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Expectations and the Evolving World Gas Market

Abstract:
A number of authors have noted that recent changes in the liquefied natural gas (LNG) industry are likely to favor shorter term multilateral trades of LNG relative to long term bilateral and project-specific contracts. We present a model in which expectations of such a change in market structure alter investment behavior in a way that reinforces the original tendency. The result is that the structure of the natural gas market could change quite quickly, as happened previously in the world oil market.

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Energy Specializations: Energy Modeling – Forecasting and Market Analysis; Natural Gas – Exploration and Production; Natural Gas – Markets and Prices

JEL Codes:
D4 -
D24 - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
L13 - Oligopoly and Other Imperfect Markets

Keywords: Natural gas, LNG, market sstructure, gas industry, integration

DOI: 10.5547/ISSN0195-6574-EJ-Vol28-No1-1


Published in Volume 28, Number 1 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.