Optimal timing control in game modeling of an energy project infrastructure

• Published in: Nonlinear analysis 2009-12, Vol.71 (12), p.e2498-e2506
• Main Authors: Krasovskii, Andrey A., Matrosov, Ivan V., Tarasyev, Alexander M.
• Format: Article
• Language: English
• Subjects: Dynamic games; Games; Gas pipelines; Infrastructure; Markets; Mathematical models; Nash equilibrium; Natural gas; Optimal infrastructure; Optimal timing; Optimization; Players
• ISSN: 0362-546X; 1873-5215
• DOI: 10.1016/j.na.2009.05.062

The purpose of this paper is to study an optimal infrastructure of a system of international gas pipelines competing for a gas market. We suggest a game-dynamic model of the operation of several interacting gas pipeline projects treated as players in the game. The model treats the projects’ commercialization times as major players’ controls. Current quantities of gas supply are modeled as approximations to Nash equilibrium points in the instantaneous “gas supply games”, in which each player maximizes his current benefit due to the sales of gas. We find numerically Nash equilibrium commercialization policies for the entire group of the pipelines. We use the model to analyze the Caspian gas market, on which gas routes originating from Russia and Turkmenistan are competing. The simulations show the degrees, to which the planned regimes are not optimal compared to the Nash equilibrium ones. Another observation is that in equilibrium regimes the pipelines are not always being run at their full capacities, which implies that the proposed pipeline capacities might not be optimal. The simulation results turn out to be moderately sensitive to changes in the discount rate and highly sensitive to changes in the price elasticity of gas demand.