LNG Shipping Research Articles

Seasonality patterns in LNG shipping spot and time charter freight rates

The aim of this paper is to investigate the existence and the nature of seasonality in LNG freight rates of different duration contract, over different market conditions (peak and troughs) for the period from December 2010 to June 2023. We employ the HEGY method and seasonal dummy variables to test for stochastic and deterministic seasonality, respectively. Then we use Markov Switching models to test for asymmetries in seasonal fluctuations across different market conditions. We reject the existence of stochastic seasonality for all freight series while results on deterministic seasonality indicate increases in rates in June, October, and November. We also found that seasonal patterns vary across market conditions, revealing that seasonal rate movements are more pronounced when the market is in downturn. Moreover, we found that the seasonal movements present similar patterns across different trading routes. The results have implications for stakeholders across the LNG value chain.

LNG freight rate and LNG price, carbon price, geopolitical risk: A dynamic connectedness analysis

With the change in energy structure, the world's demand for natural gas is increasing, and the LNG shipping market is also gradually expanding. This paper studies the time-varying connectedness between LNG freight rates and natural gas prices, geopolitical risk, and carbon prices in time and frequency domain with TVP-VAR-DY spillover index and TVP-VAR-BK spillover index respectively. Both global market and regional markets are considered in this research. This research draws the following conclusions: firstly, in this system, the short-term connectedness is the largest, followed by the long-term connectedness. Secondly, multi-month freight rate is crucial in the system. Thirdly, the net spillover effect from geopolitical risk to freight rate only appears in the short term and it's very small. Just considering the one-way connectedness, the importer's geopolitical risk transmits most short-term shocks and the exporter's geopolitical risk transmits most medium-term shocks. Finally, after the carbon price rose in the fourth stage of EU ETS, it became the transmitter of shocks to LNG freight rates in the global market and Australia-Japan market. It also received less shocks from LNG freight rates in the U.S.-Europe market. Based on these findings, we provide guidance for interested agents in the end.

LNG Shipping as a Diversification Tool for Energy Security: The Impact of the Ukraine-Russia War on LNG Ship Orders

LNG Shipping as a Diversification Tool for Energy Security: The Impact of the Ukraine-Russia War on LNG Ship Orders

Ageing of Liquified Natural Gas during Marine Transportation and Assessment of the Boil-Off Thermodynamic Properties

During LNG storage and transportation by ship, a fraction of the LNG in the cryogenic tanks evaporates due to heat ingress through the insulation, resulting in boil-off gas (BOG) production and a change in LNG composition, a phenomenon known as LNG ageing. Common practice is to assume that BOG composition and related density are identical to the initial LNG or pure methane, resulting in inaccuracy in BOG mass flow measurements. This is particularly important regarding LNG shipping economics and the utilization of BOG as a fuel for ship propulsion. This work investigates the influence of LNG ageing on the produced BOG thermodynamic properties relevant to the mentioned inaccuracies’ estimation and correction. An established, simplified, dynamic boil-off model is utilized for the simulation of LNG and BOG properties’ changes during the voyage. Four cases represented by limiting the minimum and maximum values of methane and nitrogen content are used to estimate the general influence of the compositional variability over the whole range of practically possible LNG source mixtures. Research results provide an insight into the relevant BOG properties’ variability and confirm that BOG flow measurements should be corrected with dynamic model simulations results due to significant differences between the total BOG mixture and forced BOG mixture corresponding to the LNG composition.

Probability of Risk Factors Affecting Small-Scale LNG Supply Chain Activities in the Indonesian Archipelago

In Indonesia, the CoS for power supply increased from Rp. 1025 to Rp. 1334/KWh from 2016 to 2021, respectively; this indicates an inefficient process in electricity provision. One contributing factor to this inefficiency is the existence of many high speed diesel (HSD)-fueled power plants. These are distributed across the Indonesian archipelago with a supply chain that only uses sea transportation. The absence of an economical small-scale LNG (SS-LNG) supply chain also demonstrates the inadequate infrastructure for distributing LNG to refineries. This study aims to analyze the probability of risks that occur in SS-LNG supply chains in the Indonesian archipelago. The analytical methods used are descriptive statistical analysis and Delphi analysis through in-depth interviews and Focus Group Discussions (FGD) with experts. Results showed that the SS-LNG supply chain process in Indonesia includes LNG loading, unloading, shipping, picking, storage, regasification, and distribution. There are 30 risk indicators that may occur, with the highest risks including ship accidents, equipment damage, lack of transport ships, bad weather, earthquakes, tsunami, poor safety cultures, and low levels of safety leadership. These risk indicators can be used in implementing SS-LNG.

Перспективы развития мирового рынка морских перевозок сжиженного природного газа

This article explores the significance of future prospects for the development of maritime transportation of natural gas, which is one of the main sources of energy raw materials. Transportation of gas on sea vessels is expedient and cost-effective only in liquefied form, when the volume of natural gas is reduced by more than 600 times. Liquefied natural gas (LNG or LNG) carriers are called LNG carriers. The purpose of the study is to develop a new mathematical model that will play the role of a methodological basis for forecasting changes in the global volume of LNG shipping. In the course of the study, general scientific methods of system analysis and synthesis, methods of mathematical statistics were used. The article presents the results of the study of trends in the global maritime LNG transportation market development. The author considers the main exporters and importers of LNG, as well as an assessment of the growth in its demand after the decline of the COVID-19 pandemic. The trend in the development of innovative gas liquefaction production capacities, as well as the state of the world LNG fleet and the dynamics of its increase, are analyzed.The development research of this area of maritime transportation has been carried out and the dynamics of the increase in the volume of transported LNG in recent years has been analyzed.

The Dynamic Spillover Effects of Natural Gas Prices and the United States-Europe LNG Freight Rates

With the changes in the energy structure of various countries around the world, the demand for natural gas in the world has increased, and the LNG sea transportation market, which is more convenient than pipeline transportation, is gradually expanding. In addition, after the Russia-Ukraine conflict in 2022, the total amount of LNG imported from the United States to Europe soared. This paper takes the U.S. and Europe LNG markets as an example to study the impact of LNG prices on LNG freight rates. This article uses the TVP-VAR-DY model to analyze weekly data from 2019/01/04 to 2023/03/24 and concludes that LNG freight rates receive volatility spillovers from LNG futures and spot prices, with LNG freight rates receiving more volatility spillovers during periods of significant LNG price fluctuations; Secondly, the LNG shipping market is gradually expanding, not only as a receiver of fluctuations, but also as a spillover party of fluctuations.

Fleet Deployment Optimization of LNG Shipping Route Considering the Influence of Mixed Factors

Fleet Deployment Optimization of LNG Shipping Route Considering the Influence of Mixed Factors

A Comprehensive and Systematic Modelling Tool for Natural Gas Value Chain Greenhouse Gas Emissions Quantification

This paper presents a comprehensive and systematic life cycle assessment tool developed at Imperial College, the ICLCA model, that can be used to accurately account for greenhouse gas emissions from any natural gas value chain and quantify their global warming potential. The ICLCA tool covers conventional gas production (onshore, offshore), unconventional gas production (shale gas, tight gas, and coalbed methane), gas processing, pipeline transmission, liquefaction, LNG loading, LNG shipping, LNG unloading, regasification and pipeline transport to city gate. The tool is built at unit processes level. Moreover, engineering design features, operational parameters and GHG emission mitigation options are considered in detail and are fully integrated in the tool. The detailed accounting methodology used allows to reconcile top-down and bottom-up emissions estimation approaches, which is an important step change as compared to currently employed methods. The results demonstrate that the tool successfully identifies and quantifies GHG emissions (CO2, CH4, N2O) at unit process level or equipment level and over time, covering combustion emissions, vent, fugitives, and flares. The dynamics of life cycle CO2 emissions, methane emissions and carbon intensity can be captured accurately and reliably.

Simulation Production Planning and Scheduling of Joint Lifting LNG for Maximizing Netback Revenue at Badak LNG Plant

The Multi-Supply & Seller mechanism with Multi-Buyers in Badak LNG Plant there will be several obstacles tomeet with requirementof each sales contract, the fluctuate requirement of each buyers, changes in shipping schedules caused by problems at the plant and ship, and flexibility to move LNG cargo are expected to cause problems in planning and scheduling. Furthermore, this situation will be complicate by the limited plant capacity, storage tanks, and the ship availability on the seller or buyer side. Theobjective for this study to obtain a pattern change of netback revenue for gas producers by changing the LNG shipping schedule from the planned schedule (“Planned Schedule”) compared to the deviation from planned shipping schedule (“Deviation from Planned Schedule”) and LNG prices. Simulation methods will developed to correlate within gas production capacity, LNG production capacity, LNG inventory in LNG storage tanks, LNG carriers and LNG shipping schedules in both the Planned Schedule and Deviation from Planned Schedule. This simulation will resulted the effects of changes in shipping schedules and changes in LNG prices on the netback revenue of each gas producer.The netback revenue from LNG sales for each scenario Planned Schedule and Deviation from Planned Schedule has shown that using the fluctuation of LNG price for one year in Q1 and Q4 of the following year is more better due to LNG demand is higher on winter season.

Study of Green-Ship Routing Problem (G-VRP) Optimization for Indonesia LNG Distribution

Natural gas is distributed around Indonesia mainly to be used as fuel in electrical power plants. The increase of consumption of electricity in Indonesia is on average of 6.8% annually. In response, the government considers developing gas power plants in central parts of Indonesia. As an archipelago, Indonesia depends heavily in connectivity between islands which is obviously supported by seaborne vessels or ships. These facts make the LNG transportation a complex matter in Indonesia. The distribution of LNG by ship can be designed as a hub and spokes liner shipping. A single hub and spokes network has one hub port and several feeder ports. In LNG supply chain network, the hub is the liquefaction plant and the feeder ports are receiving terminals. Various optimization methods have been established to optimally utilize a fleet. Other than the cost-efficiency, there are other considerations in optimizing the fleet. One of the current trending considerations is the emission. In the past few years, concern about environment has been increasing. IMO released a number based on research that shows that maritime transportation has 2.7% contribution to global anthropogenic emission. The aim of this research is to determine the optimal fleet and its routes of an LNG shipping to minimize the CO2 emission while also minimizing the cost of LNG distribution in central part of Indonesia that covers South Eastern Sulawesi. Demand points are the power plants of Kendari, Baubau, Selayar, Bombana, and Kolaka with a total of 828 m3 daily needs for LNG. The cost calculation was done in a G-VRP framework which took emission into account. A method called Bin Packing Problem within the context of Vehicle Routing Problem was established to minimize the total distribution cost and emission for each cluster. After acquiring the best route and fleet option, this research compared and analysed the benefits of using conventional diesel engine and a dual fuel diesel engine scenario for the chosen vessel. The result of this optimization study shown that the transportation shall use one unit of type-A ships with a capacity of 1100 m3 for the routes Ambon-Bombana-Kolaka Utara-Ambon. And two units of type-B ship with a capacity of 2500 m3 for Ambon-Kendari-Ambon and Ambon-Baubau-Selayar-Ambon route. All ships use LNG as fuel. The total expense for this scenario is $2,980,768.63 and the use of dual fuel diesel engine instead of a conventional diesel engine for the ships can reduce the total costs by $2,434,348.97 or 44.95%.

Impacts of an Ice-Free Northeast Passage on LNG Markets and Geopolitics

We examine the relevance of an ice-free Northeast Passage as a shipping route, especially for LNG-supplying and -consuming countries. Four aspects are considered in-depth: (1) Developments in natural gas production in the Russian Arctic; (2) Trends and strategies of major Asian LNG-consuming countries; (3) Geopolitical significance of the Northeast Passage; (4) Geographical and climatic particularities of the Arctic. The analysis also comprises an assessment of the competitiveness of Russian LNG exports along the Northeast Passage, a discussion of the impacts on LNG transport routes and markets, and an evaluation of the geopolitical implications of this new shipping route. We find that an ice-free NEP is relevant for maritime bulk and particularly LNG shipping, and thus of great geopolitical importance and strategic interest for countries such as Russia, the US, China, Japan, and South Korea.

Study of Volatility of New Ship Building Prices in LNG Shipping

The natural gas market has been expanding in size and has attracted particular attention across the global energy market. Although most natural gas transportation is carried out through pipelines, almost one third of it is done with the help of merchant vessels, capable of carrying liquefied natural gas. These LNG carriers have a special design and thus can be treated as a separate class of global fleet. New vessels are huge capital investments by vessel owning companies and just like other vessel classes; the new shipbuilding prices for the LNG segment continue to be a key aspect in the decision making of business players. Additionally these prices can be volatile as new ship building prices fluctuate with time. This paper attempts to analyse the volatility of new ship building prices of LNG carriers. For the study, the average ship building prices for all the LNG carriers having volume carrying capacity is between 160,000 – 173,000 cbm to be delivered between 2016 – 2019 were taken into account. For the analysis, GARCH and EGARCH methods were applied on the data set. The analysis concluded that there is a great deal of volatility in the new ship building prices of LNG vessels. It was also identified that negative shocks were more persistent the positive shocks.

Trade with endogenous transportation costs: The case of liquefied natural gas

This paper investigates the relationship between LNG shipping costs and regional natural gas price spreads. We use data on natural gas prices and shipping costs to analyze the distribution of trade benefits within the LNG value chain when shipping costs are endogenous to price spread developments. Our empirical analysis suggests that for the 2006–2014 period, the LNG shipping sector has had an implied scarcity rent on LNG shipping capacity of $0.14/MMBtu for the EU/US spread, $0.32/MMBtu for the Asia/EU spread, and $0.42/MMBtu for the Asia/US spread. We highlight in a counter-factual analysis that this distributional effect is not economically negligible. We investigate how including endogenous transportation costs affects the measured degree of price convergence between regional natural gas markets. We find that price convergence is stronger when we control for variations in transportation costs rather than implicitly assuming fixed or exogenous costs.

Multicriteria decision support to evaluate potential long-term natural gas supply alternatives: The case of Greece

This paper assesses 27 alternative natural gas supply corridors for the case of Greece, according to a multicriteria analysis approach based on three main pillars: (1) economics of supply, (2) security of supply, and (3) cooperation between countries. The alternatives include onshore and offshore pipeline corridors and LNG shipping, determined after exhaustive investigation of all possible existing and future routes, taking into consideration all possible natural gas infrastructure development projects around Greece. A multicriteria additive value system is assessed via the robust ordinal regression methodology, aiming to support the national energy policy makers to devise favorable strategies, concerning both long-term national natural gas supplies and infrastructure developments. The obtained ranking shows that noticeable alternative corridors for gas passage to Greece do exist both in terms of maritime transport of LNG and in terms of potential future pipeline infrastructure projects.

Productivity opportunities in Australia's natural gas industry and their importance to our competitive position in the global LNG market

Natural gas has moved from a regional to a global commodity, with LNG enabling natural gas users to source supply from a wider range of sources. Australian natural gas is expected to play a large role in this emerging, global market with significant investment in LNG processing and shipping facilities either in place, under construction or planned for development. The focus of Australian natural gas producers has appropriately been on production, to both meet domestic demand as well as provide feedstock for our planned LNG capacity. Going forward, however, we believe this needs to shift to a stronger focus on total cost of production, particularly in our natural gas supply sources and especially if potential supply emerges in markets traditionally seen as net energy importers. A case in point is the United States – linking contracts partially to Henry Hub pricing and the recent granting of an export license to the Cameron LNG project in Louisiana continue to demonstrate the emerging threat US based LNG supply could have to Australia’s natural gas industry. This study proposes to identify any gap between Australian operations and best practise natural gas production markets overseas, how this has trended over time and potential drivers, controllable and structural/uncontrollable. This will provide insight into opportunities to improve productivity in upstream operations as well as establish a case for continuous improvement in natural gas operations.

Allocation of liabilities between parties involved in shipping LNG from eastern Australia

LNG shipping tonnage represents about 400 vessels worldwide and it has high safety records compared with other types of tonnage. Serious attention to the operational safety of LNG vessels is dictated by their high value as assets, substantial time required to build new LNG vessels, limited availability of replacement tonnage on the market, heavy dependence of the LNG supply chain on shipping efficiency and reliability, and high costs of delay in LNG supply. Notwithstanding the high safety record of LNG vessels, shipping is historically considered a high-risk enterprise. Liability of shipowners is usually limited to accommodate navigational risks to achieve reasonable transport costs. Such limitation of liability is stipulated in various legislative acts within local and international maritime law. Liability regimes in different countries and regions vary; consequently, study must be undertaken for each particular port to understand their individual liability regimes. This extended abstract discusses the liability regime for LNG vessels calling to Port Gladstone. For the parties involved in the transport of LNG, including sellers, buyers, charterers, shipowners and port authorities, it is important to understand the liability regime in the LNG loading port to ensure proper risk assessment and management of LNG shipping. There are various tools for such risk management, which may include a combination of insurance arrangements, liability and indemnity agreements, allocation of liabilities and indemnities for shipping and insurance requirements in LNG sale purchase agreements, safety assurance policies and procedures, and the inclusion of special requirements in the port and terminal regulations. This extended abstract provides shipping stakeholders with information on methods of managing risks for potential shipping liabilities.

Probabilistic Analysis of Characteristic Pressure for LNG Tanks

Background. New challenges in LNG shipping, such as ship size growth, trading routes with more severe weather conditions, need for operating with unrestricted filling level and new propulsion systems attract very much attention in marine and offshore oriented community. One of the main concerns is the prediction of loads caused by violent fluid motion in cargo tanks. In the paper we address the problem of determining characteristic extreme values of sloshing pressures for structural design. This involves estimating ship motion in a long-term period, fluid motion in the tank, excited pressures, and relevant structural responses. Method of Approach. Ship motion analysis is based on linear strip theory. In order to investigate the dependence of the sloshing response on sea conditions, an approach based on statistical characteristics of the tank motion is utilized as well as a multimodal approach for fluid motion in a tank. However, an appropriate theoretical/numerical approach, which can be used for a realistic prediction of the most extreme pressure has not yet been developed. Thus, experiments are utilized for the most severe sea states for a chosen tank filling level. Results. Our main contribution in the paper includes the statistical analysis of experimental short term pressure distribution. The choice and fit of probability distribution models is addressed, with due account of different physical mechanisms causing impacts. The models are evaluated. The most critical tank areas for sloshing loads are briefly discussed. Appropriate dynamic response of the tank structure needs to be investigated by accounting for temporal and spatial distribution of sloshing loads. These two factors are also addressed in the paper. The variability of results obtained by processing data from multiple test runs is discussed. Conclusions. The three-parameter Weibull and generalized Pareto statistical models are fitted to the data and evaluated. They prove to accurately describe sloshing excited pressures. However, the highest data points are underestimated by the both distributions. Generalized Pareto model results in more conservative estimates. The threshold level of peaks used in a fit of generalized Pareto distribution was investigated. Based on this, it is set to a level of a 0.85–0.87 quantile of peak values. The big influence of spatial and temporal distribution on the estimates is reported. Uncertainty in measured pressures originating from inherent fluid motion variability exceeds the uncertainty resulting form ship motions' variability. Moreover, generalized Pareto model results in higher variability.

新時代のLNG船デュアルフュエル機関電気推進

For the past forty years, steam turbine installations have dominated propulsion and electric power generation onboard LNG carriers. The ease with which these installation can utilize boil-off gas and their apparent reliability have kept them in a position that has long been lost to diesel engines in all other segments of the shipping industry. Steam turbine installations are, however, not very efficient. This has a negative impact on both the ship operating economy and its exhaust gas emissions. Exactly these issues play an increasingly important role in LNG shipping today.Initially encouraged by the latest developments in its gas engine technology, Wartsila started looking for more economical and environmentally friendly ways to power LNG carriers. We studied machinery alternative with two- and four-stroke diesel, high-pressure gas-diesel, and low-pressure dual fuel engines, in mechanical and electrical and electric propulsion arrangements, with and without boil-off reliquefaction plants. Dual-fuel-electric installations were found to be the most attractive alternative to steam turbine installations.The first dual-fuel-electric LNG carrier, Gas de France Energy will go to sea later this year and two more duel-fuel-electric LNG carriers are on order, Further orders for duel-fuel-electric LNG carrier are expected any time soon.

LNG 해운시장의 변화와 하주의 전략적 대응

본 논문에서는 변화하는 LNG 해운환경에 의한 3∼5년 이내의 Spot 시장 등장 가능성을 시스템다이내믹스 방법으로 분석하고, 이러한 가능성에 대한 하주인 가스공사의 전략적 대응방안을 모색하였다. 즉 하주와 해운선사가 상호 협력하여 국제적이고 자본집약적인 해운 및 조선 산업의 특징을 최대로 활용하면서 치열한 가능성에 대판 하주인 가스공사의 전략적 대응방안을 모색하였다 즉, 하주와 해운선사가 상호 협력하여 국제적이고 자본집약적인 해운 및 조선 산업의 특징을 최대로 활용하면서 치열한 국제시장에서 모두가 발전하고 미래의 LNG 및 LNG핀 Spot시장을 선점할 수 있는 전략과 이에 대응하기 위하여 필요한 선박 확보 방안으로 i) 하주가 직접 참여하는 방안, ii) 하주가 자회사를 통하여 참여하는 방안, 그리고 iii) 하주가 컨소시엄을 통하여 참여하는 방안을 제시하였다. This paper describes not only the complexities of LNG business including shipping sector but also its own current environmental changes. Furthermore, system dynamics (VENSIM analysis) as a methodology is introduced to analyze the potential LNG shipping market in the future. As a result of the VENSIM analysis, potentiality of the spot LNG shipping market is systematically established in connection with embodiment of the spot LNG market. This paper suggests three methods, which are centered on newbuildings of ships, for the shippers to prepare for the spot LNG shipping market on the basis that maritime economics can make a direct contribution to the shippers' business decision-making.