EUROPEAN LONG-TERM GAS OUTLOOK

European gas demand has been growing very strongly in the past three years. To support that demand, the European gas industry has now embarked on a major investment phase to build new supply infrastructure. In this new phase of investment, many market elements have changed, even though superficially the market positions of leading companies appear to be unaltered. Competition to supply market growth is stronger than ever--and so is concern about security of supply. These changes could drive the industry into a genuinely new kind of gas market structure. Alternatively, they could be absorbed and melded to form a viable ""hybrid"" market--a mix of the old market structure with new competitive elements. CERA has explored this issue in two new long-term scenarios.

- The New Hybrid scenario depicts a world in which liberalized, single-network gas markets in some European countries coexist with competing multiple pipelines and cooperative arrangements with others. Such a hybrid world--the industry that we see today--becomes an end state of the gas industry in Europe.
- The SuperNet scenario describes a world in which there is a more formally integrated pan-European network of gas grids, with common rules. This scenario, scarcely visible today, could only emerge from conditions of institutional and economic crisis in the European Union, from which political consensus eventually designates the operation of energy industries as a matter that "belongs" not to the member states of the Union, but to the European level.

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CERA Reports Online, a wholly owned subsidiary of IHS Energy, is a leading advisor to international energy companies, governments, financial institutions, and technology providers. CERA delivers critical knowledge and independent analysis on energy markets, geopolitics, industry trends, and strategy. CERA's expertise covers all major energy sectors--oil and refined products, natural gas, and electric power--on a global and regional basis.