International LNG trade : the emergence of a short-term market

Abstract

Natural gas is estimated to be the fastest growing component of world primary energy consumption. Liquefied natural gas (LNG) supply chain is a way of transporting natural gas over seas, by following a procedure of gas liquefaction, transportation in specialized tankers and regasification. During the last decade the LNG market changed substantial with the emergence of a short-term market. Analysis was performed examining the needs, the conditions and the risks of this change. The implications of the short-term market were investigated and an assessment was made regarding the future of a global LNG market. Certain risk management approaches were introduced and the implications of cost reduction in the LNG supply chain were examined. A computer model was created to investigate the profitability, on behalf of the shipowner, of three short-term trading routes. The future liquefaction and regasification capacity were presented, along with the future growth of the LNG fleet. Finally, a forecast for the future level of the LNG short-term trade was conducted.