Strategic investment and international spillovers in natural gas markets By R. A. Ritz ‐ EPRG Discussion by Anna Creti (Université Paris Dauphine and Ecole Polytechnique) Energy and Climate Conference Toulouse, Sept 2015 1
What the The paper : paper does • sets an interesting context to model competition between pipelines and LNG suppliers • underlines strategic effects due to thecnlological differences • offers good explanations of the actual competition between Russia and Quatar • suggests testable hypotheses useful for further empirical work 2
Some questions/remarks I ‐ General • « Selling » the story: • Related litteature: a few wouldn’t be nicer to analytical papers on the explain your empirical role of LNG on motivation, develop the competition in the gas model, and then industry are overlooked discussing the relevance – Dorigoni, Graziano, Pontoni EP 2012 for the European context? – Hartley, EJ 2015 – Try to avoid too many back and forth between theory, – Ikonnikova, Zwart JEEA practice, numerical 2014 examples – Li, Joyeux, Ripple, EJ 2014 3
Some questions/remarks II ‐ Model Setting • You stress that you obtain • Hypotheses: market Stackelberg ‐ like « segmentation », both advantage despite cost operators capacity symmetry and constrained. simultaneous moves: – The absence of no ‐ arbitrage can be discussed – what if an entry game à la Fudenberg and Tirole 1983, – Role of the spot markets 1984? – What if only the pipeline is capacity constrained, in • Which are the differences particular on the strategic with respect to your EE effects of connecting the paper 2014? markets? 4
Some questions/remarks III ‐ Results and interpretation • Counter intuitive result • Fukushima result on security of supply: the (comparative statics): nice larger the market share of result Gazprom, the safer the – Comparing the substitution gas market effect into the demand side vs the strategic effect – deserves more explanation in the supply side seems as it goes at the opposite more appropriated than of the diversification the term « spillover » as « paradigm » of the there is no free European energy policy riding/externalities – More detailed data/figures would be useful to illustrate this result 5
Fukushima impact ‐ North/South price spread in France Long term? Short term? 6
Strategic investment and international spillovers in natural gas markets By R. A. Ritz ‐ EPRG Discussion by Anna Creti Thank you for this challenging paper! 7
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