Publication: Export Restraints on Russian Natural Gas and Raw Timber : What Are the Economic Impacts?
Date
2010-01
ISSN
Published
2010-01
Author(s)
Tarr, David G.
Abstract
Export restraints by the Russian
Federation on natural gas and timber have been the source of
major controversy between the European Union and the Russian
Federation. The analysis of this paper suggests that the
export restraints in natural gas very substantially benefit
Russia. On the other hand, in raw timber the analysis
suggests that a substantial reduction of Russian export
taxes would increase Russian welfare. The paper explains
that Gazprom has failed to invest adequately, resulting in
little development of new gas supplies. The result has been
progressively increasing use by Gazprom of Central Asian gas
supplies, at progressively higher prices for Russia. The
increased prices of gas for Russian consumers have shown
that it is crucial for Russia to allow new entrants and to
introduce competition in the Russian domestic market.
Without export restraints, however, competition among
multiple gas suppliers from Russia would erode or eliminate
the monopoly profits of the Russian Federation on gas
exports. Thus, with a more competitive domestic market, the
Russian government would be expected to grant exclusive
exporting rights to a single entity (as it presently does
with Gazprom) or impose export taxes. Thus, Europe should
not expect to achieve cheaper Russian gas as a result of
structural reforms within the Russian gas market. A more
promising avenue for European energy diversification is new
pipeline construction to open up new sources of supply
independent of Russia (especially the Nabucco pipeline), and
liquefied natural gas purchases.
Citation
“Tarr, David G.. 2010. Export Restraints on Russian Natural Gas and Raw Timber : What Are the Economic Impacts?. Policy Research Working Paper;No. 5195. © World Bank, Washington, DC. http://hdl.handle.net/10986/19904 License: CC BY 3.0 IGO.”
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