Economic Feasibility of LNG Business: An Integrated Model and Case Study Analysis

Abstract

Liquefied natural gas (LNG), recognized as the fossil fuel with the lowest carbon emission intensity, is a crucial transitional energy source in the global shift towards low-carbon energy. As the natural gas industry undergoes rapid expansion, the complexity of investment business models has increased significantly. Optimizing the combination of various segments within the value chain has become standard practice, making it essential to control risks and enhance economic benefits in these multifaceted scenarios. This paper introduces an integrated economic model encompassing upstream, liquefaction, shipping, regasification, and consumption, suitable for both upstream and downstream integration. The model offers a comprehensive analysis of the primary business models and key factors across each segment of the value chain. By constructing a robust economic evaluation framework, the study aims to provide a holistic approach to understanding the economic feasibility of LNG projects. Two detailed case studies are conducted to demonstrate the application and effectiveness of the proposed model, highlighting its capability to guide investment decisions, support risk management, and optimize asset portfolios. The integrated economic model developed in this study serves as a valuable tool for stakeholders in the LNG industry. It not only facilitates informed investment decision-making but also enhances the strategic management of risks and resources. By leveraging this model, investors and managers can better navigate the complexities of the LNG business, ensuring sustainable and economically viable operations.