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Representing GASPEC with the World Gas Model

Author

Listed:
  • Ruud Egging
  • Franziska Holz
  • Christian von Hirschhausen
  • Steven A. Gabriel

Abstract

This paper presents results of simulating a more collusive behavior of a group of natural gas producing and exporting countries, sometimes called GASPEC. We use the World Gas Model, a dynamic, strategic representation of world gas production, trade, and consumption between 2005 and 2030. In particular, we simulate a closer cooperation of the GASPEC countries when exporting pipeline gas and liquefied natural gas; we also run a more drastic scenario where GASPEC countries deliberately withhold production. The results shows that compared to a Base Case, a gas cartel would reduce total supplied quantities and induce price increases in gas importing countries up to 22%. There is evidence that the natural gas markets in Europe and North America would be affected more than other parts of the world. Lastly, the vulnerability of gas importers worldwide on gas exporting countries supplies is further illustrated by the results of a sensitivity case in which price levels are up to 87% higher in Europe and North America, but non-GEC countries increase production by a mere 10%.

Suggested Citation

  • Ruud Egging & Franziska Holz & Christian von Hirschhausen & Steven A. Gabriel, 2008. "Representing GASPEC with the World Gas Model," Discussion Papers of DIW Berlin 845, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp845
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    Cited by:

    1. Robert A. Ritz, 2013. "Price discrimination and limits to arbitrage in global LNG markets," Working Papers EPRG 1317, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Kolb, Sebastian & Plankenbühler, Thomas & Frank, Jonas & Dettelbacher, Johannes & Ludwig, Ralf & Karl, Jürgen & Dillig, Marius, 2021. "Scenarios for the integration of renewable gases into the German natural gas market – A simulation-based optimisation approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 139(C).
    3. 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.
    4. Anne Neumann & Juan Rosellón & Hannes Weigt, 2015. "Removing Cross-Border Capacity Bottlenecks in the European Natural Gas Market—A Proposed Merchant-Regulatory Mechanism," Networks and Spatial Economics, Springer, vol. 15(1), pages 149-181, March.
    5. 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.
    6. Alexios Skarakis & Athanasios Dagoumas, 2017. "An Optimization Model of the European Natural Gas System," International Journal of Energy Economics and Policy, Econjournals, vol. 7(6), pages 48-60.
    7. Ritz, Robert A., 2014. "Price discrimination and limits to arbitrage: An analysis of global LNG markets," Energy Economics, Elsevier, vol. 45(C), pages 324-332.
    8. Huppmann, Daniel & Egging, Ruud, 2014. "Market power, fuel substitution and infrastructure – A large-scale equilibrium model of global energy markets," Energy, Elsevier, vol. 75(C), pages 483-500.

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    JEL classification:

    • F0 - International Economics - - General

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