LIQUEFIED NATURAL GAS (LNG)

Supply Chain Economics

Costs of liquefaction, shipping, and regasification have declined over time as the LNG industry has developed, via economies of scale and technological improvements. However, more recently, costs throughout the chain have begun to rise again as a result of the increasing cost of raw materials and a scarcity of construction capability (EPC contractors, shipyards).

Nexant Services

Nexant maintains an integrated LNG model, based on real project data, which provides economics for the liquefaction, shipping and regasification elements of the supply chain. We derive LNG transport costs from seller to buyer, based upon current industry parameters and scenarios related to the technical and commercial developments in the shipping sector. LNG tanker capacities are based on current capacities, known new building programmes over the next three to four years, and assessments for subsequent periods.

Based on Nexant's long term gas price forecasting for each of the main LNG markets and our modelling results, we utilise a netback methodology to determine the netback FOB prices that alternative markets will potentially be able to provide to suppliers.

Selected Project Experience

  • Expert witness, commercial value of gas supply—West Africa
  • LNG competitiveness for LNG supply— Southeast Asia
  • Gas market advisor for greenfield LNG export project—Middle East
  • LNG supply feasibility—Cyprus
  

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