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Mémoire
Bachelor thesis

Liquidity analysis in the LNG market, illustrating the stakes to become a mature commodity market

SONAR|HES-SO

    2020

78 p.

Mémoire de bachelor: Haute école de gestion de Genève, 2020

English With the environmental considerations being at the heart of the decade, and the energy industry being regarded as a negative contributor, more environmentally friendly ways to power generation are being studied. However, fossil energies are still a major contributor to power generation, and greener substitutes face a hard time to be commercialised at big scale. Natural gas, a fossil energy and a substitute to oil that can be used for power generation, is transported through pipeline in its gaseous state. However, the big difference between the two commodities is that natural gas has the molecular properties to meet environmental regulations. About a decade ago, the natural gas market has seen an increasing trend to liquefy natural gas, enabling the commodity to be transported by ships and further away from its supply zone. Although liquefying natural gas has been around the world for a long time, it has evolved to become internationally traded, and trading firms have recently become focus on its tradability, more precisely the liquidity within the market. This research paper aims at analysing the liquidity in the liquefied natural gas (LNG) market, a crucial component of trading, and to illustrate to which point there is a potential that the traded product becomes as mature as the crude oil market is today. The paper explains what liquidity is, what are its measurement and takes the oil market as an example of a mature commodity market. It studies the physical market of LNG, its futures contracts and compares it to oil. The study has shown that the market has reached a comfortable phase in terms of market maturity, that the evolution is following the way the oil market grew, and even faster. However, it has been found that the LNG market has no liquidity. It might have grown faster than oil, but without efforts from existing market players and new entry of market players, the liquidity in the market might never grow and the LNG market will struggle to evolve further, towards becoming a mature commodity market.
Language
  • English
Classification
Economics
Notes
  • Haute école de gestion Genève
  • International Business Management
  • hesso:hegge
License
License undefined
Identifiers
  • RERO DOC 329857
Persistent URL
https://folia.unifr.ch/global/documents/314924
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