Susanna Dorigoni

LNG Development Across Europe: Infrastructural and Regulatory Analysis

In this paper, a cross-section infrastructural and regulatory analysis of the European LNG sector is presented. The LNG chain is maintained as being a good tool to enlarge the number of natural gas exporters to Europe, adding in this way to competition and to the achievement of the targets of the liberalisation process, which is a decrease in price for final customers and security of supply. The main reason for this is to be identified in the minor specificity of the regasification-plant-related investment compared with pipeline transportation. As a matter of fact, as the infrastructural analysis will show, the construction of new LNG receiving terminals is likely to bring about an increase in the number of importers fostering competition among them and shrinking their margins among the value chain. In this context, regulation is meant to play a key role in promoting investments without hindering competition. Nevertheless it is questionable whether LNG will be able to introduce competition beyond the European border (that is among producers) according to the forecasted supply and demand balance that is leading to a sellers market in the upstream sector. In this case, a huger part of the rent would go to the exporters leaving minor scope for competition down the European border.

Ownership Separation of the Gas Transportation Network: Theory and Practice

This article analyzes the pros and cons of ownership separation of the gas transportation network. This analysis is made with a specific test that confronts two pairs of different theoretical approaches on vertical integration. The result of this test shows that no uncontroversial solution can be offered to this problem, since all arguments (be them in favour or against) can be comfortably contrasted by a counterargument. In our view, an effective regulation would solve the problem, even though it has to be highlighted that ownership separation of the gas transportation network is not the key aspect of the gas industry. EU directives, in fact, cannot be applied where the biggest part of the value chain is produced, that is to say beyond the European borders, where an oligopoly operates. Due to its bargaining power, this oligopoly captures almost all the scarcity rent, reducing the scope for market liberalization.

Incentivi alle nuove infrastrutture d'approvvigionamento di gas: il caso del GNL

A primary concern of the European Union in recent years has been to promote the stability and assurance of the supply of energy to Member States. The European Council has identified the LNG chain as a way to achieve this goal, leading many EU-member States to adopt incentive regulations to encourage companies to build new regasification plants. Our paper discusses and compares these regulations and then focuses on the Italian case. Italy is very reliant on natural gas, but still has no importation infrastructures operated by newcomers. This has prompted the Italian authority to implement a special incentive regulation aimed at facilitating the entry of newcomers to the market. This regulation (No. 178/05) has attracted a higher filing of new infrastructure plans than all those filed in the rest of the EU combined. Our paper claims that this regulation is over-weighted on the incentive side, with the risk that it will both reduce the possibility of newcomers to enter the market and create considerable costs to the entire Italian gas system.