@article{2fdfa1a1fd984d59bcba36dba86dd5f4,
title = "An economic analysis of gas pipeline trade cooperation in the GCC",
abstract = "Natural gas plays an important role in the global energy system. Thus, optimizing trade in natural gas is a key concern for many countries. This study investigates the value of expanding the Gulf Cooperation Council's (GCC) natural gas grid. We consider the documented successes and failures of the regional gas trade in Europe and Asia and weigh them against a GCC case study. The case study uses a partial equilibrium model of energy production, trade and demand calibrated to 2018 conditions to assess regional pipeline gas trade opportunities. The model incorporates parameters that are relevant to energy policy issues, including fuel allocation and energy price reforms. We also incorporate the regional liquified natural gas (LNG) trade strategy of Qatar, a regional and global leader in LNG production and exports. We find that pipeline gas trade cooperation in the GCC can contribute up to $3.1 billion to the regional economy by reducing transportation costs. More accessible gas offers a substitute for liquid fuel consumption and can offset the opportunity costs of using domestic oil to meet domestic energy demands. We also investigate the influence of an integrated gas market and price reforms on the power trade along the GCC interconnector.",
keywords = "Gulf Cooperation Council trade cooperation, Integrated energy model, Investment, Natural gas, Pipeline",
author = "Bertrand Rioux and Rami Shabaneh and Steven Griffiths",
note = "Funding Information: Regional cooperation has become a mainstay of European energy policy. This cooperation supports the five dimensions of the European Union's (EU) energy strategy: security of supply, internal energy market security, energy efficiency, climate policy and research and development (CEEP, 2018). Historically, the European gas industry has relied on long-term contracts to develop gas fields and finance long-distance, cross-border pipelines and transmission and distribution systems (Chyong, 2019). These contracts reduce the risk inherent in large-scale infrastructure investments. However, to promote energy efficiency and market integration and improve end-user service, the EU adopted gas liberalization as one of its reform policies. Specifically, the 1991 Gas Transit Directive introduced a competitive market framework to provide supply security and efficiency (Blyhammar et al., 2018).In contrast to Europe, gas prices in the GCC are still regulated, and third parties have not been granted access to LNG terminals, pipelines and storage. Gas storage infrastructure is limited in the GCC. Only the UAE has any storage capacity volume, whereas Europe has around 140 storage facilities (CEDIGAZ, 2019). Contracts for importing LNG into the GCC are typically short-to medium-term contracts. It is unclear whether these contracts offer any destination flexibility. However, LNG has not been re-exported from the Middle East since the first LNG terminal was installed in Kuwait in 2009. Publisher Copyright: {\textcopyright} 2021 The Authors",
year = "2021",
month = oct,
doi = "10.1016/j.enpol.2021.112449",
language = "British English",
volume = "157",
journal = "Energy Policy",
issn = "0301-4215",
publisher = "Elsevier B.V.",
}