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An evaluation of alternative scenarios for the Gazprom monopoly of Russian gas exports

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  • Tsygankova, Marina

Abstract

In June 2006, Russian federal law legalized the exclusive right of Gazprom to export natural gas to Europe, and thus thwarted efforts by the European Union to bring competition to the Russian gas industry. An understanding of the motivation of the Russian government to support this export monopoly is important if Europe wishes to reduce its dependence on Gazprom. The principal aim of this paper is to contribute to a better understanding of this important question. Our analysis employs a theoretical model and several numerical simulations of an alternative organization used for gas exports, where independent gas producers in Russia are permitted to export gas to Europe. We evaluate the effects of this alternative organization on consumer surplus, industry profits, and Russian welfare. The results demonstrate that while export by independent producers reduces Gazprom's export profits, it may also increase the total domestic and export profits earned by the Russian gas industry. However, the results also suggest that Russian gas consumers will not benefit if independent gas producers are able to supply both the domestic and international markets.

Suggested Citation

  • Tsygankova, Marina, 2012. "An evaluation of alternative scenarios for the Gazprom monopoly of Russian gas exports," Energy Economics, Elsevier, vol. 34(1), pages 153-161.
  • Handle: RePEc:eee:eneeco:v:34:y:2012:i:1:p:153-161
    DOI: 10.1016/j.eneco.2011.04.009
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    References listed on IDEAS

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    Cited by:

    1. Tavana, Madjid & Behzadian, Majid & Pirdashti, Mohsen & Pirdashti, Hasan, 2013. "A PROMETHEE-GDSS for oil and gas pipeline planning in the Caspian Sea basin," Energy Economics, Elsevier, vol. 36(C), pages 716-728.
    2. Finn Roar Aune, Rolf Golombek , Arild Moe, Knut Einar Rosendahl and Hilde Hallre Le Tissier, 2015. "Liberalizing Russian Gas Markets - An Economic Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Adelman S).
    3. Tsatsos, Aristidis, 2012. "Die Liberalisierung des russischen Gassektors: 3 Szenarios?
      [The liberalisation of the Russian gas sector: 3 scenarios?]
      ," MPRA Paper 44623, University Library of Munich, Germany.
    4. Christophe Heyndrickx & Victoria Alexeeva-Taleebi & Natalia Tourdyeva, 2014. "To raise or not to raise: Impact assessment of Russia's gas price reform," ERSA conference papers ersa14p1535, European Regional Science Association.
    5. Heyndrickx, Christophe & Alexeeva-Talebi, Victoria & Tourdyeva, Natalia, 2012. "To raise or not to raise? Impact assessment of Russia's incremental gas price reform," ZEW Discussion Papers 12-052, ZEW - Leibniz Centre for European Economic Research.

    More about this item

    Keywords

    Russia; Natural gas; Exports; Monopoly; National welfare;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D60 - Microeconomics - - Welfare Economics - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

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