A structural and stochastic optimal model for projections of LNG imports and exports in Asia-Pacific

The Asia-Pacific region, the largest and fastest growing liquefied natural gas (LNG) market in the world, has been undergoing radical changes over the past few years. These changes include considerable additional supplies from North America and Australia, and a recent LNG price slump resulting from an oil-linked pricing mechanism and demand uncertainties. This paper develops an Asia-Pacific Gas Model (APGM), based on a structural, stochastic and optimising framework, providing a valuable tool for the projection of LNG trade in the Asia-Pacific region. With existing social-economic conditions, the model projects that Asia-Pacific LNG imports are expected to increase by 49.1 percent in 2020 and 95.7 percent in 2030, compared to 2013. Total LNG trade value is estimated to increase to US$127.2 billion in 2020 and US$199.0 billion in 2030. Future LNG trade expansion is mainly driven by emerging and large importers (i.e., China and India), and serviced, most importantly, by new supplies from Australia and the USA. The model's projected results are sensitive to changes in expected oil prices, pricing mechanisms, economic growth and energy policies, as well as unexpected geopolitical-economic events.