Exploring the driving factors of global LNG trade flows using gravity modelling

Taking into account the attributes of the liquefied natural gas (LNG) trade and the space-time characteristics of trade flows, this paper identifies the multiple dimensional factors that influenced the global LNG trade between 2004 and 2015. Following an analysis of the data via the application of gravity models, the empirical results of this study indicate that these influencing factors possess both general and regional characteristics. In contrast to general trade, the LNG trade is mainly affected by the economic magnitude of the demand side. Regionally, pipeline natural gas has a significant substitute effect on the LNG trade within the global model, though not within the Asian model. Additionally, the LNG trade in Asia is more sensitive to the influence of import prices and research and development investment than in the global model. Our subsample analyses show that the results are robustness across different periods. Finally, this paper discusses pertinent policy implications for the LNG trade, especially as related to Asia.