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The Cost of Improving Gas Supply Security in the Baltic States

Author

Listed:
  • Noël, P.
  • Findlater, S.
  • Chyong, C. K.

Abstract

The Baltic States (Estonia, Latvia and Lithuania) are three amongst the smallest gas markets in Europe. They import all the gas they consume from Russia, with whom they have difficult political relationships. A disruption of their supply from Russia, whatever the cause, would have severe consequences as a large share of their peak winter consumption could not be replaced by alternative gas or other fuels. The three governments want to invest in improving gas supply security and the European Commission pushes in the same direction. But what should they do? We present an assessment of the cost of various national and regional options – dual-fuel for heat plants and CHPs; strategic gas storage; strategic LNG terminals – to increase gas supply security. The cost is calculated over thirty years for different scenarios of supply disruptions. Uncertainty in commodity prices and interest rates is taken into account through Monte Carlo simulations. We draw the policy conclusions, taking into account the regional political context.

Suggested Citation

  • Noël, P. & Findlater, S. & Chyong, C. K., 2012. "The Cost of Improving Gas Supply Security in the Baltic States," Cambridge Working Papers in Economics 1204, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1204
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    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1204.pdf
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    References listed on IDEAS

    as
    1. Silve, F. & Noel, P., 2010. "Cost Curves for Gas Supply Security: The Case of Bulgaria," Cambridge Working Papers in Economics 1056, Faculty of Economics, University of Cambridge.
    2. Winzer, Christian, 2012. "Conceptualizing energy security," Energy Policy, Elsevier, vol. 46(C), pages 36-48.
    3. repec:reg:rpubli:33 is not listed on IDEAS
    4. Damigos, D. & Tourkolias, C. & Diakoulaki, D., 2009. "Households' willingness to pay for safeguarding security of natural gas supply in electricity generation," Energy Policy, Elsevier, vol. 37(5), pages 2008-2017, May.
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    Cited by:

    1. Pierre Noel & Sachi Findlater & Chi Kong Chyong, 2013. "Baltic Gas Supply Security: Divided We Stand?," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).

    More about this item

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P28 - Economic Systems - - Socialist Systems and Transition Economies - - - Natural Resources; Environment
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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