Strategic interaction on the UK Gas Transportation System: the St. Fergus and Bacton constraints

In Summer and Autumn 1998 a series of singular events put at risk the balance of the National Gas Transportation System in the UK. Strategic behaviour of shippers has been regarded as the main cause of the instability of the market. In this paper a model of shippers' behaviour is proposed in order to explain the reasons for such unusual events, which exposed some fundamental inefficiencies of the gas trading arrangements in use. The events that occurred in 1998 show the relevance of strategic interaction on the transportation system and suggest the importance of a deeper understanding of the incentives faced by shippers in the growing European gas markets. (author)