TECHNICAL PROGRAMME | Energy Infrastructure – Future Pathways
This paper explores the dual concepts of intrinsic and extrinsic value in the context of LNG asset valuation. Intrinsic value refers to the economic worth of an asset based on its risk-adjusted future cash flows, typically assessed through traditional financial models such as discounted cash flow (DCF). It is grounded in fundamental drivers such as capital and operational costs, revenues, and ultimately free cash flow. Extrinsic value, by contrast, captures the strategic flexibility and embedded option value unique to LNG assets – such as the ability to reroute cargoes across global markets, exploit regional price arbitrage opportunities, or optimize temporal spreads through storage and regasification timing.
Given the capital intensity, long-term investment horizons, and regulatory exposure inherent in LNG infrastructure, a holistic view that integrates both intrinsic and extrinsic components of value is of crucial importance for stakeholders across the energy value chain. This includes operators, financiers, investors and sellers in the LNG merger and acquisition landscape. As the energy transition continues, LNG assets are increasingly attracting interest from broad spectrum of players - from traditional oil and gas majors to private equity funds - each assessing value through the lens of their own strategic objectives.
To bridge theory and practice, this paper presents both a conceptual valuation framework and a real-world case study analysis of ADNOC’s recent bid for Santos, highlighting how intrinsic and extrinsic value drivers contribute to the valuation of LNG assets. This approach illustrates how modern LNG valuation must go beyond static financial metrics to capture the full spectrum of economic and strategic potential embedded in LNG assets.
Co-author/s:
Jafar Sadeghzadeh Ahari, Head of Engineering Group of Gas Division,Research Institute of Petroleum Industry (RIPI).
Mehran Sarmad, Project Manager, Research Institute of Petroleum Industry (RIPI).
Conventional LNG pretreatment typically involves four key steps: (1) acid gas removal utilizing generic solvent technologies, (2) dehydration via molecular sieves, (3) mercury removal with non-regenerable adsorbents, and (4) heavy hydrocarbon removal and/or cryogenic recovery of C3+ species (and optionally, even real-time flexible C2+), when advantageous. While these technologies are well-established, they are often deployed as standalone units, which may not be optimized for varying feed compositions or operational constraints. Additionally, the complexity of integrating multiple technologies can lead to increased capital and operating costs, longer commissioning times, and reduced flexibility.
Honeywell UOP has developed end-end hybrid pretreatment solutions that integrate, a). Special Activated solvent technologies for Acid Gas Treatment, b) Adsorbents with higher capacities for Mercury removal and Dehydration, and c) Advanced cryogenic fractionation with industry-leading energy efficiency. These solutions are tailored to specific feed conditions and customer requirements, offering improved efficiency, additional revenue-generating product streams, reduced footprint, and simplified operations. By leveraging advanced process modeling, solvent / adsorbent expertise, and commercial experience, Honeywell UOP delivers scalable solutions that address both technical and economic challenges in LNG pretreatment.
This paper presents a commercial case study that illustrates the application of Honeywell UOP’s hybrid designs:
Customer 1: A greenfield LNG facility designed for high-capacity acid gas, water and total sulfur removal, followed by adsorption-based mercury removal and NGL recovery unit. The integrated design offers a complete hybrid pretreatment package, reducing the need for multiple vendors and simplifying project execution.
Honeywell UOP’s hybrid pretreatment solutions represent a forward-looking approach to LNG processing—combining technical innovation with commercial practicality. They also highlight Honeywell UOP’s ability to provide innovative, integrated solutions while mitigating operational risks such as bed fouling, pressure drop, and regeneration inefficiencies through optimized process design. As global demand for LNG continues to grow, these solutions offer producers a reliable, cost-effective pathway to meet evolving market and regulatory requirements.
Co-author/s:
Daryl Jensen, Senior Engineer Manager- Ortloff, Honeywell UOP.
Ram Kumar Medishetty, Principal Engineer (Process Specialist - NGL), Honeywell UOP.
Abhishek D. Kadam, ead Engineer (Process Specialist- Solvents), Honeywell UOP.
Christopher M. Dyszkiewicz, Principal Engineer (Adsorbent/Membrane Technology Specialist), Honeywell UOP.
Bhargav Sharma, (Senior Director Sales), Honeywell UOP.
Elena Fedorova
Chair
Head of Department
National University of Oil and Gas - Gubkin University - Russia
Russia
Gholamali Rahimi
Vice Chair
Faculty Member and Head of the Energy Economic Department, Institute for International Energy Studies
Ministry of Petroleum
Iran
Tongwen Shan
Vice Chair
General Manager, Science & Information Technology Department
China National Offshore Oil Corporation
China
This paper explores the dual concepts of intrinsic and extrinsic value in the context of LNG asset valuation. Intrinsic value refers to the economic worth of an asset based on its risk-adjusted future cash flows, typically assessed through traditional financial models such as discounted cash flow (DCF). It is grounded in fundamental drivers such as capital and operational costs, revenues, and ultimately free cash flow. Extrinsic value, by contrast, captures the strategic flexibility and embedded option value unique to LNG assets – such as the ability to reroute cargoes across global markets, exploit regional price arbitrage opportunities, or optimize temporal spreads through storage and regasification timing.
Given the capital intensity, long-term investment horizons, and regulatory exposure inherent in LNG infrastructure, a holistic view that integrates both intrinsic and extrinsic components of value is of crucial importance for stakeholders across the energy value chain. This includes operators, financiers, investors and sellers in the LNG merger and acquisition landscape. As the energy transition continues, LNG assets are increasingly attracting interest from broad spectrum of players - from traditional oil and gas majors to private equity funds - each assessing value through the lens of their own strategic objectives.
To bridge theory and practice, this paper presents both a conceptual valuation framework and a real-world case study analysis of ADNOC’s recent bid for Santos, highlighting how intrinsic and extrinsic value drivers contribute to the valuation of LNG assets. This approach illustrates how modern LNG valuation must go beyond static financial metrics to capture the full spectrum of economic and strategic potential embedded in LNG assets.
Anindita Sharda
Speaker
Principal Chemical Engineer
Honeywell UOP
United States of America
Conventional LNG pretreatment typically involves four key steps: (1) acid gas removal utilizing generic solvent technologies, (2) dehydration via molecular sieves, (3) mercury removal with non-regenerable adsorbents, and (4) heavy hydrocarbon removal and/or cryogenic recovery of C3+ species (and optionally, even real-time flexible C2+), when advantageous. While these technologies are well-established, they are often deployed as standalone units, which may not be optimized for varying feed compositions or operational constraints. Additionally, the complexity of integrating multiple technologies can lead to increased capital and operating costs, longer commissioning times, and reduced flexibility.
Honeywell UOP has developed end-end hybrid pretreatment solutions that integrate, a). Special Activated solvent technologies for Acid Gas Treatment, b) Adsorbents with higher capacities for Mercury removal and Dehydration, and c) Advanced cryogenic fractionation with industry-leading energy efficiency. These solutions are tailored to specific feed conditions and customer requirements, offering improved efficiency, additional revenue-generating product streams, reduced footprint, and simplified operations. By leveraging advanced process modeling, solvent / adsorbent expertise, and commercial experience, Honeywell UOP delivers scalable solutions that address both technical and economic challenges in LNG pretreatment.
This paper presents a commercial case study that illustrates the application of Honeywell UOP’s hybrid designs:
Customer 1: A greenfield LNG facility designed for high-capacity acid gas, water and total sulfur removal, followed by adsorption-based mercury removal and NGL recovery unit. The integrated design offers a complete hybrid pretreatment package, reducing the need for multiple vendors and simplifying project execution.
Honeywell UOP’s hybrid pretreatment solutions represent a forward-looking approach to LNG processing—combining technical innovation with commercial practicality. They also highlight Honeywell UOP’s ability to provide innovative, integrated solutions while mitigating operational risks such as bed fouling, pressure drop, and regeneration inefficiencies through optimized process design. As global demand for LNG continues to grow, these solutions offer producers a reliable, cost-effective pathway to meet evolving market and regulatory requirements.
Co-author/s:
Daryl Jensen, Senior Engineer Manager- Ortloff, Honeywell UOP.
Ram Kumar Medishetty, Principal Engineer (Process Specialist - NGL), Honeywell UOP.
Abhishek D. Kadam, ead Engineer (Process Specialist- Solvents), Honeywell UOP.
Christopher M. Dyszkiewicz, Principal Engineer (Adsorbent/Membrane Technology Specialist), Honeywell UOP.
Bhargav Sharma, (Senior Director Sales), Honeywell UOP.
Laleh Shirazi
Speaker
Assistant Professor
Research Institute of Petroleum Industry (RIPI)
Iran
Co-author/s:
Jafar Sadeghzadeh Ahari, Head of Engineering Group of Gas Division,Research Institute of Petroleum Industry (RIPI).
Mehran Sarmad, Project Manager, Research Institute of Petroleum Industry (RIPI).
Li Xiao
Speaker
Director of Research and Development Center
CNOOC Gas & Power Group Co., Ltd.
China





