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European natural gas markets: resource constraints and market power

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  • Gijsbert Zwart

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Abstract

We analyze long-run scenarios for the European natural gas markets in a model, NATGAS, that explicitly includes both resource constraints and producers’ market power. Europa wordt geconfronteerd met afnemende eigen aardgasvoorraden, met name in de van oudsher grote producenten het Verenigd Koninkrijk en Nederland. De Europese afhankelijkheid van een beperkt aantal grote aardgasleveranciers zal toenemen. Daarmee groeit ook de marktmacht van deze producerende landen. We bekijken de invloed van de beschikbaarheid van vloeibaar aardgas, LNG, op de marktaandelen van producenten en de snelheid van uitputting van Europese voorraden. We bestuderen in het bijzonder hoe in de verschilende scenario's de schaduwprijzen van eindige voorraden de productiebeslissingen beïnvloeden. The European natural gas market is characterized by declining indigenous resources, particularly in the UK and the Netherlands, and a growing dependence on a small number of large exporters who, as a consequence, see their market power increasing. We analyze the impact of conditions on the global LNG market on market shares of pipeline gas suppliers, as well as on the speed of depletion of indigenous European resources. We focus on how shadow prices of resource constraints affect substitution patterns in the various scenarios.

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Bibliographic Info

Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 116.

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Date of creation: Dec 2008
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Handle: RePEc:cpb:discus:116

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  1. Finn Roar Aune & Knut Einar Rosendahl & Eirik Lund Sagen, 2008. "Globalisation of natural gas markets – effects on prices and trade patterns," Discussion Papers 559, Research Department of Statistics Norway.
  2. Franziska Holz & Christian von Hirschhausen & Claudia Kemfert, 2006. "A Strategic Model of European Gas Supply (GASMOD)," Discussion Papers of DIW Berlin 551, DIW Berlin, German Institute for Economic Research.
  3. Ruud Egging, Franziska Holz, Christian von Hirschhausen and Steven A. Gabriel, 2009. "Representing GASPEC with the World Gas Model," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 97-118.
  4. Peter R. Hartley and Kenneth B. Medlock III, 2009. "Potential Futures for Russian Natural Gas Exports," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 73-96.
  5. Stiglitz, Joseph E, 1976. "Monopoly and the Rate of Extraction of Exhaustible Resources," American Economic Review, American Economic Association, vol. 66(4), pages 655-61, September.
  6. Rolf Golombek & Eystein Gjelsvik & Knut Einar Rosendahl, 1998. "Increased Competition on the Supply Side of the Western European Natural Gas Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 1-18.
  7. Egging, Rudolf G. & Gabriel, Steven A., 2006. "Examining market power in the European natural gas market," Energy Policy, Elsevier, vol. 34(17), pages 2762-2778, November.
  8. Ruud Egging & Steven A. Gabriel & Franziska Holz & Jifang Zhuang, 2007. "A Complementarity Model for the European Natural Gas Market," Discussion Papers of DIW Berlin 732, DIW Berlin, German Institute for Economic Research.
  9. Maroeska G. Boots, Fieke A.M. Rijkers and Benjamin F. Hobbs, 2004. "Trading in the Downstream European Gas Market: A Successive Oligopoly Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 73-102.
  10. Lise, Wietze & Hobbs, Benjamin F. & van Oostvoorn, Frits, 2008. "Natural gas corridors between the EU and its main suppliers: Simulation results with the dynamic GASTALE model," Energy Policy, Elsevier, vol. 36(6), pages 1890-1906, June.
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Cited by:
  1. Kristine Grimsrud & Knut Einar Rosendahl & Halvor Briseid Storrøsten & Marina Tsygankova, 2013. "Short run effects of bleaker prospects for oligopolistic producers of a non-renewable resource," Discussion Papers 733, Research Department of Statistics Norway.

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