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European natural gas markets: resource constraints and market power

Author

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  • Gijsbert Zwart

Abstract

We analyze long-run scenarios for the European natural gas markets in a model, NATGAS, that explicitly includes both resource constraints and producers’ market power. Europa wordt geconfronteerd met afnemende eigen aardgasvoorraden, met name in de van oudsher grote producenten het Verenigd Koninkrijk en Nederland. De Europese afhankelijkheid van een beperkt aantal grote aardgasleveranciers zal toenemen. Daarmee groeit ook de marktmacht van deze producerende landen. We bekijken de invloed van de beschikbaarheid van vloeibaar aardgas, LNG, op de marktaandelen van producenten en de snelheid van uitputting van Europese voorraden. We bestuderen in het bijzonder hoe in de verschilende scenario's de schaduwprijzen van eindige voorraden de productiebeslissingen beïnvloeden. 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. 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.

Suggested Citation

  • Gijsbert Zwart, 2008. "European natural gas markets: resource constraints and market power," CPB Discussion Paper 116, CPB Netherlands Bureau for Economic Policy Analysis.
    • Handle: RePEc:cpb:discus:116
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    References listed on IDEAS

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    Cited by:

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    2. Egging-Bratseth, Ruud & Baltensperger, Tobias & Tomasgard, Asgeir, 2020. "Solving oligopolistic equilibrium problems with convex optimization," European Journal of Operational Research, Elsevier, vol. 284(1), pages 44-52.
    3. repec:aen:journl:2010v31-04-a08 is not listed on IDEAS
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    5. Youngho Chang & Dang Thi Quynh Trang & Tsiat Siong Tan & Farhad Taghizadeh-Hesary, 2021. "Competition and cooperation in the natural gas market: a game-theoretic demand-base analysis," Asia Europe Journal, Springer, vol. 19(1), pages 21-49, December.
    6. Veronika Grimm & Julia Grübel & Martin Schmidt & Alexandra Schwartz & Ann-Kathrin Wiertz & Gregor Zöttl, 2025. "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. 91(4), pages 953-985, April.
    7. 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.

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    More about this item

    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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