Defining a composite index for measuring natural gas supply security - The Croatian gas market case

This paper presents a robust composite index aimed to measure natural gas supply security. The Composite index (CI) includes the following indicators important for natural gas supply security: Energy Import Dependency Index, Energy Intensity, Gross Inland Consumption, Index of National Economy Dependence on Natural Gas, Herfindahl-Hirschman Index and Shannon-Wiener Index. The aggregated CI incorporates the normalized values of the aforementioned indicators and their weighted factors. A higher value of the CI indicates a lower level of natural gas supply security and vice versa. An analysis relevant for defining natural gas supply security for Croatia, over the period 2001-2015, is conducted in this research. The CI reached the maximal value of 0.58 in 2001, and the minimal value of 0.37 in 2015. These values indicate the increase of natural gas supply security in Croatia in the considered period. A favorable CI of 0.30 could be achieved in the year 2019 with the precondition of an operational LNG terminal on the island of Krk in the North Adriatic. This means that natural gas supply security in Croatia would increase significantly in 2019.