Export of Natural Gas from Russia
|Project manager||Rolf Golombek |
|Client project no.||217329|
|Participants||Sverre A. C. Kittelsen|
Hilde Hallre Le Tissier
|Period||2012 - 2013 (ended)|
This project focuses on the importance of Russia for the value of Norway’s natural gas reserves: Russia currently supplies roughly 40 percent of the natural gas imported by the EU, which puts it ahead of Norway - the second largest source – which supplies roughly 20 percent.
We have identified two important policy issues in Russia that would likely have important repercussions on the EU gas market, and that we wish to examine: First, domestic gas users in Russia (especially the household sector) are currently facing prices far below the net-back price (i.e., the export price to the EU net of additional transport costs). Russia has, however, stated a desire to – over time – equalize its marginal revenue from domestic and export markets, but has so far shifted this policy into the future to avoid painful domestic price increases. Higher domestic gas prices will, through lower demand, make more gas available for export. Secondly, Russia may find it in its interest to expand its export markets (currently the EU and former USSR countries) by building pipelines to the growing Asian markets or entering the international LNG trade.
We wish to analyze various scenarios (placed in 2020) that vary along these dimensions, and will analyze these within a well-established numerical model of the European gas market. In doing this, we will also take into account key uncertainties within the EU market: The extent to which the ongoing energy market liberalization successfully moves forward, and the extent to which the EU will be able to implement its ambitious 20-20-20 environmental policy targets in 2020.