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Globalisation of natural gas markets - effects on prices and trade patterns

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Abstract

The regional natural gas markets are expected to gradually become more integrated. The major driving forces are lower LNG costs, more spot trade, and increased need for imports into the US and other key markets. In this paper we examine various scenarios for a future global gas market, particularly focusing on natural gas prices and trade patterns. We use a numerical model of the international energy markets, with detailed modelling of regional gas production and international gas transport. Scenarios with different assumptions about future demand and supply conditions are simulated. Our results suggest that trade between continents will grow considerably over the next couple of decades, and that prices in the main import regions will remain around current levels. However, significant constraints on exports from the Middle East may alter this picture.

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  • Finn Roar Aune & Knut Einar Rosendahl & Eirik Lund Sagen, 2008. "Globalisation of natural gas markets - effects on prices and trade patterns," Discussion Papers 559, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:559
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    9. Finn Roar Aune & Solveig Glomsrød & Lars Lindholt & Knut Einar Rosendahl, 2005. "Are high oil prices profitable for OPEC in the long run?," Discussion Papers 416, Statistics Norway, Research Department.
    10. Maroeska G. Boots, Fieke A.M. Rijkers and Benjamin F. Hobbs, 2004. "Trading in the Downstream European Gas Market: A Successive Oligopoly Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 73-102.
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    Cited by:

    1. Marrero, Gustavo A. & Ramos-Real, Francisco Javier, 2010. "Electricity generation cost in isolated system: The complementarities of natural gas and renewables in the Canary Islands," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(9), pages 2808-2818, December.
    2. Paltsev, Sergey & Jacoby, Henry D. & Reilly, John M. & Ejaz, Qudsia J. & Morris, Jennifer & O'Sullivan, Francis & Rausch, Sebastian & Winchester, Niven & Kragha, Oghenerume, 2011. "The future of U.S. natural gas production, use, and trade," Energy Policy, Elsevier, vol. 39(9), pages 5309-5321, September.
    3. Ibrahim Abada & Steven Gabriel & Vincent Briat & Olivier Massol, 2013. "A Generalized Nash–Cournot Model for the Northwestern European Natural Gas Markets with a Fuel Substitution Demand Function: The GaMMES Model," Networks and Spatial Economics, Springer, vol. 13(1), pages 1-42, March.
    4. Lars Lindholt & Solveig Glomsrød, 2011. "The role of the Arctic in future global petroleum supply," Discussion Papers 645, Statistics Norway, Research Department.
    5. Finn Roar Aune & Gang Liu & Knut Einar Rosendahl & Eirik Lund Sagen, 2009. "Subsidising carbon capture. Effects on energy prices and market shares in the power market," Discussion Papers 595, Statistics Norway, Research Department.
    6. 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.
    7. Ibrahim Abada, 2012. "A stochastic generalized Nash-Cournot model for the northwestern European natural gas markets with a fuel substitution demand function: The S-GaMMES model," Working Papers 1202, Chaire Economie du climat.
    8. Cédric Clastres & Catherine Locatelli, 2012. "European Union energy security: the challenges of liberalisation in a risk-prone international environment Society," Post-Print halshs-00787123, HAL.
    9. Gijsbert T.J. Zwart, 2009. "European Natural Gas Markets: Resource Constraints and Market Power," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 151-166.
    10. Chyong, Chi Kong & Hobbs, Benjamin F., 2014. "Strategic Eurasian natural gas market model for energy security and policy analysis: Formulation and application to South Stream," Energy Economics, Elsevier, vol. 44(C), pages 198-211.
    11. Lars Lindholt & Solveig Glomsrød, 2017. "Phasing out coal and phasing in renewables – good or bad news for arctic gas producers?," Discussion Papers 856, Statistics Norway, Research Department.
    12. Feijoo, Felipe & Huppmann, Daniel & Sakiyama, Larissa & Siddiqui, Sauleh, 2016. "North American natural gas model: Impact of cross-border trade with Mexico," Energy, Elsevier, vol. 112(C), pages 1084-1095.
    13. Aune, Finn Roar & Mohn, Klaus & Osmundsen, Petter & Rosendahl, Knut Einar, 2010. "Financial market pressure, tacit collusion and oil price formation," Energy Economics, Elsevier, vol. 32(2), pages 389-398, March.
    14. Barnes, Ryan & Bosworth, Ryan, 2015. "LNG is linking regional natural gas markets: Evidence from the gravity model," Energy Economics, Elsevier, vol. 47(C), pages 11-17.
    15. repec:eee:eneeco:v:70:y:2018:i:c:p:1-11 is not listed on IDEAS
    16. Ibrahim Abada, 2012. "Study of the evolution of the northwestern European natural gas markets using S-GaMMES," Working Papers 1203, Chaire Economie du climat.
    17. Lindholt, Lars & Glomsrød, Solveig, 2012. "The Arctic: No big bonanza for the global petroleum industry," Energy Economics, Elsevier, vol. 34(5), pages 1465-1474.

    More about this item

    Keywords

    Natural gas trade; gas prices; numerical model;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices

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