Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/323789 
Year of Publication: 
2025
Citation: 
[Journal:] The World Economy [ISSN:] 1467-9701 [Volume:] 48 [Issue:] 6 [Publisher:] Wiley [Year:] 2025 [Pages:] 1405-1417
Abstract: 
ABSTRACT This paper analyses the integration of global natural gas markets across North America, Europe, and Asia from 2016 to 2022. The analysis focuses on the impact of the United States emerging as a major liquefied natural gas (LNG) exporter and significant supply disruptions, including the sharp reduction in Russian pipeline supplies to Europe. We identify a structural break on 1 October 2021, coinciding with these supply disruptions and a tightening global LNG market. Using both linear and nonlinear cointegration techniques, we assess price convergence across the three regions in two subsamples: before and after the break. In the first subsample, we find strong integration between all three regional gas markets, driven by growing LNG trade and shared exposure to global spot market dynamics. However, in the second subsample, the degree of integration between the Asian and European markets weakens, with US prices decoupling from both. Granger causality analysis reveals that LNG infrastructure congestion, particularly in the US and Northwest Europe, significantly drives the widening price spreads between the US and European markets. These findings suggest that physical infrastructure plays a central role in energy market integration, especially during periods of tight market conditions, where infrastructure bottlenecks limit arbitrage opportunities.
Subjects: 
arbitrage
LNG trade
market integration
natural gas price
supply disruptions
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version
Appears in Collections:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.