Building Competitive Gas Markets in the EU
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Building Competitive Gas Markets in the EU

Regulation, Supply and Demand

Jean-Michel Glachant, Michelle Hallack and Miguel Vazquez

This highly unique book focuses on market design issues common to most EU gas markets, particularly in the context of closer integration. It explores in detail the characteristics and requirements of national gas markets in Europe which are constructed as virtual hubs based on entry/exit schemes as a requirement of European law.
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Chapter 1: Introduction to Part I

Regulation, Supply and Demand

Michelle Hallack, Miguel Vazquez and Jean-Michel Glachant


Traditionally in the gas industry both supply and demand patterns were rather flat, so the short-term flexibility of gas delivery was not a scarce resource and so markets or network regulation did not need advanced tools to deliver and to price pipeline flexibility. This part of the book will show that this is not the case any more, as both supply and demand sides are changing with regard to flexibility while transport capacity and pipeline flexibility are competing for the use of the network. Chapters 2 and 3 show how ‘new’ patterns have made gas flows more variable in the last two decades. The development of the gas commodity market in a ‘dash for gas’ (Winskel, 2002) refers to the strong increase in gas demand (Heather, 2010). This change should not be understood just as a variation in traded volumes; it also accounts for a change in gas demand and supply profiles. Electricity power plants as gas consumers have changed the profile of gas usage. In the same way, the increasing use of liquefied natural gas as a flexible supplier has changed the supply portfolio. Until the massive introduction of electricity generation the main drivers of gas demand had been industrial and household consumers. On the supply side, European gas originated from national fields, and from gas pipeline importation through ship-or-pay contracts.

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