Paper Titles & Abstracts

The EU represents Russia's largest and most lucrative gas export market, while gas exports have strategic economic and political value for Gazprom and the Russian state. Gazprom's traditional export model is founded on five pillars: Long-term contracts; take-or-pay contractual clauses; oil-indexed gas prices; ownership of gas transmission and storage infrastructure; and gas sales to final consumers. This paper considers how the development of the EU gas market challenges Gazprom's export model, and how this development is therefore regarded as a challenge to Russia's security of gas exports. Such challenges include; increased supply-side competition; increased spot trading and the divergence of spot and oil-indexed gas prices; and the unbundling of vertically integrated energy companies. The result is downward pressure on the price of, and demand for, Russian gas in Europe: Gazprom negotiated discounts and refunds for European importers between 2009 and 2012, and Russia's share of EU gas imports has declined from 45 percent to 33 percent in the last decade, whilst retaining a stable 25 percent share in EU gas consumption. The manner and extent to which Gazprom will successfully adapt to these developments will have significant implications for Russia as a strategic supplier of gas to the EU, and for the EU as a large-scale importer of Russian gas.