Time Commitments in LNG Shipping and Natural Gas Price Convergence

Atle Oglend, Petter Osmundsen and Tore Selland Kleppe

The Energy Journal, 2020, vol. 41, issue 2, 29-46

Abstract: Inter-continental Liquefied Natural Gas (LNG) trade can facilitate the development of a global natural gas market. However, in addition to explicit shipping costs, such trade requires time commitments in shipping due to the long hauls of many shipping routes. We show that this time commitment adds an additional economic cost to LNG shipping, and creates a positive relationship between the economic cost of LNG trade and regional natural gas price spreads. Necessary time commitment therefore augments the other costs of LNG trade, and contributes to weaken the ties between global natural gas markets.

Keywords: LNG; Natural gas; Trade; Price convergence (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:41:y:2020:i:2:p:29-46

DOI: 10.5547/01956574.41.2.aogl

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