An Economic Model of International Gas Pipeline Routings to the Turkish Market: Numerical Results for an Uncertain Future

This paper presents a dynamic investment model of the international gas pipeline routings to the Turkish market. The model was developed by IIASA's Dynamic Systems Project (DYN) and Environmentally Compatible Energy Strategies Project (ECS) in 2000. To allow for user-friendly modeling, a professional software package "Investments in Gas Pipelines Optimization of Returns" (IGOR) was developed which can also be used as a basis for models for related problems. Input data originated from various sources, in particular IIASA's MESSAGE model. The paper analyzes model results under a wide range of future outcomes and includes comprehensive sensitivity analyses. The returns for five potential gas pipeline projects were analyzed for a wide range of values for the price elasticity of gas demand, GDP elasticity of gas demand and discount rates. The numerical results allow conclusions about gas price developments and optimal gas supply policies relative to the market parameters.