A Review of the Literature on LNG Hubs Development, Market Integration, and Price Discovery

46 Pages Posted: 22 Sep 2022

See all articles by Yuri Hupka

Yuri Hupka

Oklahoma City University - Meinders School of Business

Ivilina Popova

Texas State University

Betty J. Simkins

Oklahoma State University - Stillwater - Department of Finance

Thomas K Lee

Energy Information Administration - US DOE

Date Written: September 7, 2022

Abstract

This study provides a literature review of academic research related to liquefied natural gas (LNG) hubs development and market integration. Studies show that Asian markets lack a transparent pricing benchmark which exists in North American and European markets. As a result, the formation of functional LNG market hubs in the Asia Pacific region will take time. Early research evidence suggests a strongly cointegrated relationship between LNG and crude oil. Concurring with more recent findings, we confirm that LNG's statistical relationship to both WTI and Brent ceases after the break dates of August 2008 and October 2015, respectively. Multiple initiatives are underway to facilitate development and price discovery for global LNG markets. However, the conclusions found within prior literature are dependent upon the sophistication of the estimation model and sample ranges employed.

Keywords: Climate Finance, Energy Finance, Liquefied Natural Gas, Market Integration, Natural Gas, Price Discovery

JEL Classification: N70, O1, P48

Suggested Citation

Hupka, Yuri and Popova, Ivilina and Simkins, Betty J. and Lee, Thomas K., A Review of the Literature on LNG Hubs Development, Market Integration, and Price Discovery (September 7, 2022). Available at SSRN: https://ssrn.com/abstract=4212613 or http://dx.doi.org/10.2139/ssrn.4212613

Yuri Hupka (Contact Author)

Oklahoma City University - Meinders School of Business

2501 North Blackwelder
Oklahoma City, OK 73106-1493
United States

Ivilina Popova

Texas State University ( email )

601 University Drive
San Marcos, TX 78666-4616
United States

HOME PAGE: http://https://faculty.txst.edu/profile/520678

Betty J. Simkins

Oklahoma State University - Stillwater - Department of Finance ( email )

336 Business Building
Stillwater, OK 74078-4011
United States
405-744-8625 (Phone)
405-744-5180 (Fax)

HOME PAGE: http://spears.okstate.edu/~simkins

Thomas K. Lee

Energy Information Administration - US DOE ( email )

1000 Independence Avenue, SW
Washington, DC 20585
United States

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