Is the Great Bear Losing Control?: How Shale Gas and Liquefied Natural Gas Are Affecting Gazprom’s Monopoly Power
Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Comprehensive changes in technology and transportation are redrawing the global market for natural gas as we know it. Shale gas extraction and liquefied natural gas (LNG) transportation being two of the most important factors of change. While there is extensive literature on economy of natural gas and the mutual natural gas interdependence between the European Union and Russia, this is an attempt to identify how, Gazprom, Russia’s only natural gas exporter to the EU, are responding to these challenges. Thus, if Gazprom is using entry deterrence to restrain entrants (i.e. shale gas and LNG) from entering the EU market, and if the company’s domestic export monopoly might be threatened as a consequence of increased global competition. Observations suggest that Gazprom is carrying through entry deterrence mechanisms (e.g. limit pricing) in several EU countries and that Russia also acknowledges the need to open its domestic market for increased (domestic) competition, in order to increase the sector’s competitiveness. In addition, the paper suggests that the degree of entry deterrence can be linked to the degree of entry threat. Gazprom tend to price discriminate between captive consumers (e.g. Czech Republic, 100 percent dependency of Russian gas and no access to LNG) and the marginal consumer (e.g. Italy, 25 percent dependency and two existing LNG terminals (and eight planned). However, observations also suggests that Gazprom has shown considerable commitment to “tying up the middle ground” (e.g. Greece, Austria and Poland, 50-80 percent dependency and some or potential future access to LNG), which have mainly been carried out either by tying costumers to long-term contracts with significant price discounts or by trying to get better access to their supply chain.
Place, publisher, year, edition, pages
IdentifiersURN: urn:nbn:se:uu:diva-219592OAI: oai:DiVA.org:uu-219592DiVA: diva2:701373
Ohlsson, Henry, Professor