Masters thesis of engineering modelling of optimal sourcing strategy for future lng demand

Modelling of Optimal Sourcing Strategy for Future LNG Demand A thesis submitted in fulfilment of the requirements for the degree of Master of Engineering Israt Mustary B Sc in Computer Science & Engineering Darul Ihsan University, Bangladesh School of Engineering College of Science, Technology, Engineering and Maths RMIT University October 2020 Declaration of Originality I certify that except where due acknowledgement has been made, the work is that of the author alone; the work has not been submitted previously, in whole or in part, to qualify for any other academic award; the content of the thesis is the result of work which has been carried out since the official commencement date of the approved research program; any editorial work, paid or unpaid, carried out by a third party is acknowledged; and, ethics procedures and guidelines have been followed I acknowledge the support I have received for my research through the provision of an Australian Government Research Training Program Scholarship Israt Mustary Date: 06 October 2020 ii List of Publications The following is a list of publications arisen from this work: Mustary, I., Chowdhury, H., Loganathan, B., & Alam, F (2017) Development of a Computational Model for Optimal Sourcing of LNG Energy Procedia, 110, 597-603 Alam, F., Saleque, K., Alam, Q., Mustary, I., Chowdhury, H., & Jazar, R (2019) Dependence on energy in South Asia and the need for a regional solution Energy Procedia, 160, 26-33 iii Acknowledgments At first, I want to express my whole-hearted thanks and gratitude to my senior supervisor, Professor Firoz Alam for his guidance, encouragement, advice, constructive criticism and assistance Special thanks to Dr Harun Chowdhury and Dr Bavin Loganathan for their assistance with this study iv Table of Contents Declaration of Originality ii List of Publications iii Acknowledgments iv Table of Contents v List of Tables ix List of Figures xi Nomenclature and Units xiii Abbreviations and Acronyms xiv Abstract 1.1 Global energy scenario Global oil scenario Global coal scenario Future sources of primary energy 1.2 Advantages of LNG 10 Global LNG market and future demand 11 LNG transportation system 14 1.3 Factors for optimal sourcing strategy for LNG importers 17 Production capacity of the source terminal 18 Price at the source 18 Distance between source and destination terminals 18 Risk on the transportation route 18 Trade dispute between source country with other nations 19 Source country’s involvement in internal/external conflicts or warfare 20 v Bilateral relationship between source and destination country 20 Trade relationship/volume of export-import between source and destination country 20 Economic strength of the source country 20 Any economic or UN sanctions on the source country 20 Medium/long-term political risk index of the source country 20 Political stability index of the source country 21 1.4 Objective and scope 21 1.5 The rationale of the research 21 2.1 Current body knowledge on optimal sourcing strategy of LNG 23 Ship routing and scheduling 24 Sailing cruise speed 25 Type and size of the ship 26 Type and frequency 26 Sea condition and route 26 Sourcing strategy 28 2.2 Summary of current studies on LNG sourcing and research gap 29 2.3 Research questions 30 3.1 Methodology 31 3.2 Price estimation model 33 Important parameters associated with LNG transportation cost 33 Development of a computational model using computer software 37 3.3 Development of the optimal sourcing model 41 Methodology 41 vi 4.1 Sources of research data 44 4.2 Data of LNG exporting countries 44 4.3 LNG carriers and charter rate 53 4.4 Major LNG shipping routes and tolls 53 4.5 LNG market and wholesale LNG price 54 5.1 Introduction 57 Current energy scenario of Bangladesh 57 5.2 Implementing of the cost estimation model for Bangladesh 61 Distance measurement 61 Cost estimation 62 Model outputs and data processing 63 5.3 Implementing the optimal sourcing model for Bangladesh 64 Shortlisting by data filtering 64 Risk assessment and ranking on 12 risk factors 65 6.1 The dependency of shipping cost on distance and ship capacity 77 Effect of distance on shipping cost 77 Effect of ship capacity on shipping cost 78 Effect of delivery time on ship speed 79 6.2 Effect of the canal on unit price and delivery time 79 Case study results and discussion 81 7.1 Conclusions 83 General Conclusions 83 vii Specific Conclusions 84 7.2 Recommendation for future study 85 Sea route measurements data 91 viii List of Tables Table 1.1: Global export capacity of LNG - current and future data 12 Table 1.2: Global import capacity of LNG (current and future data) 13 Table 2.1: Summary of related published research work 29 Table 3.1: Input variables 38 Table 3.2: Output variables 38 Table 3.3: Formulation for output parameters 39 Table 3.4: Risk factors matrix for points calculation 43 Table 4.1: Data for Algeria 46 Table 4.2: Data for Angola 46 Table 4.3: Data for Argentina 46 Table 4.4: Data for Australia 46 Table 4.5: Data for Brunei 47 Table 4.6: Data for Cameroon 47 Table 4.7: Data for Canada 47 Table 4.8: Data for Egypt 48 Table 4.9: Data for Equatorial Guinea 48 Table 4.10: Data for Indonesia 48 Table 4.11: Data for Libya 48 Table 4.12: Data for Malaysia 49 Table 4.13: Data for Mauritania 49 Table 4.14: Data for Mozambique 49 Table 4.15: Data for Nigeria 49 Table 4.16: Data for Norway 50 Table 4.17: Data for Oman 50 Table 4.18: Data for Papua New Guinea (PNG) 50 Table 4.19: Data for Peru 50 Table 4.20: Data for Qatar 50 Table 4.21: Data for Russian Federation 51 Table 4.22: Data for Trinidad and Tobago 51 Table 4.23: Data for United Arab Emirates (UAE) 52 ix Table 4.24: Data for United States of America (USA) 52 Table 4.25: Data for Yemen 52 Table 4.26: Capacity and speed of LNG carriers 53 Table 4.27: Exporting and importing countries based on market 55 Table 5.1: LNG infrastructure data for the destination: Bangladesh 60 Table 5.2: Shortlisted countries 65 Table 5.3: Price comparison 65 Table 5.4: Distance and delivery time comparison 66 Table 5.5: Capacity comparison 67 Table 5.6: Risk on the route comparison 68 Table 5.7: Risk comparison of the trade dispute with other nations 69 Table 5.8: Risk comparison based on conflicts internal/external 70 Table 5.9: Bilateral relationship comparison 70 Table 5.10: Volume-export-import comparison 72 Table 5.11: Economic strength comparison 73 Table 5.12: UN sanctions risk comparison 73 Table 5.13: Medium/long-term political risk comparison 74 Table 5.14: Political stability index comparison 75 Table 5.15: Risk assessment values for each country for each factor 76 Table 5.16: Points for each risk factor and the total points for each country 76 Table 5.17: Optimal sources for Bangladesh with ranking 76 Table 6.1: Optimal destinations for Bangladesh with the country ranking 81 x Figure A.11: Sea route for source 33 Figure A.12: Sea route for source 38 97 Figure A.13: Sea route for source 49 Figure A.14: Sea route for source 54 98 Figure A.15: Sea route for source 57 Figure A.16: Sea route for source 57b 99 Figure A.17: Sea route for source 58 Figure A.18: Sea route for source 59 100 Figure A.19: Sea route for source 60 Figure A.20: Sea route for source 60b 101 Figure A.21: Sea route for source 61 Figure A.22: Sea route for source 63 102 Figure A.23: Sea route for source 65 Figure A.24: Sea route for source 67 103 Figure A.26: Sea route for source 69 Figure A.26: Sea route for source 70 104 Figure A.27: Sea route for source 73 Figure A.28: Sea route for source 75 105 Figure A.29: Sea route for source 78 Figure A.30: Sea route for source 79 106 Figure A.31: Sea route for source 81 Figure A.32: Sea route for source 84 107 Figure A.33: Sea route for source 85 Figure A.34: Sea route for source 85 b 108 Figure A.35: Sea route for source 86 Figure A.36: Sea route for source 88 109 Figure A.37: Sea route for source 90 Figure A.38: Sea route for source 90b 110 Figure A.39: Sea route for source 91 111 ... increasing demand for LNG trade in future and the need for the quest for good trading partners is crucial for the future energy demand of the importing country To minimize the overall cost of LNG import... increasing demand for LNG trade in future and the need for the quest for good trading partners is crucial for the future energy demand of the importing country 1000 Importers Importers future demand. .. Future sources of primary energy 1.2 Advantages of LNG 10 Global LNG market and future demand 11 LNG transportation system 14 1.3 Factors for optimal sourcing