Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/18490
Authors: 
Sagen, Eirik Lund
Tsygankova, Marina
Year of Publication: 
2006
Series/Report no.: 
DIW Discussion Papers 597
Abstract: 
Gazprom, the dominant gas company in Russia, is widely believed to be the key supplier of gas to Europe in the foreseeable future. However, there are numerous uncertainties and challenges within the Russian and European gas industry that may alter the allocation of Gazprom´s gas sales between domestic and export markets. In this paper we use both theoretical and numerical models to study potential effects on Russian gas exports from changes in Russian domestic gas prices and the production capacities in 2015. We also investigate whether the liberalization of the European gas markets may provide incentives for Gazprom to induce monopoly power in its export markets. Our main findings suggest that both increased domestic gas prices and sufficient production capacities are vital to maintain Gazprom´s market share in Europe over the next decade. At low domestic prices, Gazprom may even have difficulties to carry out its long-term export commitments. However, if export possibilities are ample due to both lower domestic demand at higher prices and high overall production capacities, a large share of spot trades in Europe may encourage Gazprom to exercise market power in its export markets.
Subjects: 
Russia
Natural gas
production capacity
export
Western Europe
price
numerical model
JEL: 
D42
F17
Q31
Q38
Document Type: 
Working Paper

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