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Hult, Emanuel, 2016. Are LNG regasification facilities a financially viable investment to diversify natural gas markets? : a real option approach to investments in an LNG-regasification plant. Second cycle, A2E. Uppsala: SLU, Dept. of Economics

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Abstract

This thesis looks at the value of having the option to buy gas on the world Liquified Natural Gas-market rather than just relying on one distributor via pipeline. The world market for natural gas is characterized by rigid distribution methods and there is no short term flexibility of destination for the seller and almost no possibility for buyers to buy gas on a competitive market.
The investment is evaluated using real option analysis. The computational method for the valuation is Monte Carlo simulations and pipeline gas prices and Liquid Natural Gas prices will be modelled through stochastic modelling and the prices are assumed to be characterized by mean reversion and price convergence. The model will be developed following Yepes Rodríguez (2008) model of natural gas price progression. The main conclusion is that he value of investing in a regasification facility is found to be positive and that LNG regasification facilities a financially viable investments to diversify natural gas markets.

Main title:Are LNG regasification facilities a financially viable investment to diversify natural gas markets?
Subtitle:a real option approach to investments in an LNG-regasification plant
Authors:Hult, Emanuel
Supervisor:Di Corato, Luca
Examiner:Hess, Sebastian
Series:Examensarbete / SLU, Institutionen för ekonomi
Volume/Sequential designation:1062
Year of Publication:2016
Level and depth descriptor:Second cycle, A2E
Student's programme affiliation:NM002 Agricultural Economics and Management - Master's Programme 120 HEC
Department:(NL, NJ) > Dept. of Economics
Keywords:economics, commodities, liquified natural gas, LNG, natural gas, Monte Carlo-simulation, real option, stochastic modelling
URN:NBN:urn:nbn:se:slu:epsilon-s-5934
Permanent URL:
http://urn.kb.se/resolve?urn=urn:nbn:se:slu:epsilon-s-5934
Subjects:Economics and management
Language:English
Deposited On:07 Oct 2016 15:16
Metadata Last Modified:07 Oct 2016 15:16

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