Econonomics of Energy and Environmental Policy

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The Future of Russian Gas Exports

Abstract:
Disputes between Russia and Ukraine over the terms for gas transit and deliveries prompted Russia to accelerate development of new gas pipelines to Europe circumventing Ukraine, as well as exploring the potential for gas export to additional markets like Turkey and China. The current paper examines implications of Russia increasing its gas exports capacity by building Nord Stream 2 (to Germany), Turkish Stream (to Turkey and Greece) and Power of Siberia (to China). We find that these projects have moderate effect on Russian gas exports and also that the impact on the European natural gas market is minor. We have also examined the impact of new Russian export pipes if subsidies to large Russian natural gas consumers are halved, or there are no sales to, or transit via, Ukraine. We find that the effects of increased export capacity are much stronger in these cases. The main policy implication of our study is that the EU and Russia have common interest in supporting further integration of European markets, although for somewhat different reasons. Russia wants to sustain, or increase, its exports to Europe, whereas the EU wants to make sure that the market functions well and that no country becomes vulnerable to pressure from Russia.Keywords: Russian gas export; Russia-Ukraine natural gas disputes; Turkish Stream; Russia-China natural gas trade agreement
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JEL Codes:Q35: Hydrocarbon Resources, L95: Gas Utilities; Pipelines; Water Utilities, P28: Socialist Systems and Transitional Economies: Natural Resources; Energy; Environment


Keywords: Russian gas export; Russia-Ukraine natural gas disputes; Turkish Stream; Russia-China natural gas trade agreement

DOI: 10.5547/2160-5890.6.2.faun


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Published in Volume 6, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.


 

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