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Optimal Portfolio for LNG Importation in Korea Using a Two-Step Portfolio Model and a Fuzzy Analytic Hierarchy Process

Title
Optimal Portfolio for LNG Importation in Korea Using a Two-Step Portfolio Model and a Fuzzy Analytic Hierarchy Process
Author
김진수
Keywords
liquefied natural gas (LNG) import; portfolio; fuzzy analytic hierarchy process (AHP); mean-variance portfolio; linear programming
Issue Date
2018-11
Publisher
MDPI
Citation
ENERGIES, v. 11, no. 11, Article no. 3049
Abstract
A new energy transition policy in Korea has increased the importance of liquefied natural gas (LNG) in the energy mix. The Asia-Pacific LNG market is inflexible because long-term contracts are dominant. This market characteristic means that the development of policies that ensure a stable supply of LNG is essential. We developed a new model for the optimal LNG import portfolio. The model consists of a two-step portfolio model combining the mean-variance (MV) portfolio and the linear programming (LP) model. In the first step, the MV model was applied to derive the optimal ratio between the long-term and spot contracts. Next, the LP model was used to determine the optimal LNG portfolio. We also applied a fuzzy analytic hierarchy process (AHP) to determine the weights of the cost factors. The application of the fuzzy AHP enabled this research to reflect the tangible and intangible costs more effectively. The optimal LNG portfolio showed that the optimal ratios for the long-term and spot contracts are 89.72% and 10.28% respectively, and the supply ratios in the Middle East and Southeast Asia decreased, while those in the Far East and Oceania significantly increased. The proposed model is able to build an effective LNG import strategy because it reflects the characteristics of LNG markets better than previous models.
URI
https://www.mdpi.com/1996-1073/11/11/3049http://repository.hanyang.ac.kr/handle/20.500.11754/120650
ISSN
1996-1073
DOI
10.3390/en11113049
Appears in Collections:
COLLEGE OF ENGINEERING[S](공과대학) > EARTH RESOURCES AND ENVIRONMENTAL ENGINEERING(자원환경공학과) > Articles
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