Volume 8, Issue 2 (2008)
QJER 2008, 8(2): 119-132 |
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Shahreaar B, Khosravi A, Sayyadzadeh A. Bargaining Models of the Iranian Natural Gas Exports
to Western Europe: A VECM Approach. QJER 2008; 8 (2) :119-132
URL: http://ecor.modares.ac.ir/article-18-402-en.html
URL: http://ecor.modares.ac.ir/article-18-402-en.html
1- University of Mazandaran
2- mazandaran
2- mazandaran
Abstract: (5429 Views)
Iran plans to export natural gas (NG) to Western Europe using a system of pipelines running through Iran, Turkey, and Western Europe. International gas pricing is usually undertaken through negotiations between buyers and sellers on a bilateral basis. Currently, Russia is the only exporter of gas from the Former Soviet region. So, Russia competes strongly with Iran to export NG to Western Europe.
This paper develops a bargaining model to study natural gas pricing and analyze competition between Iran and Russia as gas suppliers to Western Europe. In this model, it is assumed that NG pricing is usually linked to the prices of alternative fuels as competing energy sources. Therefore, in light of previous evidence, it is reasonable to consider that there is a
long-run relationship between NG price and price of alternative fuels. Initially, a regression model is specified to investigate unlagged relationship among variables. This relationship is estimated using the Johansen cointegration technique and then we forecast margins of the Iranian NG price. Finally, a VECM model is identified and used to forecast the lower and upper bounds of future NG price.
Received: 2007/09/12 | Accepted: 2008/01/13 | Published: 2008/07/9
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