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Export restraints on russian natural gas and raw timber : what are the economic impacts ?


  • Tarr, David G.


Export restraints by the Russian Federation on natural gas and timber have been the source of major controversy between the European Union and the Russian Federation. The analysis of this paper suggests that the export restraints in natural gas very substantially benefit Russia. On the other hand, in raw timber the analysis suggests that a substantial reduction of Russian export taxes would increase Russian welfare. The paper explains that Gazprom has failed to invest adequately, resulting in little development of new gas supplies. The result has been progressively increasing use by Gazprom of Central Asian gas supplies, at progressively higher prices for Russia. The increased prices of gas for Russian consumers have shown that it is crucial for Russia to allow new entrants and to introduce competition in the Russian domestic market. Without export restraints, however, competition among multiple gas suppliers from Russia would erode or eliminate the monopoly profits of the Russian Federation on gas exports. Thus, with a more competitive domestic market, the Russian government would be expected to grant exclusive exporting rights to a single entity (as it presently does with Gazprom) or impose export taxes. Thus, Europe should not expect to achieve cheaper Russian gas as a result of structural reforms within the Russian gas market. A more promising avenue for European energy diversification is new pipeline construction to open up new sources of supply independent of Russia (especially the Nabucco pipeline), and liquefied natural gas purchases.

Suggested Citation

  • Tarr, David G., 2010. "Export restraints on russian natural gas and raw timber : what are the economic impacts ?," Policy Research Working Paper Series 5195, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5195

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    Cited by:

    1. Russian Presidential Academy of National Economy and Public Administration authors collective, 2012. "The Consequences of Weak Competition: Quantitative Evaluation and Policy Implications (Think Tank Report)," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 1-49.
    2. Catherine Locatelli, 2013. "Les voies de la réforme du secteur gazier russe," Post-Print halshs-00822857, HAL.
    3. Kurdin, Alexander, 2017. "Regulation of Enterprise Prices: Application Areas, Mechanisms and Methods of Regulation, Impact on Competition (Case Study of Gas Industry)," Working Papers 031703, Russian Presidential Academy of National Economy and Public Administration.
    4. Kenji Fujiwara, 2014. "Tax Principles and Coordination of Trade and Domestic Policies Under Imperfect Competition," Australian Economic Papers, Wiley Blackwell, vol. 53(1-2), pages 29-40, June.
    5. Catherine Locatelli, 2012. "Relations UE-Russie : les enjeux d'une nouvelle architecture gazière," Post-Print halshs-00755640, HAL.
    6. Shastitko, Andrey E. & Golovanova, Svetlana & Kryuchkova, Polina & Kurdin, Alexander & Novikov, Vadim & Pavlova, Natalia, 2013. "Effects of Weak Competition: Quantitative Assessment and Policy Implications," Published Papers dok31, Russian Presidential Academy of National Economy and Public Administration.

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    Markets and Market Access; Transport Economics Policy&Planning; Energy Production and Transportation; Economic Theory&Research; Oil Refining&Gas Industry;

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