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Expert case by Dennis

Commercial Feasibility of Natural Gas Pipeline

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< 100 Ratings

Case Prompt

A large natural gas field is unexpectedly discovered on the Mediterranean island of Corsica. The gas can be accessed and produced relatively easily and is of good quality. Europe, and especially Germany as the largest gas consumer in the EU, is looking for alternative gas suppliers to reduce its one-sided dependence on Russia. An initial market study has shown that stable demand in Western Europe would allow for around 10 billion cubic meters (bcm) of natural gas per year from the new gas field to be sold on the European market for the next 25 years. 

To achieve this, however, the gas must be transported to the important Western European gas hub Baumgarten in Austria. Several large oil and gas companies sense a business opportunity here and are now asking themselves whether it is economically feasible to build a corresponding gas pipeline from Corsica to Austria. 

One of these companies has approached you as a consultant to provide your assessment.

Evaluation of Commercial Feasibility

Would the gas pipeline project be economically feasible? In other words, would the revenues from natural gas sales in Europe exceed the total project costs?

Potential Risks

Which risks do you see that could impact the feasibility of the project?

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