Out by the Door, in by the Window. Politics and Natural Gas Regulation in Russia

Claude Menard (University of Paris Sorbonne)
Andrey Shastitko (Lomonosov Moscow State University)
Alexander Kurdin (Lomonosov Moscow State University)

Abstract: Through the ongoing debate about the deregulation of the Russian natural gas industry and the introduction of challengers to the dominant position of Gazprom, we examine the combination of vested interests that creates formidable obstacles to that evolution. We do so with particular attention to the role of several regulatory entities - the Federal Antimonopoly Service (FAS), the Ministry of Energy (ME), and the Ministry of Economic Development (MED) – that have overlapping responsibilities with respect to monitoring competition, regulating tariffs, and defining and controlling technical standards. We analyze the role of these regulatory entities as meso-institutions, providing intermediation between the macro-layer within which policy-makers define ‘rules of the game’ and the micro-layer within which firms operate in a context of highly demanding technological requirements. In this perspective, an obvious question (without obvious answer) is: how far can meso-institutions go in making the natural gas market more effective and transparent while meeting the socio-technological requirements of this industry and remaining sheltered from political arbitrariness?

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