ABSTRACT
About 15 years ago, when the first directive of the European Parliament on natural gas was issued, it was difficult to imagine such a commodity being priced by its own supply and demand curves. European natural gas industries were forced from the very beginning to rely on international flows from both within and outside of Europe. As a consequence, though networks became a virtual site at the national level, the importance of interconnection points increased. Market borders have changed over the years, but they do remain and they are likely the most significant challenge to the construction of a European gas market. On the one hand, market borders cannot be opened without investment in interconnection infrastructure. On the other hand, investment decisions are not trivial when networks are virtual sites (and hence invisible to market players) within borders, but relevant barriers at borders.
