Market-based pipeline projects are initiated by the pipeline-owning company and require focused attempts to secure a customer or develop a market for the product transportation.

The development of Market-based pipeline investments in the international arena has fundamental differences from projects sponsored by consumer or pipeline user needs, government endeavors or producers desiring to sell their product. Whereas these User-driven projects were the traditional way of developing projects in the past, current global political and economical trends are forcing private pipeline companies to develop new ways of creating business opportunities: the development of Market-based Pipeline Projects.

A proactive strategy for developing energy transmission businesses (i.e. market-based projects) involves finding sufficient energy users and linking them with pipeline infrastructure to viable supplies of natural gas. These Market-based business opportunities are uniquely developed and require strong corporate vision and support before it can be successfully implemented.

This paper will provide an insight to the challenges, risks and uncertainties to be faced when developing Market-based pipeline projects. The discussion focuses on the project development phase of the project, from the moment the business opportunity viability has been confirmed to the time when the decision is made to proceed with large capital commitments. The paper includes a description of the pipeline project development process and a review of the variables influencing important steps and decisions prior to commencement of project implementation and hence capital investments.

While the content of this paper is mostly applicable to all types of pipeline projects, the discussion will focus on natural gas transmission pipelines.

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