The European Union constitutes an significant gas market, with gas demand projected to rise considerably from a current level of approximately 430 bcm pa towards 600 bcm pa by 2015, driven largely by the construction of new gas-fired power generation capacity. Over this period, indigenous gas production is forecast to decline as production matures, leading to increased reliance upon imported natural gas. Wood Mackenzie perceive that LNG is well placed to meet a proportion of that requirement as regasification capacity increases, particularly in the less mature Mediterranean markets such as Spain. Recent market developments have shown that LNG can compete in mature, competitive markets such as North America and Europe, particularly at the extremities of piped transmission networks. In Europe, LNG is certainly proving to be a competitive alternative to piped natural gas and one which is attracting considerable interest as the fifteen Member States of the European Union engage in the process of liberalising their electricity and gas markets. In this paper Wood Mackenzie will review the process of market liberalisation throughout the European Union, and identify the role that LNG will play in the development of this market over the years ahead.
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