Scandinavian Working Papers in Economics

Working Paper Series,
Norwegian University of Life Sciences, School of Economics and Business

No 11-2015: Liberalizing Russian gas markets – an economic analysis

Finn Roar Aune (), Rolf Golombek (), Arild Moe (), Knut Einar Rosendahl () and Hilde Hallre Le Tissier ()
Additional contact information
Knut Einar Rosendahl: School of Economics and Business, Norwegian University of Life Sciences, Postal: Norwegian University of Life Sciences, School of Economics and Business, P.O. Box 5003 NMBU, N-1432 Ås, Norway

Abstract: The Russian gas market is highly regulated. In this paper we examine possible impacts of regulatory changes on the demand side of this market. In particular, we consider the effects on Russian energy consumers of removing natural gas subsidies, and how changes in Russian gas consumption may affect its gas export to Europe. We also examine the importance of Russian pipeline capacity to Europe, as well as impacts of hypothetical changes in Russian gas export behavior. For this purpose, we use a detailed numerical model for the energy markets in Europe and Russia – LIBEMOD. Our results suggest that removing implicit subsidies to Russian gas consumers will have substantial impacts on total consumption of gas in Russia, especially in the electricity sector. Gas exports to Europe will be significantly affected as more gas becomes available for exports. Removal of other market imperfections in the Russian energy markets has smaller impacts on prices and quantities than removing gas subsidies. More competitive Russian gas export behavior would lead to much higher gas export to Europe, but our results suggest that Russian welfare would drop due to lower gas export prices.

Keywords: Russian gas prices; Russian gas export; European energy market

JEL-codes: C63; F10; Q41; Q48

38 pages, June 1, 2015

Full text files

hh_wp_11_2015_2.pdf PDF-file 

Download statistics

Questions (including download problems) about the papers in this series should be directed to Frode Alfnes ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2018-01-23 23:36:21.