All Quiet on the Eastern Front? Disruption Scenarios of Russian Natural Gas Supply to Europe

28 Pages Posted: 19 Jun 2014

See all articles by Philipp M. Richter

Philipp M. Richter

Dresden University of Technology - Faculty of Economics and Business Management; German Institute for Economic Research (DIW Berlin)

Franziska Holz

German Institute for Economic Research (DIW Berlin)

Date Written: May 2014

Abstract

The Russian-Ukrainian crisis has revitalized the European concerns of supply disruptions of natural gas as experienced in 2006 and 2009. However, the European supply situation, regulation and infrastructure have changed since: imports are more diversified, EU member states better connected and a common regulation on the security of supply has been introduced. Nevertheless, several East European countries are highly dependent on Russian natural gas. This paper investigates different Russian natural gas export disruptions scenarios and analyses short- and long-term reactions to ensure a sufficient supply of natural gas within Europe. We use the Global Gas Model (GGM), a large-scale mixed complementarity representation of the natural gas sector with a high-level of technical granularity with respect to storage and transportation infrastructure. We find that most of the EU member states are not severely affected by a complete drop out of Russian exports. Removing infrastructure bottlenecks within the EU should still be prioritized in order to secure a sufficient natural gas supply for all EU member states.

Keywords: natural gas trade, Russia, Europe, security of supply, infrastructure investment, equilibrium modelling

JEL Classification: Q34, Q37, Q41, C61, L95

Suggested Citation

Richter, Philipp M. and Holz, Franziska, All Quiet on the Eastern Front? Disruption Scenarios of Russian Natural Gas Supply to Europe (May 2014). DIW Berlin Discussion Paper No. 1383, Available at SSRN: https://ssrn.com/abstract=2456119 or http://dx.doi.org/10.2139/ssrn.2456119

Philipp M. Richter (Contact Author)

Dresden University of Technology - Faculty of Economics and Business Management ( email )

Mommsenstrasse 13
Dresden, D-01062
Germany

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

Franziska Holz

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

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