Determinants of demand for natural gas and liquefied natural gas: a country study

Abstract

In this paper, the determinants of demand for natural gas and for liquefied natural gas (LNG) have been analysed using gravity equations. Two different equations have been developed, one for the total natural gas market and another one for the liquefied natural gas market. For each model, three contrasts have been applied in order to obtain the best possible estimates and to compare between them. The results show a great influence of distance over the trade of natural gas, in both the total and the liquefied market, reducing the quantity traded as the distance is longer. Also, in the LNG market, we can see that countries with a storage capacity over the median import significantly more LNG than the others, showing the importance of those adapted facilities. In addition, it could be said that Europe still depends on pipeline imports, because its weight in world LNG market is low.