• Journal of Information Processing Systems
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• v.20 no.1
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• pp.93-104
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• 2024

China is playing more predominant role in the liquefied natural gas (LNG) market worldwide and LNG import price is subject to various factors both at home and abroad. Nevertheless, previous studies rarely heed a multiple of factors. A time-varying parameter factor augmented vector auto-regression (TVP-FAVAR) model is adopted to discover the determinants of China's LNG import price and their dynamic impacts from January 2012 to December 2021. According to the findings, market fundamentals have a greater impact on the import price of natural gas in China than overall economic demand, financial considerations, and world oil prices. The primary determinants include domestic gas consumption, consumer confidence and other demand-side information. Then, there are diverse and time-varying spillover effects of the four common determinants on the volatility of China's LNG import price at different intervals and time nodes. The price volatility is more sensitive and long-lasting to domestic natural gas pricing reform than other negative shocks such as the Sino-US trade war and the COVID-19 pandemic. The results in this study further proves the importance of domestic natural gas market liberalization. China ought to do more to support the further marketization of natural gas prices while working harder to guarantee natural gas supplies.

• Analyses & Alternatives
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• v.5 no.2
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• pp.77-105
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• 2021

Natural gas consumption in Asia is growing at fast tempo because of various factors such as economic growth in the region, urbanization, coal-to-gas switch at power and industry sector. Due to geographical characteristics and lack of international pipeline connections between countries in the continent, majority of natural gas exported to Asian consumers is transported by tankers on the sea in the form of liquefied natural gas. As Asian market is the most lucrative market with the fastest demand growth, the competitions between LNG sellers for market share in Asian market are strengthening. The competitions accelerated, especially after the introduction of large volume of incremental supply into the market by new exporters from the U.S., Australia, and Russia. Cheniere Energy, the first exporter of liquefied natural gas (LNG) in the lower 48 states of U.S. has not adopted the traditional price formation mechanism and business model. Traditionally, prices of long-term LNG contracts have been indexed to the price of competing fuels, such as crude oil. The company adopted a pricing mechanism and business model based on a cost-plus system. Cheniere Energy opted for the safer and the risk-free pricing system, that annually guarantees a fixed amount of revenue to the seller. The company earns the same amount of money, regardless of natural gas price dynamics in the domestic and international market, but possibly with less revenue. However, by introducing and successfully implementing the safer and risk- free business model, Cheniere Energy, a company of a relatively smaller size in comparison with major oil and gas companies, became an example to other smaller-sized companies in the U.S. The company's business model demonstrated how to enter and operate LNG business amid increasing competitions among sellers in the U.S. and international market.

• Journal of Korean Institute of Industrial Engineers
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• v.41 no.3
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• pp.259-266
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• 2015

Among many energy resources, natural gas has recently received a remarkable amount of attention, particularly from the electrical generation industry. This is in part due to increasing shale gas production, providing an environment-friendly fossil fuel, and high risk of nuclear power. Because South Korea, the world's second largest LNG importing nation after Japan, has no international natural gas pipelines and relies on imports in the form of LNG, the natural gas has been traditionally procured by long term LNG contracts at relatively high price. Thus, there is a need of developing an Asian LNG trading hub, where LNG can be traded at more competitive spot prices. In a natural gas spot market, the amount of natural gas to be bought should be carefully determined considering a limited storage capacity and future pricing dynamics. In this work, the problem to find the optimal amount of natural gas in a spot market is formulated as a Markov decision process (MDP) in risk neutral environment and the optimal base stock policy which depends on a stage and price is established. Taking into account price and demand uncertainties, the basestock target levels are simply approximated from dynamic programming. The simulation results show that the basestock policy can be one of effective ways for procurement of LNG in a spot market.

• International Area Studies Review
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• v.14 no.1
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• pp.99-119
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• 2010

This study explores the natural gas market and the oil market in the U.S. and the European oil market. It focuses on two kinds of analyses; one is to confirm whether there is the predictive power between spot and futures within homogeneous commodity market(or inter-heterogeneous commodity market) through Granger-causality test in terms of the return rate and the volatility. The other is to examine the spot price stabilizing effect of futures price through regression analysis. When it comes to the predictive power of inter-commodity market, there was a conflicting aspect between the return rate of spot and futures. Overall, however, its statistical significance was low. With respect to the volatility, we found that the natural gas market has little influence on the oil market unlike the predictive power of oil market on natural gas market. Concerning the return rate of the predictive power within homogeneous commodity market, we found that the return rate of spot has the predictive power on futures only in the European market. In addition, we identified that there is feedback between spot and futures in the all commodity markets regarding volatility. As a result of the spot price stabilizing effect analysis of futures price, futures volatility increased the spot volatility.

• Transactions of the Korean Society of Automotive Engineers
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• v.7 no.8
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• pp.123-131
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• 1999

Natural gas is one of the most promising alternative fuels for automotive vehicles. However, natural gas varies in compositional between the originating fields and may be further modified due to processing and additional mixing. These variations are known to affect engine performance and emissions through changes in fuel metering and combustion characteristics. In the present study, the effect of gas compositions on vehicle performance such as fuel economy, driveability and exhaust emissions was examined. Analysis are made of using 3 types of NGVs which were made by automakers and 6 different fuels which are selected in consideration of the variation in fuel composition on the worldwide market. The results may be utilized to develop natural gas natural gas engine in automaekrs and/or to establish the fuel standard in the refueling stations.

• 한국신재생에너지학회:학술대회논문집
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• 2008.05a
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• pp.107-110
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• 2008

The price of natural gas import continues to rise, as well as its domestic consumption rate. This research examined the economic feasibility of domestically developing and producing gas hydrate to substitute imported natural gas. Today, the technology to commercially produce gas hydrate is still lacking; however, if the gas hydrate is able to be commercially produced domestically and replace imported natural gas, the annual economic benefit for the Republic of Korea would be 211 - 833 USD/ton. From the industry's point of view, gas hydrate is a high value investment since one can expect an annual profit of over 150USD/ton. The commercial value of gas hydrate development will increase as long as the natural gas market continues to expand and as the increase of natural gas consumption remains steady. With further development of technology, one can anticipate an even higher expected return on the investment.

• Environmental and Resource Economics Review
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• v.18 no.4
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• pp.787-813
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• 2009

Because of global warming, the thawing of the Arctic ice cap is slowly accelerating. That is the hot issue nowadays. According to the each country's climate change policy, it is boom in the world to lessen the consuming of the fossil fuel those are oil, coal and natural gas. But on the contrary the thawing of the Arctic ice cap is the chance to make the natural gas producing unit cost lower. The purpose of this paper is to search the Arctic policy of each country under the contradictory relationship between promoting the climate change policy and exploiting the natural gas on the Arctic. Specially, there are huge natural gas reserves in Russia on the Arctic region, Russia's exploiting the natural gas on the Arctic will affect on the natural gas supply-demand balance of world natural gas market strongly in the future. Therefore it needs to prepare the future energy alternative policy for Korea's energy security. Russia has Yamal Peninsular where is abundant on natural gas reserver, and she can supply natural gas by LNG ship all over the world via the Arctic route. This means that the structure of world natural gas market be changed gradually. It will be possible in 2030~2040. And such a change is very important because new natural gas trading type can do it through not only overcoming the geological restriction but also shifting the main trading type from PNG(Pipeline Natural Gas) to LNG(Liquified Natural Gas). Therefore it is necessary that we should let this be a good lesson to ourselves through the government action of other countries (China, Japan) those also have no sovereignty over the Arctic as Korea.

• New & Renewable Energy
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• v.4 no.2
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• pp.61-67
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• 2008

The price to import natural gas continues to rise, as well as the rate of its domestic consumption. This research examined the economic feasibility of domestically developing and producing gas hydrate to substitute imported natural gas. Today, the industry still lacks the technology to commercially produce gas hydrate. However, if the gas hydrate is able to be commercially produced domestically and replace imported natural gas, the annual economic benefit for the Republic of Korea would be 211 - 833 USD/ton. Gas hydrate is rated as a high value investment by the gas industry since the potential annual profit can reach over 150USD/ton. The commercial value of gas hydrate development will increase as long as the natural gas market continues to expand and its consumption increase remains steady. With further development of technology, one can anticipate an even higher expected return on the investment.

• Journal of the Korean Institute of Gas
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• v.2 no.3
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• pp.18-24
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• 1998

This paper attempts to improve domestic natural gas pricing system, thereby optimizing social welfare. This is done by deriving theoretical frameworks of natural gas pricing, which make use of both Ramsey component pricing rule and Efficient component pricing rule based on the theory of marginal cost. Allocative efficiency and social welfare between gas prices derived from the three pricing mechanism, present Cost-based pricing, Ramsey component pricing rule and Efficient component pricing rule, are analysed and compared in the case study. For the city gas, allocative efficiency of Cost-based pricing is higher than that of Ramsey component pricing rule and Efficient component pricing rule. In contrast, for the natural gas consumed for power generation, allocative efficiency of Cost-based pricing is lower than the other two pricing systems. It also turns out that social welfare is improved by the prices driven from Ramsey component pricing rule and Efficient component pricing rule rather than present Cost-based pricing.

• Environmental and Resource Economics Review
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• v.15 no.5
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• pp.799-826
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• 2006

Combining recent advances in causal flows with time series analysis, relationships among eight North American natural gas spot market prices are examined. Results indicate that price discovery tends to occur in excess demand regions and move to excess supply regions. Across North America, the U.S. Midwest region represented by Chicago spot market is the most important market for price discovery. The Ellisburg-Leidy Hub in Pennsylvania is important in price discovery, especially for markets in the eastern two-thirds of the U.S. Malin Hub in Oregon is important for the western markets including the AECO Hub in Alberta, Canada.