by Chris Ross, Executive Professor, Finance, University of Houston and Justin Varghese, MBA Candidate, Bauer College of Business
Liquefied natural gas (LNG) developers and natural gas producers have depended on third parties to create demand for their product. In recent years, LNG market prices have dropped in response to a surge in supplies and roughly two million tons of LNG contracts are set to expire in the next 10 years. Promising new LNG projects cannot be financed and have stalled.
Developers need to do more to encourage end users – including industrial users and electric generation facilities – to switch from diesel and other liquid fuels to LNG. A new business model could help. We propose a broad collaborative, including natural gas producers, pipeline companies, Engineering, Procurement and Construction (EPC) companies, equipment manufacturers and end users to accelerate market growth.