The EGM model of the European gas system has been developed by Energy Markets so that gas sellers, gas buyers, traders and asset owners can get to grips with the implications of a range of issues including liberalisation of the market. The aim was to develop a tool which when combined with the knowledge, insight and experience of Energy Markets consultants, can offer unparalleled support to any company seriously interested in the development of the European gas market.

The model comprises two main modules (See Figure 2). The first is a demand-forecasting model looking out to 2020. The second module is a more innovative model, which simulates the behaviour of the market subject to a set of constraints, which describe the physical infrastructure, together with commercial constraints such as existing gas supply contracts. Political and policy issues can also be simulated. For example supply diversity can be simulated by imposing upper limits on the share of gas imported into a country from any one supply source. At the heart of the model, which runs in Microsoft Excel, is an optimiser package, which finds the least cost solution to supplying the projected demands whilst complying with the constraints imposed by the user.

Figure 1: Structure of the European Gas Model:

• Geographical Coverage

The current version of the model is based primarily on OECD Europe, with the FSU and North Africa included as export/transit countries. FSU gas is considered to be delivered at the borders of Slovakia, Poland, Finland, etc. Algerian and other gas supplies are represented by both pipeline and LNG sources. The model may be extended to include a wider geographical area in future versions.

Figure 2: Geographical Coverage of the European Gas Model:

The model covers 25 countries:
Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey and the UK.