LNG development across Europe: infrastructural and regulatory analysis

Abstract

In this paper a cross-section infrastructural and regulatory analysis of the European LNG sector is presented. The LNG chain is maintained as being a good tool to enlarge the number of natural gas exporters to Europe, adding in this way to competition and to the achievement of the targets of the liberalisation process, that is a decrease in price for final customers and security of supply. The main reason for this is to be identified in the minor specificity of the regasification plant related investment compared to pipeline transportation. The latter, in fact, brings about, once built, a physical tie between producers and importers that prevents the buyer from changing supplier, in order to recover the high fixed sunk costs connected with the pipeline investment, and effective competition from developing. A regasification terminal, on the contrary, is theoretically able to receive cargoes from whatever source of supply according to the relative conveniences. Nevertheless in order to develop its potential the LNG market needs to be well designed and regulated. More particularly, regulation is meant to play a key role in promoting regasification investments without hindering competition.