World gas demand is forecast to increase by more than 40% over the next 20 years. To meet this rising demand, substantial sources of new supplies must be developed. These new supplies are growing in scale and will increasingly come from locations that are further from the major markets of the U.S. and Europe. This increase in scale and distance from consuming markets increases the challenge and complexity of gas monetization. While considerable attention is placed on technology as a driver of gas resource development, from a commercial perspective, the gas markets themselves represent a significant determinant in the ability to monetize gas resources successfully.

This paper addresses the role of gas markets in monetizing gas resources, using the development of the European gas market as a case study. Specifically, the paper describes the evolution of the European gas markets from their traditional country-focused structures, based on long-term oil-indexed contracts, through the emergence of liquid markets in individual countries, to the current development of a pan-European liquid market. The paper considers the key milestones marking each stage of development and the changing role of both market players and regulators in driving that development over time.

Finally, a perspective is provided of the challenges ahead in achieving continued progress in the development of the European gas market. This includes the implications these challenges have for market players and regulators as they seek to create competitive markets that provide reliable gas supply, investment and resource monetization.

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