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Russian Gas Imports in Europe: How Does Gazprom Reliability Change the Game?

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  • Joris Morbee
  • Stef Proost

Abstract

Europe’s dependence on Russian gas imports has been the subject of increasing political concern after gas conflicts between Russia and Ukraine in 2006 and 2009. This paper assesses the potential impact of Russian unreliability on the European gas market, and how it affects European gas import strategy. We also study to what extent Europe should invest in strategic gas storage capacity to mitigate the effects of possible Russian unreliability. The European gas import market is described by differentiated competition between Russia and a – more reliable – competitive fringe of other exporters. The results show that Russian contract volumes and prices decline significantly as a function of unreliability, so that not only Europe but also Russia suffers if Russia’s unreliability increases. For Europe, buying gas from more reliable suppliers at a price premium turns out to be generally more attractive than building strategic gas storage capacity.

Suggested Citation

  • Joris Morbee & Stef Proost, 2010. "Russian Gas Imports in Europe: How Does Gazprom Reliability Change the Game?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 79-110.
  • Handle: RePEc:aen:journl:2010v31-04-a04
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    Cited by:

    1. Le Coq, Chloé & Paltseva, Elena, 2012. "Assessing gas transit risks: Russia vs. the EU," Energy Policy, Elsevier, vol. 42(C), pages 642-650.
    2. Joris Morbee, 2014. "International Transport of Captured $$\hbox {CO}_2$$ CO 2 : Who Can Gain and How Much?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(3), pages 299-322, March.
    3. Nick, Sebastian & Thoenes, Stefan, 2014. "What drives natural gas prices? — A structural VAR approach," Energy Economics, Elsevier, vol. 45(C), pages 517-527.
    4. Sergey Chernavsky & Oleg Eismont, 2009. "Is Gas Cartel's Profitable for Russia? (A Case of European Gas Market)," Journal of the New Economic Association, New Economic Association, issue 1-2, pages 127-149.

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    JEL classification:

    • F0 - International Economics - - General

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