Changes on the European Gas Market: Implications for Gazprom

Abstract

Following the recession of 2008-2009, Gazprom has faced declining demand and rising competition on the European gas market. In addition, the company has encountered rising competition on the domestic gas market and an alternative buyer of the Central Asian gas. Cheaply priced supply of the Central Asian gas helped the exporting Russian gas giant to maximize its profits, while meeting its supply obligations in Europe. This paper analyzes the aforementioned changes and the response of the company to those changes; namely, acquiring joint ventures with monopolistic power, as well as distribution channels in Europe; building new pipelines, especially South Stream pipeline; and creating a positive self-image through different media outlets. All of Gazprom's decisions represent its efforts to retain its market share and thus the ability to extract partial monopoly profits from the European market.