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Analysis of NCG Prices Under Different Shapes of Oil Price Recovery with a Worldwide Gas Market Model

In: HANDBOOK OF ENERGY FINANCE Theories, Practices and Simulations

Author

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  • Maik Günther
  • Mostafa Fallahnejad

Abstract

Natural gas plays an important role in Europe. During the last 10 years, the European gas market has undergone significant changes. While the share of oil-indexed gas in markets has declined, gas-on-gas competition has grown significantly. This chapter investigates gas prices at the trading hub NetConnect Germany (NCG) under various oil price scenarios in the period 2017 to 2023. This is done by performing sensitivity analyses using the worldwide gas market model WEGA. The results reveal that the NCG prices are very sensitive to the changes of oil prices throughout this period. However, NCG prices are smoothed and delayed due to the price formula of oil-indexed contracts as well as the decline of the share of oil-indexed gas.

Suggested Citation

  • Maik Günther & Mostafa Fallahnejad, 2020. "Analysis of NCG Prices Under Different Shapes of Oil Price Recovery with a Worldwide Gas Market Model," World Scientific Book Chapters, in: Stéphane Goutte & Duc Khuong Nguyen (ed.), HANDBOOK OF ENERGY FINANCE Theories, Practices and Simulations, chapter 13, pages 301-316, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789813278387_0013
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    More about this item

    Keywords

    Energy Finance; Financial and Economic Modeling; Volatility; Forecasting; Quantitative Finance; Energy Markets;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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