Feasibility study of liquefied natural gas bunkering

Abstract

This paper studies the emergence of LNG as marine fuel with special focus on the bunker risk management and practices. It discusses the conventional fuel oil bunker risk and relevant hedging instrument, then LNG pricing and trading mechanism. The paper also features a comparison of price volatility between conventional heavy fuel bunker and LNG using GARCH (1,1) Model, as well as a Monte Carlo simulation that yields a preliminary statistical conclusion on the investment decision on LNG-powered ships.