Investment decisions under uncertainty on LNG-powered vessels for environmental compliance

Journal of Shipping and Trade

Table 6 Parameters of variables in Eqs. (6)–(7) and (23)

	Parameters	Estimates	Parameters	Estimates	Parameters	Estimates
IFO	η _o	0.002456	\( {\overline{P}}_o \)	5.5638	σ _o	0.0377
MGO	α	0.894557	β	1.1109	–	–
LNG_{henry hub}	η _ghh	0.01616	\( {\overline{P}}_{ghh} \)	1.5653	σ _ghh	0.04939
LNG_japan	η _gjp	0.01376	\( {\overline{P}}_{gjp} \)	2.1945	σ _gjp	0.05562

η_o is a generalized drift parameter and σ_o is a generalized diffusion parameter. \( {\overline{P}}_o \) is the mean value of oil-based fuel prices. α is the parameter and β the intercept in the cointegrating vector of the cointegration relationships between IFO and MGO. η_ghh is a generalized drift parameter and σ_ghh is a generalized diffusion parameter. \( {\overline{P}}_{ghh} \) denotes the mean value of LNG prices at Henry Hub. η_gjp is a generalized drift parameter and σ_gjp is a generalized diffusion parameter. \( {\overline{P}}_{gjp} \) denotes the mean value of LNG prices at Japan and W_∆t can be simulated with a normal inverse function with \( \varepsilon \sqrt{\Delta t} \) where ε~N(0, 1)