Examing the Key Differences Between Natural Gas Markets in Three Distinct Regions: North America, Europe and Asia

1891 Words Feb 7th, 2013 8 Pages
Zack Tatum

EXAMING THE KEY DIFFERENCES BETWEEN NATURAL GAS MARKETS IN THREE DISTINCT REGIONS:
NORTH AMERICA, EUROPE AND ASIA

TABLE OF CONTENTS

Introduction Page 3

Asia – Market Maturity Page 3 Asia – Sources of Supply Page 3 Asia – Dependence on Imports Page 4 Europe – Market Maturity Page 4 Europe – Sources of Supply Page 4 Europe – Dependence on Imports Page 4 North America – Market Maturity Page 5 North America – Sources of Supply Page 5 North America – Dependence on Imports Page 5

References Page 7

Introduction
As with many other products and commodities participating in a globalized supply chain, the three dominant market places are located in North America,
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(McRae and Ruppel, 2011) However, recent assessments peg China’s recoverable tight-gas reserves at over 1,200TCF. Due to uniquely challenging reservoir lithology, (Faulkner, 2012) China will require assistance from Independent producers as their E&P technology lags by world standard. (Faulkner, 2012) Even with Shell allocating USD1B per year to Chinese shale gas exploration (Hamilton, 2012), it may take a decade until Chinese shale gas flows to market. Therefore, it’s reasonable to expect Asia will continue importing roughly 40% of its gas (roughly half is from in-region) and may become increasingly dependent on supplies from Central Asia (Kazakhstan), the Middle East and Western Africa. (Mitchell, 2012)
Europe – Market Maturity
Europe contains a well-developed natural gas market which is considered open, although the lack of a uniform natural gas financial and legal framework for European Union (EU) nations is an encumbrance to efficient market operation. The complicated patchwork of cross-border pipelines must also comply with multiple and dissimilar legal and regulatory regimes which add complication to construction and operations. (McRae and Ruppel, 2011) The European market relies heavily on long term contracts with price terms based on a mix of competing fuels, and pipeline access is restricted. This policy was crafted by way of reaction to the 1973 Arab Oil Embargo; it’s inherently inapplicable to today’s market and serves as a hindrance to

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