoping to increase sales of the fuel to 2.6 billion cubic meters a year in 2015.
The number reached 390 million cubic meters in 2012, according to the company.
Westport has other ventures with global auto producers, in addition to the business with GAZ. The Canadian company is developing natural-gas engines jointly with such partners as General Motors, Caterpillar and Tata Motors.