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

Jin Zhang (), Xiuling Yin, Zhanxiang Lei, Jianjun Wang, Zifei Fan and Shenaoyi Liu
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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

Energies, 2024, vol. 17, issue 13, 1-19

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.

Keywords: liquefied natural gas; integrated model; economic evaluation; value chain; upstream and downstream integration (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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