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The EU-Russia Gas Relationship: a mutual dependency

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Abstract

Current debate on the energy security in the EU often stresses the EU dependency on gas imports from Russia. However, Russia is no less dependent on the EU – more than half of its gas exports goes to Europe. The purpose of this paper is to characterize this mutual dependency through an index-based approach, and to discuss how the development of gas markets may affect such dependency. We suggest a unified framework to assess the security of gas supply for the EU and the security of gas demand for Russia, and construct dependency indexes for both parties. Our approach accounts not only for the traditional import/export dependency measures but also for the balance of power between Russia and the EU. The proposed methodology is then used to address the evolution of the EU-Russia gas relationship in the view of gas market’s developments. New gas pipelines projects (e.g., South Stream, Nabucco) and increasing use of liquefied natural gas are all likely to impact both the demand side and the supply side of the EU-Russia gas trade, and affect mutual gas dependency between the EU and Russia.

Suggested Citation

  • Le Coq, Chloe & Paltseva, Elena, 2012. "The EU-Russia Gas Relationship: a mutual dependency," SITE Working Paper Series 18, Stockholm School of Economics, Stockholm Institute of Transition Economics.
  • Handle: RePEc:hhs:hasite:0018
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    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. Sovacool, Benjamin K. & Mukherjee, Ishani, 2011. "Conceptualizing and measuring energy security: A synthesized approach," Energy, Elsevier, vol. 36(8), pages 5343-5355.
    3. Franz Hubert & Svetlana Ikonnikova, 2011. "Investment Options And Bargaining Power: The Eurasian Supply Chain For Natural Gas," Journal of Industrial Economics, Wiley Blackwell, vol. 59(1), pages 85-116, March.
    4. repec:reg:rpubli:33 is not listed on IDEAS
    5. Peter Havlik, 2010. "European Energy Security in View of Russian Economic and Integration Prospects," wiiw Research Reports 362, The Vienna Institute for International Economic Studies, wiiw.
    6. Finon, Dominique & Locatelli, Catherine, 2008. "Russian and European gas interdependence: Could contractual trade channel geopolitics?," Energy Policy, Elsevier, vol. 36(1), pages 423-442, January.
    7. Inderst, Roman & Wey, Christian, 2007. "Buyer power and supplier incentives," European Economic Review, Elsevier, vol. 51(3), pages 647-667, April.
    8. Le Coq, Chloé & Paltseva, Elena, 2009. "Measuring the security of external energy supply in the European Union," Energy Policy, Elsevier, vol. 37(11), pages 4474-4481, November.
    9. Irina Suleymanova & Franz Hubert, "undated". "Strategic Investment in International Gas-Transport Systems: A Dynamic Analysis of the Hold-up Problem," Energy and Environmental Modeling 2007 24000059, EcoMod.
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    More about this item

    Keywords

    Energy Security; European Union; Gas transit risks; Index; Russia.;

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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