European Gas Market

By

Omkar Khedkar (09020243018)

Siddhath Nimbalkar(09020243029)

Introduction

Natural gas forms a major part of energy mix in all members of EU.

Widely spread Gas networks.

Strategies implemented on long term and short term basis.

Short term strategy

To Target achievement of Economic efficiencies.

Short Term tactics by Germany and France

Germany opted for spot purchase of LNG rather than taking gas from well established Russian sources.

Germany and France preferred other sources for natural gas instead of Russia in early 2009.

France also increased its LNG import by 3% in 2009.

German gas import prices

Long Term Strategy

Gas Security:

1) Design of Regulations for the European Union.

2) Establishment of Political Relations

Long term strategy adoption

The BRITISH Strategy

Dependence on Russia is zero.

Utilization of the EU to develop Southern Corridor for gas supplies without traversing into the Russian territory.

Diversification of Energy sources into nuclear and renewables.

Construction of Nabucco Gas Pipeline.

Market liberalization and interlinking of markets.

This diversification will be highly capital intensive.

Strategic investments in developing storage systems- current capacity is only 5% of annual demand.

The GERMAN Strategy

Strengthen the relations with Russia

Construction of Nord Stream Pipeline that bypasses countries like Belarus and Poland.

Investment in upstream operations in Russia by German companies like BASF and E.ON.

Upstream developments in Middle East, North Africa and the Caspian Sea.

Development of strong downstream and storage systems to manage market risks.

German-Nigerian partnership.

The French Strategy

Strengthen relations with Russia.

GDF Suez’s negotiations with Gazprom for being a part of Nord Stream Pipeline consortium- April 2009.

Acquisition of 60% exploration rights in Qatar’s gas block.

Reluctant to invest in domestic downstream sector.

The Dutch Gas Roundabout Concept

Concept by Govt. of Netherland. Netherland will emerge as a major gas hub for North

western Europe.

Achieving Gas security for entire European Union.

It has an excellent transport system.

Naturally available storage systems in form of depleted gas fields and salt caverns

Conclusion

Two way strategy is helping EU to handle issues like Gas security and Low Carbon Economy.

The best practices promoted by EU are Liberalization of Markets. Trading Facility.