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An Integrated Asian Natural Gas Market: Potentials and Policy Implications

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  • Youngho Chang

    (Nanyang Technology University)

  • Yanfei Li

    (Nanyang Technology University)

Abstract

In this study, we ask two questions: First, what would be the trade pattern of natural gas in the East Asia Summit region when an integrated and competitive market of natural gas is introduced? Second, what would be the impacts of additional infrastructure, including pipelines and LNG terminals, in the region? Investigating these questions under a consistent computational framework, this study contributes to justifying and motivating the policies which promote regional integration of natural gas market and investment in new infrastructure. We find that with an integrated and competitive regional natural gas market, supply should come more from within the region, which has cheaper costs of transportation than from external suppliers with relatively cheap costs of production and transportation. The model thus implies clear and significant welfare gains in moving towards such an integrated market. Additionally, new infrastructure clearly increases general social welfare and brings new trade opportunities to specific countries in the region. Relevant countries thus find support for their investment in the expansion of the regional supply network for natural gas, including both pipeline and LNG.

Suggested Citation

  • Youngho Chang & Yanfei Li, . "An Integrated Asian Natural Gas Market: Potentials and Policy Implications," Chapters,, Economic Research Institute for ASEAN and East Asia (ERIA).
    • Handle: RePEc:era:chaptr:2010-rpr-25-09
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    File URL: http://www.eria.org/publications/research_project_reports/images/pdf/y2010/no25/9_Ch9_Integrated_Asian_Natural_Gas_Market.pdf
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    References listed on IDEAS

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    Cited by:

    1. Shi, Xunpeng & Variam, Hari M.P., 2017. "East Asia’s gas-market failure and distinctive economics—A case study of low oil prices," Applied Energy, Elsevier, vol. 195(C), pages 800-809.
    2. Shi, Xunpeng & Padinjare Variam, Hari Malamakkavu, 2016. "Gas and LNG trading hubs, hub indexation and destination flexibility in East Asia," Energy Policy, Elsevier, vol. 96(C), pages 587-596.

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