The approval of the Master's thesis by the Institute of Maritime Studies, University of Piraeus does not imply approval of the author's opinion." In the first chapter, there is the presentation of the structure of the LNG market and the presentation of the current global trade flows.
LIST OF ACRONYMS AND ABBREVIATIONS
INTRODUCTION
LNG MARKET AND ITS GLOBAL FLOWS
WHAT IS LNG?
LNG PRODUCTION PROCESS
LNG is held in insulated tanks until it is ready to be loaded onto a specially designed LNG ship or carrier. When the ship reaches its destination, the LNG is transferred to a re-gasification plant, where it is heated, returning to its gaseous state.
AN OVERVIEW OF THE LNG MARKET IN 2013
This turns it into a clear, colorless, non-toxic liquid - liquefied natural gas or LNG - which is much easier to store and transport. The gas is then transported by pipeline to customers, providing energy for homes and industries (Shell).
WORLD’S TOP LNG SUPPLIERS AS PER 2013
WORLD’S TOP IMPORTERS AS PER 2013
NATURAL GAS RESERVES
THE DISTRIBUTION OF LNG
The maritime trade in natural gas is based on the invention of the LNG ships, which enable the linking of the global markets and the production areas with consumption areas. Through the third form of transport, the natural gas is transferred to consumers to satisfy domestic and industrial needs.
CNG Vs LNG
Page | 25 The figure below clearly shows that trading in natural gas by sea is by far the cheapest way to trade this energy cargo. Economies of scale can be achieved through seaborne trade, making LNG the most attractive solution for domestic and industrial use.
THE GLOBAL FLOWS OF NATURAL GAS
Russia, Europe's main supplier of natural gas, will play a critical role in shaping prices as it operates an extensive network of pipelines. The only Central Asian producer that can sell natural gas to the Western market is Azerbaijan.
PIPELINE NETWORK AND NATURAL GAS FLOWS
The West-East gas pipeline is the longest gas transportation pipeline in the world to date. The Transcontinental Gas Pipeline is an energy corridor stretching from Corpus Christi, Texas to New York. The Transcontinental Pipeline is the nation's largest volume interstate natural gas pipeline system, with a capacity of 9.8 billion cubic feet per day and a length of 2,000 miles.
CONCLUSIONS
Yemen, another major LNG exporter, in 2011 exported 90% of its total dry natural gas production, accounting for 309 bcf. A major African LNG exporter is Nigeria, where the Trans-Sahara pipeline is planned to be installed and supply Algeria with natural gas. Governments could accelerate the consolidation of natural gas as a well-established fuel by providing financial incentives for reducing carbon dioxide emissions.
CRUDE OIL MARKET AND ITS GOBAL FLOWS CHARACTERISTICS OF CRUDE OIL
THE CRUDE OIL SUPPLY CHAIN
THE CRUDE OIL MARKET AND ITS GLOBAL FLOWS CHARACTERISTICS OF CRUDE OIL .. Page | 34 Economic, Social, Technological, Environmental and Legal Framework) to the upstream crude oil supply chain follows to identify the external factors that influence all activities involved. During the transfer of crude oil, various transportation methods are used, such as oil tankers and barges for sea transfer, pipelines and railways. Smaller tankers are usually found in more regional markets, while ships carrying crude oil are used for very short distances.
Political
Page | 34 economic, social, technological, environmental and legal framework) to the upstream crude oil supply chain follows to point out the external factors that affect all the operations involved. Large tankers are used to transport oil over long distances because of the economies of scale they provide. As for pipelines, they connect interregional markets, as do railroads by transferring oil from producing regions to market hubs, although rail is a relatively high-cost method of oil transportation.
Technological
Legal
Crude Oil Supply Chain
Economic
Social
Environmental
There are several types of crude oil with varying density (light to heavy) and sulfur content (sweet to sour). Russian Export Blend is a medium sour crude oil with an API gravity of about 32 and a sulfur content of about 1.2%. West Texas Intermediate, the US benchmark crude oil, is a light, sweet crude oil with an API gravity of about 40 and a sulfur content of about 0.3%.
AN OVERVIEW OF THE CRUDE OIL MARKET
WORLD’S TOP CRUDE OIL SUPPLIERS AS PER 2012
WORLD’S TOP OIL CONSUMERS AS PER 2012
Oil Suppliers
Japan has very few oil resources and that is why this country relies on crude oil imports. Russia is also a major exporter of crude oil, while Saudi Arabia's daily consumption is 2.9 mb/d. Source: data from http://www.eia.gov/countries/index.cfm?view=consumption South Korea is the tenth largest consumer of crude oil with a daily consumption of 2.3 mb/d.
CRUDE OIL RESERVES
THE DISTRIBUTION SYSTEM OF CRUDE OIL
Aframax is a vessel with a tonnage of 80,001 to 119,999 and is the largest carrier of crude oil in the AFRA (Average Freight Rate Assessment) system of tankers. Page | 42 Crude oil is mostly transported by pipeline, which is the most economically viable way to transport oil over short to medium distances. The last mode of oil transportation to be examined is the specialized trucks that transport crude oil and its refined products.
THE GLOBAL CRUDE OIL FLOWS
Indonesia, struggling to attract investment to meet domestic energy needs, exported 108.1 mt of crude oil in the same year. The Tazama pipeline is the largest oil pipeline in Africa, transporting crude oil from Tanzania to Zambia. The Caspian Pipeline Consortium (CPC) pipeline opened in 2001 and runs 940 miles from the Tengiz oil field to the Russian Black Sea port of Novorossiysk. The four largest shareholders of the consortium are: Transneft 24%, KMG 19%, Chevron 15% and LukArco 12.5%.
THE PETROLEUM PRODUCTS MARKET AND THEIR GLOBAL FLOWS THE REFINING PROCESS
More specifically, the refinery products are the following: LPG, petroleum, jet fuel, motor fuel, jet fuel, kerosene, distillate fuel oil, diesel fuel oil, fuel oil residues, lubricants, greases and waxes. As the distillation process continues, the atmospheric gas oil fraction is the basis for the production of automotive diesel, heating diesel and industrial diesel. At even higher temperatures, the products of distillation are residues of fuel oil, lubricant, grease and wax.
AN OVERVIEW OF THE REFINED PRODUCTS MARKET
The most important products from crude oil refining are hydrocarbon gases, distillates, residues and refinery by-products. Refineries must have immediate access not only to crude oil markets but also to refined product markets to become important hubs for petroleum product trade. After more than a hundred years of Western dominance, the aforementioned regions are the major refining centers due to the immediate access to capital and crude oil markets.
THE PETROLEUM REFINERY
The fifth largest refinery in the world is the Onsan refinery located in Ulsan in South Korea with a capacity of 669,000 b/d. The sixth largest refinery in the world is the Port Arthur Refinery, located on the Gulf of Mexico in Port Arthur, Texas. The ExxonMobil refinery located in Singapore is the seventh largest in the world, with a capacity of about 592,000 b/d.
THE DISTRIBUTION SYSTEM OF PETROLEUM RODUCTS
"Clean" tankers are used to trade refined products between national refined product markets by integrating them into one global refined petroleum product market. Road tankers are an economically less efficient way to transport liquid petroleum products from distribution terminals to consumers, e.g. Refined products are packed by the manufacturer, in this case the refinery, into containers with a capacity of 55 U.S.
THE GLOBAL FLOWS OF REFINED PRODUCTS THE LPG TRADE FLOWS
The Middle East exported 32.8 million tons of LPG in 2013, of which 31.3 million tons were transferred to the Asia-Pacific region. Total exports from the continents amounted to 9.3 million tons of LPG, of which 6 million tons were exported from Algeria. In terms of LPG imports, the largest importer as of 2013 was the Asia-Pacific region, which accounted for 55% of total LPG imports.
THE CLEAN PETROLEUM PRODUCT TRADE FLOWS
In terms of distillate fuel oil imports, Europe is the largest importer and more specifically France, the Netherlands, Germany, the United Kingdom and Spain, followed by the U.S.A. As far as Africa is concerned, the largest exporter of kerosene is Ivory Coast and with reference to Europe the largest exporter is the Netherlands, with its deep oil terminals. Among the largest producers of motor gasoline were China, Japan, Russia, Canada, India, Germany, the United Kingdom, Italy and Mexico.
THE IMPACT OF LNG, CRUDE OIL AND REFINED PRODUCT FLOWS TO THE GLOBAL TRADE
THE GLOBAL ENERGY DEMAND
THE IMPACT OF LNG TRADE FLOWS
As for South Korea, the second largest importer of LNG for 2012, this country has very limited LNG resources and relies solely on imports to meet its city gas production needs and energy for energy production. With GDP growth expected to rebound from the global financial crisis to 4-5%, Korea's LNG demand is also expected to increase, driven by growth in combined cycle gas turbine (CCGT) power generation and in the use of gas in the city. Economic and population expansion will be the main drivers of LNG demand in China in the coming years.
THE EFFECT OF LNG TRADE FLOWS ON CHARTER RATES
The greater the number of shipyards building LNG carriers, the faster deliveries will be made and the more ships will enter the market. If all LNG vessels are commissioned by 2015 and none are laid down, there will be 484 vessels on the market. An oversupply of vessels may be observed initially, but according to estimates, time charter rates will increase by the end of 2015 to the beginning of 2016 due to the future demand for LNG in the Asia-Pacific region, led mainly by China and Japan.
THE IMPACT OF CRUDE OIL FLOWS
Page | 71 This growing demand will certainly lead to growing demand for crude oil transportation services in the future. This growing demand will certainly lead to a growing demand for crude oil transportation services in the future. In June, Capesize was busy in the spot market at $320,000/day due to the need for iron ore stocks and port congestion.
THE IMPACT OF REFINED PRODUCT FLOWS
It is also projected that Africa's demand for petrol will increase in the medium and long term. European demand for refined petroleum products is expected to decline in the medium and long term. In the medium term, until 2020, North America's demand for refined petroleum products is expected to be stable; while demand is expected to decrease in the long term.
FINAL CONCLUSIONS
In contrast, demand for gasoline in North America and Europe is expected to continue to decline due to environmental regulations and the shift to more environmentally friendly fuels such as diesel. China's demand for motor gasoline is rapidly increasing day by day due to the country's extremely growing vehicle fleet, which is expected to reach 266 million cars by 2025. Emerging Asian markets are expected to be major players in global energy trade.
BIBLIOGRAPHY AND REFERENCES