Alternative natural gas contract and pricing structures and incentives of the LNG industry

Natural Resources Forum
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Abstract

Gas conversion to liquefied gas (LNG) and transport by LNG tankers is one option for meeting expanding gas consumption and for gas traded internationally. This paper examines the impact of the traditional gas contract provisions of indefinite pricing, market out price ceilings, and take‐or‐pay requirements on the profitability of LNG projects in the context of markets characterized by price and quantity uncertainty. Simulation experiments are used to examine and calibrate the effects of those provisions. The results provide guidance to operators, host countries and purchasers in structuring such contracts. The paper also assesses prospects of future expansion of world LNG capacity.

Additional publication details

Publication type Article
Publication Subtype Journal Article
Title Alternative natural gas contract and pricing structures and incentives of the LNG industry
Series title Natural Resources Forum
DOI 10.1111/j.1477-8947.1991.tb00133.x
Volume 15
Issue 3
Year Published 1991
Language English
Publisher Wiley
Contributing office(s) Eastern Energy Resources Science Center
Description 12 p.
First page 190
Last page 201