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WIREs Energy Environ.
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Future liquefied natural gas business structure: a review and comparison of oil and liquefied natural gas sectors

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The liquefied natural gas (LNG) trade provides the means of trading gas globally and represents about 10% of the gas trade. The forecasts show the LNG business will grow, over the next 20 years, at about twice the rate of the whole gas trade. Although the current state of LNG trade is well studied, the literature on the future business structure of it is limited and conflictual. This work considers the future LNG business structure by comparing the development trajectories of the oil and LNG sectors. In addition, it assesses the conclusions drawn by researchers against this background and the current pattern of change in the industry. The comparison involves three stages: (1) trade flows—oil and LNG trade flows are very similar, mainly due to the common distribution of the oil and gas reserves. (2) Supply chain configuration—the international trade for both fuels is tanker based thus allowing for a similar market responsive trade policy, i.e., real‐time destination selection (spot sale) at a global scale. (3) Institutional developments—the current transparent and competitive global oil trade, with prices dominated by physical and paper markets, was driven previously by long‐term contracts, in the same manner as the current LNG business. This analysis, together with transaction cost economics, supports the argument that, in future, LNG spot trade will increase and give rise to a competitive and globally unified LNG market. Furthermore, LNG pricing will become transparent and would be dominated by physical and paper markets benchmark prices. WIREs Energy Environ 2017, 6:e240. doi: 10.1002/wene.240 This article is categorized under: Energy Policy and Planning > Economics and Policy Energy Policy and Planning > Systems and Infrastructure Energy and Development > Economics and Policy
Share (%) of LNG imports by country, 2014 (Data extracted from Ref ). LNG, liquefied natural gas.
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World energy intensity [tonnes of oil equivalent/thousand 2005 US dollars (toe/thousand 2005 US$)], 2012 (Source: Ref ).
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Worldwide share (%) of oil demand by sector, 2014 and 2040 (Source: Ref ).
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Regional LNG supply (million tonnes per annum\MTPA), 1990–2014 (Source: Ref ). LNG, liquefied natural gas.
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Oil export from OPEC countries (bbl/d), 2014 (Data extracted from Ref ). OPEC, Organization of the Petroleum Exporting Countries.
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Spectrum of governance structures for transactions (Adapted from Ref ).
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Volume of LNG trade in physical market (MTPA) and its share (%) of total LNG trade, 1995–2012 (adapted from Ref ). LNG, liquefied natural gas.
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Share (%) of global LNG exports by country, 1990–2014 (Source: Ref ). LNG, liquefied natural gas.
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Number of vessels in the LNG fleet by range of cargo capacity, 2014 (Data extracted from Ref ). LNG, liquefied natural gas.
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Detailed LNG supply chain. LNG, liquefied natural gas.
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Oil supply chain, with the main configuration on the left (Source: Ref ).
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Major interregional trade flows of oil and LNG (TOE), 2014 (Adapted from Refs and ). LNG, liquefied natural gas; TOE, tonnes of oil equivalent.
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