Russian associated petroleum gas flaring limits: Interplay of formal and informal institutions

Energy Policy, Vol 116, 2018, pp.232-241

The Russian oil sector, crucial to the economy, was obliged to cut its associated petroleum gas flaring to 5% of total supply from 2012. Significant progress has been made since but the target has not been reached. The impact of the weakness of formal and importance of informal institutions on the policy outcome was found to be significant. Not only is far more flaring allowed as a result of exemptions and non-compliance with subsoil licenses but it also remains unclear how much is actually flared due to unclear metering practices and if fines can be avoided or written off without much oversight. Oil sector lobby has advocated many of these informal institutions. Standard type of informal institutions dominates, while also subversive institutions as well as gaps in regulations were identified. Analysing the oil sector interests through new institutionalism shows that the dominance of informal institutions has influenced the behaviour and interests of oil companies, especially in terms of relaxing legitimacy rules on compliance. Also the norm that oil sector activities are prioritized over environmental protection partly explains the relaxed attitude towards informal institutions; the 5% target set is partly ceremonial for the government.