February 24, 2006

NATGAS: a model of the European natural gas market

The NATural GAS model is an integrated model of the European wholesale gas market providing long-run projections of supply, transport, storage and consumption patterns in the model region, aggregated in 5-year periods, distinguishing two seasons (winter and summer).

Model results include levels of investment in the various branches, output and consumption, depletion of reserves and price levels. The NATGAS model computes long-term effects of policy measures on future gas production and gas prices in Europe. NATGAS is an equilibrium model describing behaviour of gas producers, investors in infrastructure (pipeline, LNG capacity, as well as storage), traders and consumers. NATGAS covers the main European demand regions, including the United Kingdom, Germany, the Netherlands and Italy. Moreover, it covers the main origins of supply on the European market, such as Russia, Norway, Algeria, the Netherlands, the United Kingdom and LNG.

In this memorandum, we first discuss the theoretical background as well as the model specifications. Afterwards, we describe the data we used, present some results and assess validity by computing sensitivities and comparing with current developments.


Gijsbert Zwart
Machiel Mulder