Competitors in the Natural Gas Industry

Competitors in the Natural Gas Industry - Competitors in...

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Competitors in the Natural Gas Industry The traditional, vertically integrated control of gas companies from the government usually leads to inefficient operations. Natural gas and transportation are sold as a whole to final consumers. It opens access to pipeline transportation. The purpose of both markets are to trade natural gas as a commodity and minimize risks of price and supply while transporting services for shipping gas through pipelines. “The increasing complexity of transactions in both markets calls for the use of intermediaries and for spot markets that promote efficient pricing and minimize transaction costs. Well-functioning spot markets concentrate trading in a central location where gas supplies and pipeline capacity are easily accessible. “ (quote) ( http://rru.worldbank.org/documents/publicpolicyjournal/137juris.pdf) The natural gas market The trade is typically made under contracts in the natural gas market. It is usually separate from transportation. The contracts are of two types, physical and financial. Both types of contracts may include traders, producers, suppliers, company, and utilities. The physical gas market Sometimes referred as cash gas contracts, the physical gas market trades contracts for the physical delivery of natural gas. Gas contracts differ from each other in two dimensions: the transaction and the duration of the supply. The purchase for natural gas for resale takes place in the wholesale gas market, and a purchase for end use in the retail gas market. The later market
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