Russian Strategy for Cross-border Gas Pipelines
To cope with continuous growth in the world demand for gas, it is not enough to make simply continue investments on new gas field developments. At the same time the gas pipeline network has to be extended to new markets whenever a new gas producing region is created, since gas has no alternative transport measure from fields to market. The nature of pipelines is to form a "natural monopoly" because of the large investments required and the exclusiveness of competition. However, at the planning stage plans of cross-border gas pipelines are facing various types of competition. Russia, the largest gas producing country in the world, confronts competition of gas suppliers set by Turkmenistan and Azerbaijan for the market of China and the South Europe respectively, on the other hand Russia made China a gas-market competitor against the traditional European market, which allowed Russia to win a series of long-term sales and purchase agreements from European gas distributors. As the gas demand soars, Russia may notch a stronger position against both East and West due to its magnitude and flexibility of deliveries, which is being accomplished not through geopolitics but rather through competition in the market.
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