Embedding resilience in natural gas monetization exports

Abstract

The economies of several countries depend heavily on hydrocarbon exports, which significantly contribute to their gross national income. As this sector is vulnerable to risks and uncertainties, it is necessary to enhance the resilience of these exports to secure their returns and, hence, the financial security of the national economy. This work studies resilient investment planning to secure the financial returns of the hydrocarbon export sector, considering the production and transportation stages. We develop a novel two-step resilient investment planning approach for the hydrocarbon export sector. In the first step, a portfolio optimization framework is formulated based on Modern Portfolio Theory (MPT) to enhance resilience against price fluctuations associated with hydrocarbon supply chains. In the second step, nine hydrocarbon supply chain resilience metrics are employed to develop a degree of resilience indicator (DORI). The indicator evaluates the performance of financially optimal investment portfolios determined from step one against several risks associated with hydrocarbon exports. The proposed methodology is applied to a case study, considering exporting four chemical commodities to three importers from a natural gas-based economy to determine the optimal investment portfolio. The ability of the proposed DORI to predict portfolio resilience is assessed by running several disruption scenarios. Results highlight the importance of considering resilience metrics, as MPT efficient portfolios with the highest financial returns are not necessarily the most resilient to supply chain disruptions. Results also demonstrate that incorporating a supply chain perspective into the portfolio optimization framework provides additional insights into the hydrocarbon export problem.