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Theoretical and Practical Aspects of Natural Gas Pricing in Domestic and Foreign Markets: The Case of Russia

Author

Listed:
  • Idrisov Georgy

    (Gaidar Institute for Economic Policy)

  • Gordeev Dmitry

    (Gaidar Institute for Economic Policy)

Abstract

The paper analyzes the need to change the approaches to Russia’s natural gas pricing in domestic and foreign markets. The authors conclude that changes are inevitable in the medium term because existing pricing practices are becoming obsolete in the rapidly transforming gas market. The development of the gas industry is severely hampered by inefficient domestic consumption due to distorted price incentives, lack of competition in the domestic market and the pegging of export gas prices to the oil product basket. The paper discusses possible development options for Russia’s gas industry and their potential macroeconomic effects.

Suggested Citation

  • Idrisov Georgy & Gordeev Dmitry, 2017. "Theoretical and Practical Aspects of Natural Gas Pricing in Domestic and Foreign Markets: The Case of Russia," Working Papers wpaper-2017-274, Gaidar Institute for Economic Policy, revised 2017.
    • Handle: RePEc:gai:wpaper:wpaper-2017-274
    as

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    File URL: https://www.iep.ru/files/RePEc/gai/wpaper/wpaper-2017-274.pdf
    File Function: Revised version, 2017
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    References listed on IDEAS

    as
    1. Gilat Levy, 2005. "Careerist Judges," RAND Journal of Economics, The RAND Corporation, vol. 36(2), pages 275-297, Summer.
    2. Adrien de Hauteclocque & Jean-Michel Glachant, 2009. "Longterm Energy Supply Contracts in European Competition Policy: Fuzzy not Crazy," Working Papers EPRG 0919, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    3. Bilgin, Mert, 2009. "Geopolitics of European natural gas demand: Supplies from Russia, Caspian and the Middle East," Energy Policy, Elsevier, vol. 37(11), pages 4482-4492, November.
    4. Hauteclocque, Adrien de & Glachant, Jean-Michel, 2009. "Long-term energy supply contracts in European competition policy: Fuzzy not crazy," Energy Policy, Elsevier, vol. 37(12), pages 5399-5407, December.
    5. Grigoryev, Yuli, 2007. "Today or not today: Deregulating the Russian gas sector," Energy Policy, Elsevier, vol. 35(5), pages 3036-3045, May.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Claude Ménard & Ivan Shabalov & Andrey Shastitko, 2021. "Institutions to the rescue: Untangling industrial fragmentation, institutional misalignment, and political constraints in the Russian gas pipeline industry," Post-Print hal-04012224, HAL.
    2. Ménard, Claude & Kurdin, Alexander & Shastitko, Andrey, 2020. "Out by the door, in through the window: Politics and natural gas regulation in Russia," Utilities Policy, Elsevier, vol. 64(C).

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    More about this item

    Keywords

    natural gas; pricing; cross subsidization;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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