The Future of Long-term LNG Contracts

Peter Hartley, George Mitchell, Cynthia Mitchell, James A Baker

Research output: Working paperDiscussion paper

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Long-term contracts between exporters and importers of LNG increase the debt capacity of large, long-lived, capital investments by reducing cash flow variability. However, long-term contracts also may limit the ability of the contracting parties to take advantage of profitable ephemeral trading opportunities. After developing a model that illustrates these trade-offs, we argue that increased LNG market liquidity is likely to encourage much greater volume and destination flexibility in contracts and increased reliance on short-term and spot market trades. These changes would, in turn, reinforce the initial increase in market liquidity.
Original languageEnglish
PublisherUWA Business School
Publication statusPublished - 2013

Publication series

NameEconomics Discussion Papers


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