At present, throughout the world LNG investments are abounding. In particular, the US and the EU are trying to facilitate their security of natural gas supply. For this reason, LNG enables importers to extend their gas suppliers’ portfolio, considering that some producing countries can be reached only via sea transport. LNG will thus increase importers’ choice; at the same time it can widen the group of exporting countries and enhance the construction of a global gas market. In the LNG value chain one can identify three elements: liquefaction, shipping and regasification. While the first and the last element of the value chain have been deeply studied, too little attention has been paid to shipping. Nevertheless, the number of operative ships will be one of the key variables for the increase of an effective spot market and, consequently, for a greater market liquidity. The goal of this paper is thus clear: will LNG shipping be able to sustain a liquid market? The findings are not straightforward. In fact, while on the one hand shipping is not likely to represent a bottleneck in the foreseeable future, at least for what concerns transport capacity, on the other hand most of the ships are bound to long-term contracts and this can be detrimental to competition. Moreover, shipping is often part of vertical integrated projects. Thus, authors cannot hypothesize that in the short term spot sales will grow, as it happened with oil tankers.
LNG Shipping: A Descriptive Analysis
DORIGONI, SUSANNA;MAZZEI, LUIGI;PONTONI, FEDERICO BRUNO;
2008
Abstract
At present, throughout the world LNG investments are abounding. In particular, the US and the EU are trying to facilitate their security of natural gas supply. For this reason, LNG enables importers to extend their gas suppliers’ portfolio, considering that some producing countries can be reached only via sea transport. LNG will thus increase importers’ choice; at the same time it can widen the group of exporting countries and enhance the construction of a global gas market. In the LNG value chain one can identify three elements: liquefaction, shipping and regasification. While the first and the last element of the value chain have been deeply studied, too little attention has been paid to shipping. Nevertheless, the number of operative ships will be one of the key variables for the increase of an effective spot market and, consequently, for a greater market liquidity. The goal of this paper is thus clear: will LNG shipping be able to sustain a liquid market? The findings are not straightforward. In fact, while on the one hand shipping is not likely to represent a bottleneck in the foreseeable future, at least for what concerns transport capacity, on the other hand most of the ships are bound to long-term contracts and this can be detrimental to competition. Moreover, shipping is often part of vertical integrated projects. Thus, authors cannot hypothesize that in the short term spot sales will grow, as it happened with oil tankers.
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