Research Of LNG Ship Investment Decision Based On The Theory Of Option Games

This article is based on the basic situation that China has made adjustment of energy structure and made more efforts to control environmental pollution. Liquefied natural gas (LNG) due to its price advantage and environmental characteristics, the quantity of domestic demand is increasing. At present, the yield of LNG in China is behind the requirement, growing dependence on foreign. Then using the real options and option game theory to build a model, analyze the strategy of liquefied natural gas transportation enterprise investment to the liquefied natural gas ships. This research work has guiding significance for the liquefied natural gas transportation enterprise considers its investment strategy.This article analyzes the condition of demand and transportation capability of LNG in China firstly. Draw a conclusion that China need to import LNG on account of LNG yield is lower than the increasing demand. So, to meet these needs, transportation enterprise has to invest for the LNG ship and enlarge transport power. However, the valuable LNG ship and uncertainty shipping market made the investment of the LNG ship has huge risk. The enterprise wants to invest the LNG ship need relevant investment decision theory to reduce risk to reasonable level. To resolve the question of investment decision, this article refers to the real options theory that applied more and more widely in economic field, then units the characteristics of LNG ships investment, using the option game theory which combined with game theory to analyze investment of LNG ships. The article first comparing the real option method and traditional NPV theory, analyze the advantage that real option theory is used to LNG ship investment, which can be used for reference when enterprise using real option theory for LNG ships investment. For the condition of two enterprises, the option game model of duopoly that consider operating costs is used to calculate the value functions of two enterprises, separately calculated each enterprise’s investment critical value and optimal investment of time. Finally, by the example of two enterprises invest for LNG ships, using the matlab programming to simulate the enterprise value function curve, obtain the best investment decision-making method for each enterprise, and can be more directly to see the adaptability and superiority by using of real options and option game theory in the field of LNG ship investment.