Strategic Analysis of Russia -European Union Gas Relations: An Evolutionary Game Theory Approach

Articles in Press

Document Type : Research Paper

Authors

1 Department of Energy Economics, Faculty of Economics and Administrative Sciences, University of Mazandaran, Mazandaran, Iran

2 Faculty of Law and Political Science, University of Mazandaran, Mazandaran, Iran

3 Department of Economics, University of Mazandaran, Mazandaran, Iran

Abstract

The Russia- European Union relationship affects their energy ties, specifically in the natural gas trade. The changes in their gas relations, from the energy dialogue in October 2000 to recent gas interruptions and the REPowerEU plan in 2022, show a shift from neoliberalism toward realism-geopolitical relations. Employing evolutionary game theory, this study has analyzed the evolution of gas trade strategies within the framework of the political relations of these two players. The study examines strategic equilibrium in energy relationships to determine whether realism will persist or shift toward liberal energy equilibrium. During the assessment of Russian-Union energy, three strategies were identified. Their first strategy is based on liberalism cooperation (Eu and CO), the second shows economic cooperation but with an element of security competition (RC and ER), and the last involves mutual avoidance (CH and ES). We define a 3x3 game with symmetrical payoffs in two Liquefied natural gas market scenarios: current status and the possibility of further expansion. Initial game results show a mixed equilibrium, which is unstable and can change in the long run. The second game’s outcome (second scenario) shows a pure equilibrium in mutual cooperation that is also unstable and short-term. Based on the outcomes of these two games, Russia and the European Union cannot always rely on mutual cooperation in gas trade, so government agencies, security issues, and realistic approaches will continue to play a role in their gas policy decisions, with varying degrees of impact.

Keywords

Main Subjects

Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 09 April 2024

Files

Share

How to cite

Statistics