Future European gas supply in the resource triangle of the Former Soviet Union,the Middle East and Northern Africa

A steady increase of natural gas demand can be observed in Europe over the last decades. Due to the European obligation to reduce greenhouse gas emissions in the framework of the Kyoto Protocol, the trend toward natural gas is expected to continue in the future. The increased consumption is faced by comparably low indigenous gas resources within Europe, so that the dependency of Europe on gas imports from abroad will rise in the future. In addition to the existing supply sources Russia and Algeria, gas resources from the Middle East and the Caspian and the Central Asian regions may be supply options to cover Europe's gas demand in the future. Against this background, possible natural gas supply options as well as the transport infrastructure to and within Europe are discussed regarding their technical capacity and their costs. With the help of a cost-minimization model of the European gas supply system, the gas flows and the infrastructure capacity development up to the year 2030 are analyzed. In a sensitivity analysis, the impacts of demand variations on the choice of supply sources are studied.     

The future of the European natural gas market: A quantitative assessment

The debate over the availability of conventional natural gas has been nearly as strong as that for conventional oil. In Europe, the debate is strengthened due to the region’s dependence on natural gas from outside countries. In addition, concern has been expressed by some energy experts in recent years about an imminent shortage of natural gas from Europe, caused supposedly by dwindling natural gas resources. Thus, the purpose of this analysis is to address the concern by assessing the availability of natural gas in the region. This is done by estimating a cumulative availability curve showing natural gas endowment versus production costs. The findings indicate that natural gas in Europe is more available and economic than often assumed. Increased research and development of this potential could help increase energy security in the region.     

Security of supply and retail competition in the European gas market.: Some model-based insights

In this paper, we analyze the impact of uncertain disruptions in gas supply upon gas retailer contracting behavior and consequent price and welfare implications in a gas market characterized by long-term gas contracts using a static Cournot model. In order to most realistically describe the economical situation, our representation divides the market into two stages: the upstream market that links, by means of long-term contracts, producers in exporting countries (Russia, Algeria, etc.) to local retailers who bring gas to the consuming countries to satisfy local demands in the downstream market. Disruption costs are modeled using short-run demand functions. First we mathematically develop a general model and write the associated KKT conditions, then we propose some case studies, under iso-elasticity assumptions, for the long–short-run inverse-demand curves in order to predict qualitatively and quantitatively the impacts of supply disruptions on Western European gas trade. In the second part, we study in detail the German gas market of the 1980s to explain the supply choices of the German retailer, and we derive interesting conclusions and insights concerning the amounts and prices of natural gas brought to the market. The last part of the paper is dedicated to a study of the Bulgarian gas market, which is greatly dependent on the Russian gas supplies and hence very sensitive to interruption risks. Some interesting conclusions are derived concerning the necessity to economically regulate the market, by means of gas amounts control, if the disruption probability is high enough.     

Indicators of security of natural gas supply in Asia

Natural gas has become an increasingly valuable resource and a global commodity. The demand for it has significantly increased. Japan, Korea and Taiwan heavily rely on liquefied natural gas (LNG) imports for their gas supplies from Malaysia, Brunei, Indonesia, Australia and the Middle East. On the other hand, countries like Thailand and Singapore import gas via trans-border pipelines. Gas supply interruptions, volatile gas prices, transportation and distribution bottlenecks, and a growing reliance on imports over longer distances have renewed interest on gas security in Asia. This paper examines the relative vulnerability to natural gas supply disruptions of seven gas-importing countries in Asia for year 2008. Based on four indicators of security of gas supply, a composite gas supply security index is estimated as an overall indication of gas vulnerability for our sample countries. The results demonstrate that there are differences in the values of the overall indicator of gas vulnerability among countries and the assessment is useful in developing an effective strategy of natural gas supply security in countries in the Asian region.     

Mexican natural gas implications for the US market

Despite the current glut of natural gas in the USA, much future demand may not be met unless supplementary sources of supply are developed. Mexico is not now an important supply source but a September 1979 agreement may mean that large volumes of Mexican gas will be exported to the USA in the future. This paper presents a modified version of the out-of-kilter algorithm used to examine the possible impacts of this gas, with particular attention given to identification of those areas most likely to benefit from these supplemental supplies. The results indicate that if Mexican natural gas is introduced to the US pipeline network in either southern Texas or southern New Mexico in large quantities, serious pipeline capacity problems may inhibit the use of Mexican supplies as a supplementary source.     

Households’ willingness to pay for safeguarding security of natural gas supply in electricity generation

Security of energy supply is a major issue for all EU Member States due to Europe's increasing dependence on imported fossil-fuel sources and the continuous rise in energy demand. The latter is of particular importance in electricity sector given the continuously increasing use of gas for electricity generation. In order to properly tackle with the problem, concerted actions are required by the EU Member States in several levels, i.e. legislative, political, etc. Nevertheless, these actions will come at an additional cost paid by the society either through increased electricity bills or through public financing for energy security investments. Thus, such policies should be justified on the basis of cost-benefit analysis. Towards this direction, it may be necessary to take into account non-market costs and benefits, i.e. the value that consumers place on interruptions avoided. In order to explore households’ perceptions and willingness to pay for securing gas supply for electricity production, an empirical study was conducted by means of the contingent valuation method. The results indicate that consumers are willing to pay a premium on their electricity bills in order to internalize the external costs of electricity production, in terms of energy security, which are caused from imported fuels.     

Power system economics : The value of natural gas in electricity generation

The study reported in this paper is concerned with assessing the value of natural gas in power generation. It had previously been assumed that this value is equal to price(s) of displaced fuel(s). A methodology is derived to assess this value in integrated supply systems and results are derived for a hypothetical system. It is shown that the value is system specific and may be equal to, greater than or less than the value of displaced fuel. The methodology and results reported are relevant to the debate on gas parity pricing.     

A MonteCarlo approach for assessing the adequacy of the European gas transmission system under supply crisis conditions

Europe’s dependency on non-EU countries’ energy supply is sharply increasing. Recently, sudden supply disruption caused by international disputes outside the EU have created serious problems for some EU countries and raised concern in many others. In these situations, it is highly desirable to have a tool to assess possible outcomes of supply disruptions. This paper presents a newly developed model, MC-GENERCIS, aimed to assess the robustness of the EU transnational gas transmission system during both normal and special operating conditions, including high-demand situations and/or a supply shortage. The model has a country-by-country resolution and examines all possible dispatching choices of national TSOs on the basis of a probabilistic MonteCarlo approach. The preliminary validation of the model through its application to the “normal” conditions for the winter 2008–2009 and to the recent supply disruption involving Ukrainian gas transit is also described.     

European ability to cope with a gas crisis. Comparison between 2009 and 2014

Regulation (EU) No 994/2010 concerning measures to safeguard security of gas supply was adopted following the 2009 commercial dispute between Ukraine and Russia which yield to a gas disruption. Since then, new infrastructure and cooperation measures have being implemented in order to reinforce the European gas system to better cope with gas shortages. Joint Research Centre has developed GEMFLOW, a country-based model of the European gas network, to simulate gas disruptions of different duration and to estimate the survival time and gas non-served per country. In this paper an analysis and comparison of the improvements carried out in the European gas system between 2009 and 2014 is presented and GEMFLOW model is used to evaluate the progress being made to strengthen the security of gas supply at European level.     

Russian gas price reform and the EU–Russia gas relationship: Incentives,consequences and European security of supply

In order to provide a comprehensive picture on the relationship between Russia and the EU, the focus should be on both the external energy relationship as well as Russia's internal organization. This paper sets out to do this by combining both strands of research in order to arrive at recommendations for Europe on the way to adjust its energy policy towards Russia. The emphasis is on whether or not Russia should impose unified gas pricing. Main conclusions are that the perceived advantages of unified Russian gas pricing to Russia as well as Europe are in fact overstated and that EU security of supply might worsen under unified gas prices. Three policy recommendations are that EU policy should (1) more explicitly acknowledge the interdependence between Russia and Europe; (2) not push Russia towards unified gas pricing; and (3) not take for granted any increase in Russian exports flowing to Europe.     

综合利用拓展天然气工业发展空间

在世界经济全球化的今天，从客观上了解天然气资源的需求，拓展天然气综合利用空间，培育新的经济增长点，是经济可持续发展战略的重要保证。     

The liberalisation of the Spanish gas market

This article analyses the deregulation process carried out by the Spanish government elected in 1996 introducing competition for the first time in the natural gas sector.     

The development of natural gas supply costs to Europe,the United States and Japan in a globalizing gas market—Model-based analysis until 2030

Quickly declining natural gas reserves in some parts of the world, increasing demand in today's major gas consuming regions, the emergence of new demand centres and the globalization of natural gas markets caused by the rising importance of liquefied natural gas (LNG) are changing global gas supply structures and will continue to do so over the next decades. Applying a global gas market model, we produce a forecast for global gas supply to 2030 and determine the supplier-specific long-run average costs of gas supplied to three major consuming regions. Results for the three regions are compared and analysed with a focus on costs, supply diversification and the different roles of LNG. We find that while European and Japanese external gas supply will be less diversified in international comparison, gas can be supplied at relatively low costs due to the regions’ favourable locations in geographic proximity to large gas producers. The US market's supply structure on the other hand will significantly change from its current situation. The growing dependency on LNG imports from around the world will lead to significantly higher supply costs but will also increase diversification as gas will originate from an increasing number of LNG exporting countries.     

Soviet gas and European security

This article probes the energy security issues associated with Western Europe's imports of Soviet gas. The prime focus is on France, but the situations of FR Germany and Italy are also examined. The analysis suggests that growing West European dependence on natural gas from sources judged politically unreliable will not entail dire or immediate vulnerability to supply cut-offs. At the same time, the article concludes that by the early 1990s imported natural gas from politically unreliable sources may have assumed as large a role as is prudent in coping with the European energy problem.     

All quiet on the eastern front? Disruption scenarios of Russian natural gas supply to Europe

The 2014 Russian–Ukrainian crisis reignited European concerns about natural gas supply security recalling the experiences of 2006 and 2009. However, the European supply situation, regulation and infrastructure have changed, with better diversified import sources, EU member states being better connected and a common regulation on the security of supply has been introduced. Nevertheless, European dependency on natural gas remained high. This paper investigates different Russian natural gas export disruptions scenarios and analyses short- and long-term reactions in Europe. We use the Global Gas Model (GGM), a large-scale mixed complementarity representation of the natural gas sector with a high level of technical granularity with respect to storage and transportation infrastructure. While we find that most of the EU member states are not severely affected by Russian disruptions, some East European countries are very vulnerable. Prioritizing the removal of infrastructure bottlenecks is critical for securing a sufficient natural gas supply to all EU member states.     

Identification of congestion and valuation of transport infrastructures in the European natural gas market

Rising import dependency, increasing market liberalization and cross-border trade and security of supply fears facilitate investments in natural gas supply infrastructures in Europe. In order to ensure an efficient allocation of capital resources, it is important to identify congestion in the existing system and investment requirements based on economic principles. This paper first outlines an analytical framework for the identification of bottlenecks and the evaluation of transport capacities and the cost of congestion based on nodal prices. Secondly, an infrastructure model of the European gas market with high temporal and spatial granularity which exhibits the characteristics of the theoretical model is introduced. Parameterizing the model with the existing infrastructure and applying a demand and supply scenario for the year 2015, congestion mark-ups between countries in Europe are estimated. This approach indicates potential bottlenecks which might arise within the next five years and quantifies their economic costs. With only some temporary congestion, physical market integration is found to be high in Western Europe. In Eastern Europe, severe bottlenecks are identified and discussed. Implications for efficient investment decisions arising from the findings are examined in the context of the theoretical considerations.     

A utility-eye view of the CO2 compliance-decision process in the European power-sector

The purpose of this paper is to provide a utility eye-view of the European power-sector's CO₂-compliance decision process under a tradable emissions scheme. The cost analysis indicates that, in the medium term, many utilities are likely to consider options based on traditional power technologies such as converting existing coal-fired capacity to burn gas, extending the lives of nuclear capacity, and replacing old coal-fired plants with more efficient gas- or even coal-fired units. The long-term economic potential of future options is highly uncertain, and utilities are likely to respond to this by maintaining flexibility in fuel choices and avoid large investments that lock them into a specific compliance method before more efficient and cleaner technologies have crystallized. Given the multitude of possible CO₂-mitigation options, there is a strong case for emissions trading and for refraining from policies that build on mandatory fuel-requirements, higher rates of capital stock turnover and technology standards.     

The security of gas supply—a critical issue for Europe?

Gas is competing with oil for being the dominant energy source. In electricity generation gas is to play as pivotal a role as oil in transportation. The security equation of gas and electricity become unseparably interrelated. Energy disruptions have considerable influence on the national accounts far beyond the direct cost of market participants (asymmetry). The present gas supply to the EU depends dangerously on too few sources and venues. There is a decided lack of optionality. The EU directly or through its members needs a clear proactive policy on “Security of Gas Supply” with a strong multilateral direction. The measures developed for the oil industry over the last 30 years can at least serve as a starting point for a constructive debate. When discussing security of supply dependence it is useful to clearly define the various risks one wishes to protect against. Free riders relying on alternative fuels without participating in their security systems are not permissible.     

Natural gas contracts in an emerging competitive market

The price and duration of natural gas contracts are analysed to determine that electric and gas utilities in the USA can obtain long-run reliable supplies of natural gas at prevailing market prices. Open access to gas transmission lines has created a market with a large number of buyers and sellers that provides reliable gas supplies. The transaction cost literature on contracts suggests that spot purchases and short-term contracts have become more efficient than the long-term fixed price contracts that typifield the gas industry before the 1980s. An efficient supply of gas requires increasing contracting options and reducing regulatory approval of contracts. For instance, gas marketers, with access to local distribution of pipelines, could offer customers a menu of contract choices for gas and energy services. Alternatively, distribution companies could offer their customers a diversity of contracts. Some regulatory inefficiencies are avoided by automatically setting the allowable cost of gas to current market prices.     

Solar hydrogen energy: The European–Maghreb connection. A new way of excellence for a sustainable energy development

The global sustainability is a key word of the future energy system for human beings. It should be friendly to our earth. Hydrogen energy is a critical resource to sustainable energy development. Over the coming decades, rapid economic growth will necessitate expanded and diversified energy supplies. This study is proposed to illustrate the attention to the opportunities and possibilities of connecting the energy consumer in North Mediterranean countries, to the reservoir of the Great Sahara of North Africa using hydrogen as a solar energy carrier. It also discusses cooperation between North Africa and north sides of the Mediterranean that has been going on for a long time, in oil and natural gas industry, and why cannot be done in solar hydrogen energy industry, which will reduce pollution and will last forever. Clearly, North Africa is a major bilateral partner with the Europe and the people of the two shares of the Mediterranean will be work together and to built strategic relationships for many decades. In the future, North Africa countries are well-positioned to play a greater role in the Europe clean energy equation. Demographically, interregional migration due to economic concerns will decline. Now, there are good chances to start such cooperation for the benefits of all partners.