An emerging economic view of world natural gas demand and supply

Natural gas is swiftly moving from a locally traded commodity in regional markets to a globally traded commodity. This paper describes a numerical model of international gas trade which evaluates the effects of inter- and intra-regional gas trade on demand, supply and price. Preliminary evidence indicates natural gas prices are 15 to 30% lower in real terms when inter-regional trade occurs and local consumption of natural gas increases relative to fuel oil in the local market. Natural gas developers or marketers that explicitly consider the inter-regional impacts of gas trade will have a greater likelihood of understanding the risks in marginal projects and are more likely to embrace economic projects and eschew noneconomic projects