The Impact of the Construction of the Nord Stream 2 Gas Pipeline on Gas Prices and Competition

The study makes use of gas market modelling to analyse the impact of the Nord Stream 2 gas pipeline on the wholesale prices of European countries and the European gas market competition.
It is also inspected how the expected return of infrastructural projects planned in the East-Central European region is impacted by this new development. According to the results, the expansion of Nord Stream – due to the modification of the long term contracted transmission routes – will reduce those capacities that enable the region to access liquid Western gas markets. This will increase the current spread between the Eastern and Western European prices, hindering the integration of gas markets. On balance, the welfare impacts of the expansion will be negative, and most of the drop in welfare will have to be endured by East-Central European consumers and system operators. The analysis also shows that the East-West bottlenecks that are likely to arise due to the modification of the long term contracted routes will warrant the construction of new transmission paths, requiring almost one billion euros of supplemental investments within the East-Central European region.


Author:

REKK

Version
File Type pdf pdf
File Size 477.75 KB