1. Introduction

Totally unregulated economy would tell us that the price for any good, natural gas in the Portuguese market included, is established by the intersection of demand and supply curves.

This is however valid in a fully open market place through the bargaining of many buyers and sellers, and certainly not the case for Portugal and other countries with small economic weight and even more if they are not producers. In such case sale prices are established almost independently of local demand and supply conditions and market mechanisms are not expected to insure a correct gas industry implementation.

Present work tries to propose a method to forecast gas consumption's in Portugal, for different gas prices, considering state intervention, either by energy taxation or subsidize policies.

It will be complemented by some extrapolations concerning the shares partition between oil and gas in the world natural gas market development.

2. Natural Gas Introduction in Portugal

Due to its geographical location Portugal has specific energy procurement problems, namely connection to international networks. This is also valid for natural gas and become a major constrain to guarantee diversity of primary energy sources and free prices, in a country where the sole indigenous supply of energy is hydroelectricity.

With a dependence of more than 80% on fuel oil, in the eighties, Portugal installed 1800 MW power generation capacity by coal and needed further to take urgent action, going either for nuclear power generation, or for natural gas. This last option was selected and authorities looked for the construction of an LNG terminal located in the Portuguese South West coast. However, soon, the interest to connect to the Spanish gas network become evident because of costs and continuity of supply and LNG option abandoned.

Portugal will finally receive natural gas from Algeria (Hassi R'mel field), through the "Maghreb Pipeline" crossing Algeria, Morocco, Gibraltar strait, Spain and Portugal in a total system length of 2460 km. The "Maghreb Pipeline" present capacity is 9 Bm3/year, able to be doubled with the increase of compression rate. Capacity is shared between Spain and Portugal who keeps 2,5 Bm3/year1 only, under a take or pay contract. Reduction of possible diversity of sources of supply is obvious, compared with the LNG alternative, but it was the optimum feasible under the imposed constrains.

First delivery is expected for beginning 1997 and the balance between gas and other fuels market shares is a major issue for the future of natural gas industry in Portugal.

3. Demand Forecast Procedure
3.1 Method

Demand forecasts are usually estimated by one of the following methods:

  • Previous experience

  • Market research

  • Customer Economics Criteria

  • Other attributes

Previous experience is not available in Portugal for natural gas. Detailed market research have been implemented by distribution companies, with results restricted for publication and therefore not available for this work.

Customer Economics Criteria were the basis for our approach, as a result from acceptable payback periods - PB. Such economic attractiveness has been balanced with other uneconomic attributes (comfort, hassle factors, etc.) and, in the Portuguese case, taking in consideration the geographic limits of the main distribution pipeline.

3.1 Method

Demand forecasts are usually estimated by one of the following methods:

  • Previous experience

  • Market research

  • Customer Economics Criteria

  • Other attributes

Previous experience is not available in Portugal for natural gas. Detailed market research have been implemented by distribution companies, with results restricted for publication and therefore not available for this work.

Customer Economics Criteria were the basis for our approach, as a result from acceptable payback periods - PB. Such economic attractiveness has been balanced with other uneconomic attributes (comfort, hassle factors, etc.) and, in the Portuguese case, taking in consideration the geographic limits of the main distribution pipeline.

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