System of econometric equations of the world market of natural gas

Abstract

The article presents the approach to modelling the global natural gas market. As endogenous variables of the model, evaluating the world market, three variables are selected: world exports, world natural gas production, world market natural gas price. As exogenous variables in the model the following are selected: world natural gas imports; world proven natural gas reserves; global demand for natural gas; gas segment employment; global liquefied natural gas prices; the cost of transporting gas; investments in the gas segment; gas production by the OPEC countries. The article proposes the methodology of creating econometric models of the natural gas market and describes the provisions for the modeling procedure. The model of the natural gas market consists of three interdependent econometric equations, each of which is autoregressive distributed lags model (ADL-model). The article presents the structural form of the system of econometric equations in which one equation has more than one endogenous variable. The transition from structural form to reduced form of a system of econometric equations is demonstrated. In the reduced form each equation has only one endogenous variable. The testing of the system of econometric equations is performed. The article presents the solution of the system of econometric equations. The results of the model solution are used to predict world exports, world natural gas production, world market natural gas prices until 2030.