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A fundamental analysis on the implementation and development of virtual natural gas hubs

Aurora del Valle, Pablo Dueñas, Sonja Wogrin and Javier Reneses

Energy Economics, 2017, vol. 67, issue C, 520-532

Abstract: The ongoing gas market liberalization in Europe has brought up a new competitive environment in which shippers (i.e., companies that are responsible for conveying gas from producers to consumers) must adapt their behavior to the changing conditions. The development of gas virtual hubs increases market interactions among shippers, but the oligopolistic market structure may give room for strategic behavior. The market is in addition segmented by type of costumer. Each shipper maximizes its profit by supplying gas to households, businesses and industries (conventional costumers), participating in the electricity market, trading in the global LNG spot market and interacting with the rest of shippers in a virtual hub. During the hub implementation and development, the following questions arise: How do shippers behave at the different levels of hub maturity? And, to what extent does the implementation of virtual hubs in entry-exit systems diminish the barriers to entry of new market players, provides more flexibility and fosters competition?

Keywords: Natural gas virtual hubs; Market liberalization; Entry-exit access system; Mathematical modeling (search for similar items in EconPapers)
JEL-codes: C60 C61 C70 D43 L13 L95 (search for similar items in EconPapers)
Date: 2017
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