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European Natural Gas Markets: Resource Constraints and Market Power

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  • Gijsbert T.J. Zwart

Abstract

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. In this paper we analyze long-run scenarios for the European natural gas markets in a model, NATGAS, that explicitly includes both factors, resource constraints and producers’ market power. Finite resources lead to interdependencies of current production decisions and future opportunities. These decisions in turn depend on the potential for large producers to set market prices above marginal costs. 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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  • Gijsbert T.J. Zwart, 2009. "European Natural Gas Markets: Resource Constraints and Market Power," The Energy Journal, , vol. 30(1_suppl), pages 151-166, June.
    • Handle: RePEc:sae:enejou:v:30:y:2009:i:1_suppl:p:151-166
    DOI: 10.5547/ISSN0195-6574-EJ-Vol30-NoSI-10
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    4. Kristine Grimsrud & Knut Einar Rosendahl & Halvor B. Storrøsten & Marina Tsygankova, 2016. "Short Run Effects of Bleaker Prospects for Oligopolistic Producers of a Non-renewable Resource," The Energy Journal, , vol. 37(3), pages 293-314, July.
    5. Veronika Grimm & Julia Grübel & Martin Schmidt & Alexandra Schwartz & Ann-Kathrin Wiertz & Gregor Zöttl, 2025. "Publisher Correction: On a tractable single-level reformulation of a multilevel model of the European entry-exit gas market with market power," Journal of Global Optimization, Springer, vol. 93(2), pages 571-603, October.
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    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices

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