Key criteria for successful LNG market development to replace LPG in the Scandinavian market.

Abstract

The main goal of the thesis is to perform the comparative study of LNG and LPG markets and to examine key factors for successful LNG implementation on the Scandinavian market on competition with LPG. It was found that the main competition between LNG and LPG arises in the energy generation for steel, iron and chemical industries. The price of both fuels is found as the main driver for companies to make a decision on switching from LPG to LNG utilization. LNG market in Europe is expected to be oversupplied as a result of huge shale gas developments and the current narrow Asian-European price spread. LPG availability will also increase as a portion of still expanding shale gas projects in the U.S., but it will always be disrupted by various factors because LPG is a fraction whether of gas processing plant or refinery. Refining margin is established as one of the main parameters affecting LPG small scale market. At the increasing refining margin trend the price for LPG is observed to fall down. LPG price is found to be very fluctuating compare to LNG price. Another important parameter such as the advent of new environmental policies will also tighten the competition between both fuels.