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What's the story with natural gas markets in Europe? Empirical evidence from spot trade data | IEEE Conference Publication | IEEE Xplore

What's the story with natural gas markets in Europe? Empirical evidence from spot trade data


Abstract:

Natural gas trading in Europe has changed significantly since first deregulatory measures were taken in the late 1990s. The opening of transport infrastructure to third p...Show More

Abstract:

Natural gas trading in Europe has changed significantly since first deregulatory measures were taken in the late 1990s. The opening of transport infrastructure to third parties and the separation of transport from other activities along the natural gas value chain have in combination with other regulatory interferences, led to the development of several trading places across Europe. We investigate the current degree of market functioning in Europe based on short term trade in different regions. We test the hypothesis if natural gas markets in Europe exhibit a significant level of integration using the Kalman filtering technique. Our results identify a significant level of integration between twelve price series with varying evolution over time.
Date of Conference: 10-12 May 2012
Date Added to IEEE Xplore: 02 August 2012
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ISSN Information:

Conference Location: Florence, Italy

I. Introduction

Creating a single European market has been on the agenda of policy makers essentially since nearly a quarter of a century starting with the Single European Act of 1987. A long struggle between interest groups deferred an application of the Act to natural gas by 10 years with the first Gas Directive coming into force. With no progress in achieving the foreseen goal, the creation of a competitive internal market for natural gas, a second and third Directive followed in 2003 (2003/55/EC) and 2009 (2009/73/EC). At the heart of the project and key to the natural gas industry is the free flow of molecules in a European system of transmission pipelines. This includes third-party access to the system as well as a costreflective and non-discriminatory tarification system that ensures a secure level of flows and provides sufficient investment incentives. This all plays against a highly regulated industry with oversight from a national and from this year onwards a European regulatory authority. Albeit the industry is technically less complicated than its sibling electricity the issue is equally complex.

References

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