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Globalisation of natural gas markets – effects on prices and trade patterns

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  • Finn Roar Aune
  • Knut Einar Rosendahl
  • Eirik Lund Sagen

    ()
    (Statistics Norway)

Abstract

The regional natural gas markets are expected to gradually become more integrated. The major driving forces are lower LNG costs, more spot trade, and increased need for imports into the US and other key markets. In this paper we examine various scenarios for a future global gas market, particularly focusing on natural gas prices and trade patterns. We use a numerical model of the international energy markets, with detailed modelling of regional gas production and international gas transport. Scenarios with different assumptions about future demand and supply conditions are simulated. Our results suggest that trade between continents will grow considerably over the next couple of decades, and that prices in the main import regions will remain around current levels. However, significant constraints on exports from the Middle East may alter this picture.

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Bibliographic Info

Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 559.

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Date of creation: Oct 2008
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Handle: RePEc:ssb:dispap:559

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Keywords: Natural gas trade; gas prices; numerical model;

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References

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  1. Guillaume L¿Hégaret & Boriss Siliverstovs & Anne Neumann & Christian von Hirschhausen, 2003. "International Market Integration for Natural Gas?: A Cointegration Analysis of Prices in Europe, North America and Japan," Discussion Papers of DIW Berlin 393, DIW Berlin, German Institute for Economic Research.
  2. Gabriel, Steven A. & Zhuang, Jifang & Kiet, Supat, 2005. "A large-scale linear complementarity model of the North American natural gas market," Energy Economics, Elsevier, vol. 27(4), pages 639-665, July.
  3. Golombec, R. & Gjelsvik, E. & Knut, E. & Rosendahl, E., 1996. "Increased Competition on the Supply Side on the Western European Natural Gas Merket," Memorandum 11/1996, Oslo University, Department of Economics.
  4. Finn Roar Aune & Solveig Glomsrød & Lars Lindholt & Knut Einar Rosendahl, 2005. "Are high oil prices profitable for OPEC in the long run?," Discussion Papers 416, Research Department of Statistics Norway.
  5. Knut Einar Rosendahl & Eirik Lund Sagen, 2007. "The Global Natural Gas Market. Will transport cost reductions lead to lower prices?," Discussion Papers 523, Research Department of Statistics Norway.
  6. Peter R. Hartley & Kenneth B Medlock III & Jennifer E. Rosthal, 2008. "The Relationship of Natural Gas to Oil Prices," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 47-66.
  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. 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.
  9. Sagen, Eirik Lund & Tsygankova, Marina, 2008. "Russian natural gas exports--Will Russian gas price reforms improve the European security of supply," Energy Policy, Elsevier, vol. 36(2), pages 867-880, February.
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Citations

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Cited by:
  1. Ibrahim Abada, 2012. "A stochastic generalized Nash-Cournot model for the northwestern European natural gas markets with a fuel substitution demand function: The S-GaMMES model," Working Papers 1202, Chaire Economie du Climat.
  2. Gijsbert T.J. Zwart, 2009. "European Natural Gas Markets: Resource Constraints and Market Power," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 151-166.
  3. 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.
  4. Finn Roar Aune & Gang Liu & Knut Einar Rosendahl & Eirik Lund Sagen, 2009. "Subsidising carbon capture. Effects on energy prices and market shares in the power market," Discussion Papers 595, Research Department of Statistics Norway.
  5. Lindholt, Lars & Glomsrød, Solveig, 2012. "The Arctic: No big bonanza for the global petroleum industry," Energy Economics, Elsevier, vol. 34(5), pages 1465-1474.
  6. Ibrahim Abada, 2012. "Study of the evolution of the northwestern European natural gas markets using S-GaMMES," Working Papers 1203, Chaire Economie du Climat.
  7. Aune, Finn Roar & Mohn, Klaus & Osmundsen, Petter & Rosendahl, Knut Einar, 2009. "Financial market pressures, tacit collusion and oil price formation," UiS Working Papers in Economics and Finance 2009/14, University of Stavanger.
  8. Cédric Clastres & Catherine Locatelli, 2012. "European Union energy security: the challenges of liberalisation in a risk-prone international environment Society," Post-Print halshs-00787123, HAL.
  9. Ibrahim Abada & Vincent Briat & Steve A. Gabriel & Olivier Massol, 2011. "A Generalized Nash-Cournot Model for the North-Western European Natural Gas Markets with a Fuel SubstitutionDemand Function: The GaMMES Model," EconomiX Working Papers 2011-8, University of Paris West - Nanterre la Défense, EconomiX.
  10. Lars Lindholt & Solveig Glomsrød, 2011. "The role of the Arctic in future global petroleum supply," Discussion Papers 645, Research Department of Statistics Norway.
  11. 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.

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