Liberalization of Russian gas exports: benefits and challenges

Alla Yakunina,J Váchal,J Horák,M Vochozka

doi:10.1051/shsconf/20173901033

Alla Yakunina, J Váchal + Show 2 more

Open Access

https://doi.org/10.1051/shsconf/20173901033

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Abstract

Russian gas export liberalization has been discussed throughout the post-Soviet period. Recently, the number of Gazprom’s export monopoly advocates has been diminishing as a result of dramatic changes in both European and Russian gas markets, which are: increasing international trade in liquefied natural gas; the EU movement from long-term contracts to the commodity markets and hub pricing; substantially increased share of the non-Gazprom gas suppliers at the Russian domestic market. Although there is a potential risk of price decrease in the EU gas market in the case of the Gazprom export monopoly abolition, the benefits of the Russian gas export liberalization would be greater than losses. The gas resource base and the cost of pipeline gas production would allow Russia to improve its positions in the world market.

Highlights

The gas sector operating in Russia today is the successor of the Soviet gas industry with very low and stable regulated domestic prices for natural gas, which was a priority resource in the electricity and heat generation
In the Russian domestic market, gas supply exceeds demand considerably nowadays. This strengthens the desire of independent gas suppliers, primarily Rosneft and Novatek, to obtain the opportunity to export their gas by abolishing Gazprom's monopoly on gas exports or by selling gas to Gazprom at the export netback price
In this paper we try to understand how solid are the arguments of the liberalization idea’s opponents who suggest that the Russian gas exports liberalization would lead to an increased competition among Russian gas coming to the European market from different sources, and to the decrease in the total Russia’s revenues from gas export

Summary

Introduction

The gas sector operating in Russia today is the successor of the Soviet gas industry with very low and stable regulated domestic prices for natural gas, which was a priority resource in the electricity and heat generation. For many decades, regulated domestic prices for Russian natural gas are maintained at a level below the world market prices. The Government regulates tariffs for gas distributing and marketing organizations This natural gas pricing system on the Russian domestic market is the result of multiple changes and adjustments. The share of independent suppliers has continued to grow even despite the decline in total gas production in Russia in recent years (Table 1). In the Russian domestic market, gas supply exceeds demand considerably nowadays This strengthens the desire of independent gas suppliers, primarily Rosneft and Novatek, to obtain the opportunity to export their gas by abolishing Gazprom's monopoly on gas exports or by selling gas to Gazprom at the export netback price (world prices minus export duty and transportation costs). In this paper we try to understand how solid are the arguments of the liberalization idea’s opponents who suggest that the Russian gas exports liberalization would lead to an increased competition among Russian gas coming to the European market from different sources, and to the decrease in the total Russia’s revenues from gas export

Literature review

Consequences of liberalization: discussion

Conclusions

Findings

Annual Review of NC