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Natural Gas Pricing in Countries of the Middle East and North Africa

This paper presents a quantitative framework for discussing the gas pricing policy in the countries of Middle East and North Africa (MENA) where gas prices are set directly or indirectly by the governments. It concludes that the price of gas in most MENA countries is substantially below its economic cost, resulting in wasteful use of gas and electricity, deployment of inefficient technologies, and huge burden on government budgets. The low gas price also causes a bias in favor of gas export projects while at the same time reduces investorsÕ interest in the upstream and downstream gas sector. The implications are most interesting about four countries Ð Algeria, Qatar, Egypt and Iran Ð where each country has to revisit its gas allocation policy and where each government is trying to de-link investorsÕ interest from domestic gas prices.

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Energy Specializations: Energy Access – Sustainable Development and Distributed Energy; Natural Gas – Markets and Prices; Natural Gas – LNG Infrastructure

JEL Codes: Q40: Energy: General, Q48: Energy: Government Policy, Q35: Hydrocarbon Resources

Keywords: Natural gas prices, Middle East, North Africa, policy, welfare, LNG

DOI: 10.5547/ISSN0195-6574-EJ-Vol30-No3-1

Published in Volume 30, Number 3 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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