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LNG market liberalization and LNG transportation: Evaluation based on fleet size and composition model

Author

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  • Yuan, Jun
  • Shi, Xunpeng
  • He, Junliang

Abstract

The proportion of spot trading and short-term contracts has gradually increased in the rapidly growing LNG market, leading to more uncertainties in LNG demand and prices that significantly challenge LNG shipping decisions. In this paper, a mathematical model is developed to minimize transportation costs from multiple exporting countries to multiple importing countries under demand and price uncertainty, both of which are results of LNG market liberalization. A Gaussian process metamodel based simulation optimization method is proposed to solve the fleet planning problem, accounting for various uncertainties. A case study is given to illustrate the effects of uncertainties on the optimal solutions. The results demonstrate that shipping companies may purchase fewer ships and charter more ships to hedge against the risk of uncertainty. LNG market liberalization can significantly reduce its transportation costs and carbon emissions. The results suggest the need for further LNG market liberalization and measures to mitigate uncertainties for shipping companies, such as removing destination clauses.

Suggested Citation

  • Yuan, Jun & Shi, Xunpeng & He, Junliang, 2024. "LNG market liberalization and LNG transportation: Evaluation based on fleet size and composition model," Applied Energy, Elsevier, vol. 358(C).
    • Handle: RePEc:eee:appene:v:358:y:2024:i:c:s0306261924000400
    DOI: 10.1016/j.apenergy.2024.122657
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