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Options for transporting Russian gas to Western Europe: A game-theoretic simulation analysis


  • Chollet, Andreas
  • Meinhart, Berit
  • von Hirschhausen, Christian R.
  • Opitz, Petra


This paper examines the perspectives of Russian gas exports to Western Europe and the strategic options of the CIS gas transiting countries, namely Ukraine and Belarus. The development of a new transit corridor through Belarus (the Yamal-Europe pipeline), depriving Ukraine of its former monopoly, has modified the situation profoundly. The thrust of the paper is an analysis of nthe strategies that Ukraine and Belarus may pursue in transiting Russian gas: non-cooperative duopoly, cooperative duopoly, and individual or collective cooperation with Russia. Using a demand function for Western European gas imports from Russia, we estimate prices and quantities for gas transit, the expected profits for Russia, Ukraine, and Belarus, and the resulting import prices for Western Europe. The results indicate that Ukraine suffers a loss of several hundred million USD annually from the market entry of Belarus, Belarus has an incentive to increase its gas transit capacity to at least 56 billion cubic meters, and Russia's profits increase, in particular when it unites its gas sector with Belarus and Ukraine. For Western Europe, all scenarios indicate an increase in welfare through the new pipeline, but also an increasing importance of gas imports from Russia.

Suggested Citation

  • Chollet, Andreas & Meinhart, Berit & von Hirschhausen, Christian R. & Opitz, Petra, 2001. "Options for transporting Russian gas to Western Europe: A game-theoretic simulation analysis," Discussion Papers 2001/10, Technische Universität Berlin, School of Economics and Management.
  • Handle: RePEc:zbw:tubsem:200110

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    References listed on IDEAS

    1. Rolf Golombek & Eystein Gjelsvik & Knut Einar Rosendahl, 1995. "Effects of Liberalizing the Natural Gas Markets in Western Europe," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 85-112.
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    More about this item


    Gas; pipelines; strategic behavior; CIS; Russia;

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General


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