European Market Integration for Gas? Volume Flexibility And Political Risk
By Frank Asche, Petter Osmundsen, Ragnar Tveterås. Social Science Research Network, 2002
170 citations recorded by the source corpus.
Gas exports to the Continent are regulated by long term take-or-pay contracts. The contracts are described and analyzed. We thereafter examine whether the most central European gas market, the German market, is integrated. Are there substantial price differences between gas from different export countries, and do prices move together? Time series of Norwegian, Dutch and Russian gas export prices to Germany in 1990-1998 are examined. Cointegration tests show that the different border prices for gas to Germany move proportionally over time, indicating an integrated gas market (the Law of One Price holds). We find differences in mean prices, with Russian gas being sold at prices systematically lower than Dutch and Norwegian gas. Among the explanatory factors for price discrepancies are differences in volume flexibility (swing) and perceived political risk.
Subfields: Economics and Econometrics, General Energy
View Paper: https://www.semanticscholar.org/paper/d4f281a8c7d0cc419186ed37e69db17c9b9b7d0c
How researchers see this paper
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In Economics and Econometrics
- A. Neumann
- Theodore Panagiotidis
- E. Rutledge
- C. von Hirschhausen
- Boriss Siliverstovs
- Frank Asche
- Ulrich Oberndorfer
- Roger White
In General Energy
Citations in the corpus
- Oil and gas markets in the UK : Evidence from a cointegrating approach (2007, background): “Asche et al. (2002) provide a discussion of the structure of the take-or-pay contracts and evidence that the continental market for gas is integrated.”
- Convergence of European spot market prices for natural gas? A real-time analysis of market integration using the Kalman Filter (2006, methodology): “For Europe, analysis of that type was carried out by Asche et al. (2001, 2002) suggesting an increasing level of integration of European natural gas prices at the country level.”
- International Market Integration for Natural Gas? A Cointegration Analysis of Prices in Europe, North America and Japan (2005, methodology): “8See Asche et al. (2002) for more details on this interpretation.”
- The UK Market for Natural Gas, Oil and Electricity: Are the Prices Decoupled? (2006, background): “Several studies have indicated that oil and natural gas prices are nonstationary (e.g. Gjølberg and Johnsen, 1999; Serletis and Herbert, 1999; Asche, Osmundsen and Tveterås, 2002; Asche, Gjølberg and Völker, 2003).”