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Simulating Security of Supply Effects of the Nabucco and South Stream Projects for the European Natural Gas Market

Because of the decrease in domestic production in Europe, additional natural gas volumes will be required. In addition to Nord Stream, the major import pipeline projects, Nabucco and South Stream, have been announced to provide further gas supplies to Europe. This raises the question concerning whether and how these projects contribute to the European Union's focus on security of supply. Applying the natural gas infrastructure model TIGER, this paper investigates the impact of these pipeline projects on southeastern Europe's gas supply. Gas flows and marginal cost prices are evaluated in general and considering the possibility of supply disruptions via Ukraine for the year 2020. The model results show a positive impact of these pipelines on security of supply despite few consumer cut-offs that result from intra-European bottlenecks. South Stream is only highly utilized in case of a Ukraine crisis, supporting the idea that its main purpose is to bypass Ukraine. Keywords: Natural gas, security of supply, Nabucco, South Stream, linear-optimization, transport infrastructure

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Energy Specializations: Energy Security and Geopolitics – Energy Security; Natural Gas – Pipelines ; Natural Gas – Policy and Regulation

JEL Codes: Q41: Energy: Demand and Supply; Prices, L95: Gas Utilities; Pipelines; Water Utilities, Q40: Energy: General, Q35: Hydrocarbon Resources, G01: Financial Crises

Keywords: Natural gas, Security of supply, Nabucco, South stream, Linear-optimization, Transport infrastructure

DOI: 10.5547/01956574.33.3.6

Published in Volume 33, Number 3 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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