Natural gas industry and markets organization

At the inception of the natural gas industry, the vertically integrated company (VIC) was the prominent form of organizational structure. In this type of organization, a single operator controls the entire value chain, from exploration and production to transmission and distribution to end users (FIG. 1). The main drive for the emergence of VICs can be found in the low energy density (kWh/m³) of natural gas relative to liquid fuels. In fact, the energy content of natural gas is almost 1,000 times less than the energy content of crude oil. FIG. 1. Natural gas value chain. The result is that the investment in gas transportation, being capital-intensive, requires red