Debt and Optionality in U.S. LNG Export Projects
Peter Hartley and
Kenneth Medlock
The Energy Journal, 2023, vol. 44, issue 2, 1-28
Abstract:
U.S. liquefied natural gas (LNG) export projects have substantially more spot trading of LNG than traditional projects. While this reduces the debt capacity of the projects, it allows project developers to better exploit many types of real options. Exploiting those options greatly increases the positive skewness of project cash flows. While the modal operating profits for a representative U.S. LNG export project are unlikely to cover fixed costs, interest and taxes at usual leverage ratios, the mean real equity return is likely to be positive. Some quarters could return extremely high profits. Understanding determinants of spot trading of LNG matters because increased spot trading will better integrate global natural gas markets.
Keywords: LNG exports; Real options; Debt finance; Spot and contract trade; Market integration (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
https://journals.sagepub.com/doi/10.5547/01956574.44.2.phar (text/html)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:44:y:2023:i:2:p:1-28
DOI: 10.5547/01956574.44.2.phar
Access Statistics for this article
More articles in The Energy Journal
Bibliographic data for series maintained by SAGE Publications ().