21 April 2015
BREC Alumni Andrei V. Belyi and Andreas Goldthau published a research paper under the title "Between a rock and a hard place: International market dynamics, domestic politics and Gazprom's strategy". The research was implemented within the Florence School of Regulation, Robert Schuman Centre for Advanced Studies at the European University Institute. Read BREC Global Energy Associate Andrei V. Belyi's insights on Gazprom strategy here
Gazprom, Russian's prime state owned gas producer, is facing severe pressure stemming from international gas market dynamics, EU regulation and the Ukraine crisis. Slowing gas demand coupled with shifting pricing models and a persisting transit issue pose significant challenges for Gazprom's business going forward. Domestic pressure emerges from competition arising from private companies, mainly Notatek, but also state-owned rival Rosneft, and is reinforced by governmental moves toward non-market-orienteded Russian gas sector organization. Gazprom's options include pivoting to alternative markets, notably China; reverting to international legal bodies and market principles to counter EU regulatory pressures; and to depoliticize gas trade in order to generate loterm expectationsons on its prime market - Europe. We pose that neither of these options is likely to fully solve Gazprom's dilemma, whose competitive position will arguably further weaken both domestically and internationally. We believe that Gazprom's best option would be to aim for depoliticizing gas trade, by way of giving up its de facto monopoly on gas exports to Europe.
Keywords: Energy security, gas markets, Gazprom, European Union, regulation
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