Strategic Access Of Third Parties To Storage And Competition In The Gas Sector

This article studies strategic aspects connected to third party access to storage facilities (TPAS) in the gas sector. We show that in some market settings, TPAS can be used strategically by vertically integrated gas producers who behave as buyers in the intermediate market. The aim of these strategic purchases is to change the price formation in the intermediate market and in doing so increase rival's costs. Such a strategy can reduce social efficiency in the industry. Finally, we show that this distortion could be reduced allowing the vertical integration of storage facilities to the independent downstream company.