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Representing GASPEC with the World Gas Model

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Author Info

  • Ruud Egging
  • Franziska Holz
  • Christian von Hirschhausen
  • Steven A. Gabriel

Abstract

This paper presents results of simulating a more collusive behavior of a group of natural gas producing and exporting countries, sometimes called GASPEC. We use the World Gas Model, a dynamic, strategic representation of world gas production, trade, and consumption between 2005 and 2030. In particular, we simulate a closer cooperation of the GASPEC countries when exporting pipeline gas and liquefied natural gas; we also run a more drastic scenario where GASPEC countries deliberately withhold production. The results shows that compared to a Base Case, a gas cartel would reduce total supplied quantities and induce price increases in gas importing countries up to 22%. There is evidence that the natural gas markets in Europe and North America would be affected more than other parts of the world. Lastly, the vulnerability of gas importers worldwide on gas exporting countries supplies is further illustrated by the results of a sensitivity case in which price levels are up to 87% higher in Europe and North America, but non-GEC countries increase production by a mere 10%.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.92793.de/dp845.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 845.

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Length: 22 p.
Date of creation: 2008
Date of revision:
Publication status: Published in: The Energy Journal (2009), Special Issue
Handle: RePEc:diw:diwwpp:dp845

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Keywords: natural gas; trade; cartel; collusion; World Gas Model;

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Cited by:
  1. Paltsev, Sergey & Jacoby, Henry D. & Reilly, John M. & Ejaz, Qudsia J. & Morris, Jennifer & O'Sullivan, Francis & Rausch, Sebastian & Winchester, Niven & Kragha, Oghenerume, 2011. "The future of U.S. natural gas production, use, and trade," Energy Policy, Elsevier, vol. 39(9), pages 5309-5321, September.
  2. Franziska Holz & Philipp M. Richter & Ruud Egging, 2013. "The Role of Natural Gas in a Low-Carbon Europe: Infrastructure and Regional Supply Security in the Global Gas Model," Discussion Papers of DIW Berlin 1273, DIW Berlin, German Institute for Economic Research.
  3. Gabriel, S.A. & Rosendahl, K.E. & Egging, Ruud & Avetisyan, H.G. & Siddiqui, S., 2012. "Cartelization in gas markets: Studying the potential for a “Gas OPEC”," Energy Economics, Elsevier, vol. 34(1), pages 137-152.
  4. Egging, Ruud, 2013. "Benders Decomposition for multi-stage stochastic mixed complementarity problems – Applied to a global natural gas market model," European Journal of Operational Research, Elsevier, vol. 226(2), pages 341-353.
  5. Robert Ritz, 2013. "Price Discrimination and Limits to Arbitrage in Global LNG Markets," Cambridge Working Papers in Economics 1340, Faculty of Economics, University of Cambridge.
  6. Gijsbert Zwart, 2008. "European natural gas markets: resource constraints and market power," CPB Discussion Paper 116, CPB Netherlands Bureau for Economic Policy Analysis.
  7. Juan Rosellón & Anne Neumann & Hannes Weigt, 2011. "Removing Cross-Border Capacity Bottlenecks in the European Natural Gas Market: A Proposed Merchant-Regulatory Mechanism," Documentos de Trabajo DTE 506, CIDE, Division de Economia.
  8. Dorigoni, Susanna & Graziano, Clara & Pontoni, Federico, 2010. "Can LNG increase competitiveness in the natural gas market?," Energy Policy, Elsevier, vol. 38(12), pages 7653-7664, December.

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