Liberalizing Russian Gas Markets – An Economic Analysis

38 Pages Posted: 10 Aug 2017

See all articles by Finn Roar Aune

Finn Roar Aune

Statistics Norway - Research Department

Rolf Golombek

University of Oslo - Frisch Centre

Hilde Hallre

University of Oslo - Ragnar Frisch Centre for Economic Research

Arild Moe

Fridtjof Nansen Institute

Knut Einar Rosendahl

Norwegian University of Life Sciences; Statistics Norway - Research Department

Date Written: June 23, 2015

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 Classification: Q410, Q480, F100, C630

Suggested Citation

Aune, Finn Roar and Golombek, Rolf and Hallre, Hilde and Moe, Arild and Rosendahl, Knut Einar, Liberalizing Russian Gas Markets – An Economic Analysis (June 23, 2015). CESifo Working Paper Series No. 5387. Available at SSRN: https://ssrn.com/abstract=2621999

Finn Roar Aune

Statistics Norway - Research Department ( email )

Kongens Gt. 6
PO Box 8131 Dep
N-0033 Oslo
Norway

Rolf Golombek (Contact Author)

University of Oslo - Frisch Centre ( email )

Gaustadalleen 21
N-0349 Oslo
Norway
+47- 2295 8812 (Phone)

HOME PAGE: http://www.frisch.uio.no/cv/rolfgo_eng.html

Hilde Hallre

University of Oslo - Ragnar Frisch Centre for Economic Research ( email )

Gaustadalleen 21
N-0317 Oslo
Norway

Arild Moe

Fridtjof Nansen Institute ( email )

P.O. Box 326
Lysaker N-1326
Norway
(47) 6711 1927 (Phone)

Knut Einar Rosendahl

Norwegian University of Life Sciences ( email )

PO Box 5033
NO-1432 Aas
Norway
+47 64966117 (Phone)

Statistics Norway - Research Department ( email )

Kongens Gt. 6
PO Box 8131 Dep
N-0033 Oslo
Norway
+47 21094954 (Phone)
+47 21094963 (Fax)

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