Designing a Rectification Strategy for Managing Disruptions in LNG Supply Chain

Global LNG trade continues to grow owing to increasing energy demand, especially from the Asia-Pacific region. However, the trade of LNG has inherent vulnerabilities that can eventually manifest as disruptions. Typical consequences of disruptions include excess or shortfall of inventory, and plant shutdown, all of which can significantly impact profit. In this paper, we seek to develop a systematic methodology that can be used by an LNG receiving terminal to mitigate the effects of disruptions. We develop an agent-based dynamic model of the LNG supply chain and use it to systematically design operational interventions that can ameliorate the adverse consequences of disruptions. As a case study, we focus on a sudden decrease in demand. The disruption is managed through fire sales of a product. We demonstrate that a key parameter in this rectification strategy, the fire sale price, can be systematically determined using the proposed agent-based model.