Cooperation amongst GECF Selected Member Countries in LNG Export: A Cooperative Game Theory Approach

Regarding the recent development in LNG production and transportation, LNG exports would exhibit a pivotal role in the future of global gas trade. By analyzing the geographical pattern of the World LNG trade and the structure of its transportation costs, the LNG cost matrix for Forum's exporters to main LNG importers is presented. Using this matrix, the cooperation amongst the Forum's member countries in LNG exports using the cooperative game approach is examined and the possible coalitions as well as the characteristic functions and the surplus amounts resulting from the coalitions are calculated. Stable rational allocation based on the core of the game and the allocation of surplus amounts based on Shapley values are also evaluated for the most general feasible coalition amongst Forum's member countries. The present research work can be considered as the first attempt in analysing the cooperation amongst Forum's members in LNG trade using cooperative game theory based on the actual trade statistics, and hence can be used for policy recommendations.