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Export restraints on Russian natural gas and raw timber : what are the economic impacts ?
 
Author:Tarr, David G.; Collection Title:Policy Research working paper ; no. WPS 5195
Country:World; Russian Federation; Date Stored:2010/01/28
Document Date:2010/01/01Document Type:Policy Research Working Paper
Language:EnglishMajor Sector:Industry and trade
Rel. Proj ID:1W-Wto And Developing Countries -- -- P077509;Region:The World Region; Europe and Central Asia
Report Number:WPS5195Sub Sectors:Other domestic and international trade
SubTopics:Energy Production and Transportation; Transport Economics Policy & Planning; Oil Refining & Gas Industry; Markets and Market Access; Economic Theory & ResearchTF No/Name:TF030367-DANISH CTF FY03 - NON-REGIONAL VPU'S; TF030393-JAPAN; TF030314-DANISH CTF GENERAL FY03 - (ALL EXCEPT SUB-SAHARAN AFRICA)
Volume No:1 of 1  

Summary: 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.

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