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Economic Feasibility of LNG Business: An Integrated Model and Case Study Analysis

Author

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  • Jin Zhang

    (Department of Overseas New Ventures Assessment, Research Institute of Petroleum Exploration & Development, PetroChina Company Limited, Beijing 100083, China)

  • Xiuling Yin

    (Department of Overseas New Ventures Assessment, Research Institute of Petroleum Exploration & Development, PetroChina Company Limited, Beijing 100083, China)

  • Zhanxiang Lei

    (Department of Overseas New Ventures Assessment, Research Institute of Petroleum Exploration & Development, PetroChina Company Limited, Beijing 100083, China)

  • Jianjun Wang

    (Department of Overseas New Ventures Assessment, Research Institute of Petroleum Exploration & Development, PetroChina Company Limited, Beijing 100083, China)

  • Zifei Fan

    (Department of Overseas New Ventures Assessment, Research Institute of Petroleum Exploration & Development, PetroChina Company Limited, Beijing 100083, China)

  • Shenaoyi Liu

    (Department of Overseas New Ventures Assessment, Research Institute of Petroleum Exploration & Development, PetroChina Company Limited, Beijing 100083, China)

Abstract

Liquefied natural gas (LNG), recognized as the fossil fuel with the lowest carbon emission intensity, is a crucial transitional energy source in the global shift towards low-carbon energy. As the natural gas industry undergoes rapid expansion, the complexity of investment business models has increased significantly. Optimizing the combination of various segments within the value chain has become standard practice, making it essential to control risks and enhance economic benefits in these multifaceted scenarios. This paper introduces an integrated economic model encompassing upstream, liquefaction, shipping, regasification, and consumption, suitable for both upstream and downstream integration. The model offers a comprehensive analysis of the primary business models and key factors across each segment of the value chain. By constructing a robust economic evaluation framework, the study aims to provide a holistic approach to understanding the economic feasibility of LNG projects. Two detailed case studies are conducted to demonstrate the application and effectiveness of the proposed model, highlighting its capability to guide investment decisions, support risk management, and optimize asset portfolios. The integrated economic model developed in this study serves as a valuable tool for stakeholders in the LNG industry. It not only facilitates informed investment decision-making but also enhances the strategic management of risks and resources. By leveraging this model, investors and managers can better navigate the complexities of the LNG business, ensuring sustainable and economically viable operations.

Suggested Citation

  • Jin Zhang & Xiuling Yin & Zhanxiang Lei & Jianjun Wang & Zifei Fan & Shenaoyi Liu, 2024. "Economic Feasibility of LNG Business: An Integrated Model and Case Study Analysis," Energies, MDPI, vol. 17(13), pages 1-19, July.
    • Handle: RePEc:gam:jeners:v:17:y:2024:i:13:p:3351-:d:1431122
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    References listed on IDEAS

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    1. Zhang, Jinrui & Meerman, Hans & Benders, René & Faaij, André, 2021. "Techno-economic and life cycle greenhouse gas emissions assessment of liquefied natural gas supply chain in China," Energy, Elsevier, vol. 224(C).
    2. Gordon, D. V. & Gunsch, K. & Pawluk, C. V., 2003. "A natural monopoly in natural gas transmission," Energy Economics, Elsevier, vol. 25(5), pages 473-485, September.
    3. Vladimír Hönig & Petr Prochazka & Michal Obergruber & Luboš Smutka & Viera Kučerová, 2019. "Economic and Technological Analysis of Commercial LNG Production in the EU," Energies, MDPI, vol. 12(8), pages 1-17, April.
    4. Dai, Lei & Jing, Danyue & Hu, Hao & Wang, Zhaojing, 2021. "An environmental and techno-economic analysis of transporting LNG via Arctic route," Transportation Research Part A: Policy and Practice, Elsevier, vol. 146(C), pages 56-71.
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