Issues in Global Natural Gas: A Primer and Analysis
IMF Working Papers, February 1, 2002
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- Issues in Global Natural Gas: A Primer and Analysis
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Bibliographic details
- Authors: Bright E Okogu
- Published: February 1, 2002
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451845983.001
Summary
- This paper discusses the rising profile of natural gas in global energy, factors constraining its further development, the gas contracting process, and the absence of a global market, which is analyzed in the context of the economic rent in the gas price and the opaque nature of gas contracts.
- A proposal for rationalizing the trade to ease these constraints is offered.
- Gas pricing, and factors driving demand are also analyzed using evidence from the literature.
- FDI can help to monetize some of the 'stranded' gas reserves, but success would depend on an investor-friendly climate, including appropriate tariff regimes in the domestic markets.
Key findings and analysis
- Rising profile of natural gas in global energy.
- Constraints to further development include transportation constraint, transportation infrastructure, and the opaque nature of gas contracts.
- Absence of a global market is linked to economic rent embedded in gas price and opaque contracting practices.
- Gas contracting process and sales and purchase agreement structures influence price formation and market access.
- Gas pricing, including concepts such as base price, equilibrium price, price cushion, supply price, and wellhead price, is analyzed using evidence from the literature.
- Demand drivers and cross price elasticity results are examined with regional references to Asia and Pacific, Europe, Middle East, North America, and Global considerations.
Policy recommendations and proposals
- Rationalize trade arrangements to ease constraints arising from the absence of a global market and opaque contracts.
- Promote investor-friendly climates to attract FDI necessary to monetize 'stranded' gas reserves.
- Implement appropriate tariff regimes in domestic markets to improve attractiveness for investment and facilitate gas monetization.
FDI and stranded reserves
- Foreign direct investment (FDI) can help to monetize some of the 'stranded' gas reserves.
- Success of FDI-driven monetization depends on an investor-friendly climate and appropriate tariff regimes in domestic markets.
Thematic keywords and subjects covered
- Subjects: Commodities, Economic sectors, Fuel prices, National accounts, Natural gas sector, Oil, Oil prices, Prices, Transportation.
- Keywords include: Asia and Pacific, base price, cross price elasticity result, economic rent, equilibrium price, Europe, Fuel prices, gas market, gas price, gas pricing, gas supplier, gas trade, Global, investment, LNG, Middle East, Natural gas, Natural gas sector, North America, Oil, Oil prices, outside gas exporter, paper market, pipeline, pipeline gas project, price cushion, sales and purchase agreement, supply price, Transportation, transportation constraint, transportation infrastructure, user cost, utility service, wellhead price, WP.
Issues in Global Natural Gas: A Primer and Analysis — Bright E Okogu, February 1, 2002
Content in this bundle
- Issues in Global Natural Gas: A Primer and Analysis - WP/02/40 Revised: 5/31/02