European Natural Gas Markets: Resource Constraints and Market Power

Gijsbert Zwart

The Energy Journal, 2009, vol. 30, issue 1_suppl, 151-166

Abstract: 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. In this paper we analyze long-run scenarios for the European natural gas markets in a model, NATGAS, that explicitly includes both factors, resource constraints and producers’ market power. Finite resources lead to interdependencies of current production decisions and future opportunities. These decisions in turn depend on the potential for large producers to set market prices above marginal costs. 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.

Keywords: Natural gas; EU; market power; NATGAS model (search for similar items in EconPapers)
Date: 2009
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Journal Article: European Natural Gas Markets: Resource Constraints and Market Power (2009)
Working Paper: European natural gas markets: resource constraints and market power (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:30:y:2009:i:1_suppl:p:151-166

DOI: 10.5547/ISSN0195-6574-EJ-Vol30-NoSI-10

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