Impact of Purchase Coalitions on Liquefied Natural Gas Procurement: A Mathematical Programming Model Considering Split Delivery

The demand for natural gas is rising globally due to its lower carbon emissions. Liquefied Natural Gas (LNG) is increasingly an important component of global energy trade. While the conventional LNG trade has been based on long-term contracts (LTCs), importers have sought greater flexibility in procurement, resulting in the development of the LNG spot market. Innovations in maritime transportation, such as the split delivery of LNG cargoes, provide even more operational flexibility for global LNG procurement. Previously, we proposed a mathematical programming model for the optimal procurement of LNG cargo through LTCs and the spot market, considering split deliveries. In this article, we propose a mathematical programming model that considers buying LNG by forming alliances or purchasing coalitions to minimize the total procurement cost incurred by importers. The proposed model is demonstrated using an illustrative example and a case study. Over a set of configurations, the proposed model saved $260.14 and $193.31 million over a planning horizon of 3 months through the formation of single and multiple purchase coalitions, respectively. These results clearly highlight that LNG procurement by forming purchase coalitions leads to significant cost savings, offering substantial benefits to importers.