Analysis of Inefficient Global Liquefied Natural Gas (LNG) Shipment Routes
Open Access
- Author:
- Dhanurendra, Bagas
- Area of Honors:
- Industrial Engineering
- Degree:
- Bachelor of Science
- Document Type:
- Thesis
- Thesis Supervisors:
- Dr. Anastasia Shcherbakova, Thesis Supervisor
Dr. Paul M Griffin, Thesis Honors Advisor - Keywords:
- Natural Gas
LNG
Shipping
Inefficiency
Energy Markets - Abstract:
- This thesis attempts to analyze a dimension of the inefficiency in the world LNG markets, through examination and analysis of inefficient LNG shipping routes. This thesis aims to fill a void in LNG shipping literature, by determining key factors that drive inefficient LNG shipments and their measure of influence. In this paper, these key factors will be hypothesized and analyzed using regression models. First, a model for inefficient LNG shipments is established, whereby inefficient shipments are defined as LNG shipments that crosses the Qatar longitude (51.53o E). Next, data on tanker movements, port location & type, vessel capacity and shipping cost are procured, combined and prepared. Finally, the probit model is utilized for the analysis of regression. The findings of this study are that inefficient LNG shipments are mainly driven by seasonality (time of year) and shipping cost. Summer and winter time increases the probability of inefficient shipments by 9% and 11%, respectively. Also, a 1000 point decrease in the Baltic Dry Index (BDI) will increase the probability of inefficient shipments by 8.4%. LNG carrier capacity is not a significant factor in driving inefficient LNG shipments. Future work includes improving the descriptive and predictive power of the regression models. More representable data of LNG production shipments should be collected and analyzed, thus increasing the sample size and variability. Future work could also include other factors to the model such as shipping distances, contracting conditions, cargo ownership, and other factors that generally affect the international LNG markets. Lastly, a more accurate criteria and measure of inefficient shipments should be defined, hence better representing the actual behavior of global LNG shipping activity.