Bio Fuel Development in Russia has been in the headlines this week, with both President Putin and Prime Minister Viktor Zubkov calling for more capacity.

One Russian gas company, Itera, is expanding its bio fuel operations and is currently constructing two bio ethanol plants in the United States.

Itera’s chairman Igor Makarov explained that a downturn in relations with Gazprom served as an impetus for looking for other types of fuel.

Itera created a joint company Bio Energy International LLS with its American and European partners. At the moment they are building two plants in the United States, both with a capacity of 400 tonnes of ethanol a day. They should be completed by the end of 2009 and similar projects in Ukraine, Lithuania and Belarus are being discussed as well.

Itera’s top official is sure that at the moment Russia has enough energy resources but in the long-term it is necessary to build the same bio fuel production base in Russia.

Itera has started to examine the markets of Russia but admits that setting up production of bio fuel is only possible with the assistance of the State.

Entrepreneurs are waiting for a legal base for development of bio fuel production in the country while Europe and the US have already quite a developed legal base for this and even have special tax benefits.