Economic Analysis of Long-term Natural Gas Supply Contracts

Cooperation and Funding: Gas Distribution Company

The liberalization of the gas industry in Europe changed the basic conditions for the market participants. This also influenced the feasibility of natural gas supply contracts. The research project analyses long-term contracts concerning their characteristic components. Furthermore, the trading conditions at the time of the contract formation were compared with the current situation. Besides the economic feasibility, the diversification of risks between the contract partners was analysed. We find that historically, the supplier/exporter had the price risk while the consumer/importer took the volume risk. This changed after liberalisation of the gas market.