skip to content

Faculty of Economics

Journal Cover

Ritz, R.

A Strategic Perspective on Competition between Pipeline Gas and LNG

The Energy Journal

Vol. 40 no. 5 (2019)

Abstract: Global gas markets feature two types of suppliers: piped gas and LNG exporters. Pipelines have a high degree of "asset specificity" : once built, they are physically bound to a particular route. LNG is transported by tanker, with a choice of export markets. Put simply: LNG is mobile, pipelines are not. This paper uses game-theoretic modelling to show how its commitment to serving a single market confers a strategic advantage on piped gas. By "overinvesting" in its own market, a pipeline exporter can induce LNG rivals to shift sales to their other markets. The model helps understand competition between Russian piped gas and Qatari LNG. It shows how Russia's dependence on Europe can be good news for gas buyers, why these nonetheless strongly benefit from diversifying into LNG imports, and how the Herfindahl index of imports can mismeasure "supply security" . The paper also discusses Russia's evolving gas export strategy, including gas deals with China.

Keywords: Global gas markets, Strategic competition, Security of supply, Diversification strategy

Author links: Robert Ritz  

Publisher's Link: https://doi.org/10.5547/01956574.40.5.rrit



Papers and Publications



Recent Publications


Bhattacharya, D., Dupas, P. and Kanaya, S. Demand and Welfare Analysis in Discrete Choice Models with Social Interactions Review of Economic Studies [2023]

Huffman, D., Raymond, C. and Shvets, J. Persistent Overconfidence and Biased Memory: Evidence from Managers American Economic Review [2022]

Rauh, C. and Valladares-Esteban, A. On the Black-White Gaps in Labor Supply and Earnings over the Lifecycle in the US Review of Economic Dynamics [2023]

Ajzenman, N., Cavalcanti, T. and Da Mata, D More than Words: Leaders' Speech and Risky Behavior During a Pandemic American Economic Journal: Economic Policy [2023]