Demand for storage of natural gas in northwestern Europe. Trends 2005-2030

Felix Hoeffler () and Madjid Kuebler ()
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Felix Hoeffler: Max Planck Institute for Research on Collective Goods, Bonn
Madjid Kuebler: Team Consult, Berlin, Germany

No 2006_9, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: The seasonal demand for natural gas requires supply flexibility. This “swing” is now largely provided in northwestern Europe by indigenous production. Declining reserves will increase the dependency on imports from far-off sources, which are less flexible. Hence, flexibility must be provided by additional storage. We estimate that in 2030 between 10 (with no strategic storage) and 29 (with 10 per cent strategic storage for imports from non-EU countries) billion cubic meter of working gas volume will be required, in addition to the existing 40 billion cubic meters. This estimation is based on production and consumption forecasts for natural gas and observations of the relationship between the supply and demand of gas and the supply and demand of flexibility in the period 1995-2005. We provide different scenarios to check for the robustness of our results. We discuss the impact of third-party access to storage facilities on incentives to close the storage gap, as well as policy implications of strategic storage obligations.

Keywords: Seasonal swing; strategic storage obligations; thirdparty access (search for similar items in EconPapers)
JEL-codes: L51 L98 Q41 (search for similar items in EconPapers)
Pages: 25 pages
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