DELIVERY OPTIMISATION MODEL FOR LNG

Abstract

In the complex world of the Liquid Natural Gas (LNG) industry, the LNG trade have been constantly evolving. Due to factors like rapid growth in supply, increased pricing flexibility and transparency, and the continued emergence of new markets, the LNG trade has become more interconnected and globalised compared to the recent past, where LNG flows has been restricted to the respective regions of America, Europe and Asia. In 2021, we have seen high fluctuating LNG prices, a rising fuel crisis from supply shortage and changes in sea route planning due to canal blockage and congestion. Thus, there is a dire need to create an optimisation model to find the most efficient sea routes in the LNG supply chain to generate the most revenue for LNG traders. In this paper we discuss the areas of optimisation that can be done in an LNG delivery contract and use techniques such as linear programming to find the most economical solution to the shipping portion of the LNG value chain. Subsequently running a test using a model on forecasted data to draw further insights.