Russian Federation–East Asia Liquefied Natural Gas Trade Patterns and Regional Energy Security

20 Pages Posted: 22 Feb 2020

See all articles by Ehsan Rasoulinezhad

Ehsan Rasoulinezhad

Saint Petersburg State University

Farhad Taghizadeh-Hesary

Tokai University; Waseda University

Naoyuki Yoshino

Asian Development Bank Institute

Tapan Sarker

Griffith University - Griffith Business School

Date Written: June 10, 2019

Abstract

East Asia has remained the biggest market for liquefied natural gas (LNG) in 2018. The Russian Federation has a clear vision to develop its East Asia LNG projects to provide a bigger share of Asian LNG imports. We model Russian Federation–East Asia LNG trade patterns via the gravity trade theory, which is shown to fit well with energy trade patterns. Our findings reveal that a 1% increase in population growth in the People’s Republic of China, Japan, and the Republic of Korea increases Russian Federation LNG exports by nearly 3.43%, and economic growth by 6.16%, while any increase in geographic distance decelerates LNG exports to the selected East Asian economies by nearly 7.3%. This means that the close proximity of the Russian Federation to East Asia is an advantage for its LNG exports. Furthermore, the West’s sanctions against the Russian Federation are a positive influencing factor on the latter’s LNG export volume to East Asia. We recommend some policies such as construction of a gas trading hub in Asia, increasing regional pricing power, and energy import diversification and shorter distances between the Russian Federation (exporter) and East Asia (importer) to improve energy security in this region.

Keywords: gravity trade modeling, LNG trade, energy security, Russian Federation, East Asia

JEL Classification: Q37, R11, F14

Suggested Citation

Rasoulinezhad, Ehsan and Taghizadeh-Hesary, Farhad and Yoshino, Naoyuki and Sarker, Tapan, Russian Federation–East Asia Liquefied Natural Gas Trade Patterns and Regional Energy Security (June 10, 2019). ADBI Working Paper 965, Available at SSRN: https://ssrn.com/abstract=3541035 or http://dx.doi.org/10.2139/ssrn.3541035

Ehsan Rasoulinezhad (Contact Author)

Saint Petersburg State University ( email )

7-9, Universitetskaya nab.
Saint Petersburg, 199034
Russia

Farhad Taghizadeh-Hesary

Tokai University ( email )

3-20-1 Orido
Shimizu-ku
Shizuoka, 424-8610
Japan

Waseda University ( email )

1-104 Totsukamachi, Shinjuku-ku
tokyo, 169-8050
Japan

Naoyuki Yoshino

Asian Development Bank Institute ( email )

Kasumigaseki Building 8F
3-2-5, Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

Tapan Sarker

Griffith University - Griffith Business School ( email )

Brisbane, Queensland 4111
Australia

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