This paper analyses the main determinants of Russian long term contract prices. Two hypothesis were tested on a panel dataset of 12 European countries over 7 years. First, whether Russia is pricing its contracts in relation to the closest competitive threat. Results based on price comparison are inconclusive for the first hypothesis. Second, whether the market power of Russia affects LTC prices. We designed a novel indicator called Exposure Index to grasp the market power of Russia. Multivariate panel regression shows that the Exposure Index affects the ability of Russia to segment its market and discriminate between European importing countries. Our results should be taken cautiously, as we were unable to assess all the long term contracts of Russia due to data availability and model specification affected the results strongly. Still, we argue that infrastructure diversification enhanced competition and resulted in lower LTC prices for Europe.
Main conclusions were presented by Peter Kotek at the 41st IAEE conference.