Optimizing Liquefied Natural Gas Sales at the Operational Level in a Production and Distribution Project
Abstract
As the Liquefied Natural Gas (LNG) market is pushed towards liberalization by consumers, a higher portion of projects are dedicated to spot sale also the possibility of arbitrage increases. It means the cash that flows into the upstream of LNG projects is a combination of the cash which is generated by deliveries to Long Term Contract (LTC) destinations, spot sale and arbitrage. To a considerable extent, LTC cash flow is predictable while spot sales and arbitrage cash flows, affected by the dynamics of supply and demand, are more volatile. In this research, a model for maximization of the profit of an LNG supplier with respect to product spot sales/arbitrage and LTC commitments at an operational level is formulated. The output of the model is an assignment of tankers to customers, whereby tankers not currently fulfilling LTCs are free to carry spot/arbitrage shipments. The fleet of tankers is fixed, although where required additional tankers can be chartered at high prices. Using the developed model different aspects of the LNG business are studied, including: the importance of arbitrage, the role of time value of money in spot sales decision making and the spot sales decisions in response to price fluctuation
Biography
Hamed Nikhalat is a PhD researcher at the Ports Operations Research and Technology Centre (PORTeC), Centre for Transport Studies (CTS), Imperial College London. He obtained his MSc in Marine Structures Engineering from University of Tehran, where he was previously awarded a BSc in Civil Engineering. He has past experiences in maritime consultancy, and bulk terminal design in particular. His research lies on the simulation and optimization of shipping and inventory management in energy business particularly liquefied natural gas (LNG).