The dynamics of gas supply coordination in a new world: cooperation or competition between gasexporting from a Russian perspective

PhD ceremony: Mr. T.A. Boon von Ochssée, 13.15 uur, Academiegebouw, Broerstraat 5, Groningen

Thesis: The dynamics of gas supply coordination in a new world: cooperation or competition between gasexporting from a Russian perspective

Promotor(s): prof. J.G. van der Linde, prof. P.M.E. Volten

Faculty: Economics and Business

Russia is seeking to redefine its place in an ever-changing international political system. Its vast gas resources, and their profitable development, could serve to strengthen Russia’s position in that system while income from gas export earnings could enhance Russia’s economic security. For both Russia and its state-controlled Gazprom the stream and possible expansion of income from gas exports are economically vital. Together with Gazprom, Russia must take into account demand uncertainty and competition from other gas-exporting countries in an increasingly interregional and dynamic gas market. PhD-student Boon van Ochssée deals with the boundary solutions to gas supply coordination between gas-exporting countries from a Russian perspective in light of the post-Cold War geopolitical context.

As the industry matures, gas-exporting countries could avoid price competition through (informal) coordination as far as capacity expansions are concerned, for example. The Gas Exporting Countries Forum (GECF) offers Russia a possible platform for such coordination. However, Russia also desires to preserve an independent course for its gas exports strategy. Investments in gas infrastructures potentially act as important instruments for securing and expanding Gazprom’s market share in growing markets. In light of demand uncertainties and potential competition, a ‘real-option game’ model is applied to explain why Gazprom continuously tries to strike a balance between cooperation and competition with other gas-exporters.

Whether - and in what form - gas supply coordination may arise depends on Russia’s geopolitical perception of a dominant position in the European gas market, which hinges in part on the post-Cold War geopolitical context in which the great powers vie for a position on the Eurasian continent. The boundary solutions to cooperation between Russia and other gas-exporting countries are therefore also subject to geopolitical forces.