A Profit Opportunity in LNG’s Move to Asia

Editor’s Note: The following is an excerpt from my December 10, 2018, Energy Inner Circle mailing, The Dark Files. Every week, my Energy Inner Circle readers receive a confidential briefing on some of the behind-the-scenes workings in the energy and defense worlds. With liquefied natural gas (LNG) beginning to take over the energy realm, particularly in the U.S., I have discussed several goings on in the industry in my Dark Files mailings. If you’d like to receive The Dark Files every week – and my exclusive energy profit recommendations – just click here.

Qatari Energy Minister Saad Sherida al-Kaabi announced last week that the Persian Gulf state was leaving OPEC, effective January 1. The public perception is that Doha regards the Saudi-led oil organization as another element in the Riyadh diplomatic offensive against Qatar.

That attack has sought to isolate Qatar in the Persian Gulf because of (largely Saudi) perceived support for terrorism. The United Arab Emirates (UAE), OPEC’s number 2 player, sides with Saudi Arabia in the tiff, as do Egypt and Bahrain. Meanwhile, Qatar is supported by the real target in all of this: Iran.

I have just had two visits in Doha, sandwiched between an eight-day stay in Singapore. At both locations, I was apprised that there is a deeper rift afoot. This likewise involves a significant pivot in policy that may have a more pervasive result than the loss of Qatar’s small monthly contribution (less than 600,000 barrels a day) to aggregate OPEC crude production.

And, aside from a Teheran-inspired attempt to counter renewal of US sanctions, a primary outside catalyst may well be coming from an entirely different geopolitical quarter.

Russia.

In another recent analysis, I wrote the following on the Qatari decision:

“…[M]ost in the geopolitical business have concluded that the real reason for Saudi displeasure is the developing rapport between Qatar and Iran.

I have discussed this development previously, placing some emphasis on Teheran’s widening use of the Doha banking community to bypass Saudi pressure and the renewal of U.S. sanctions.”

Complicating Factors

As an oil producing country, Qatar’s impact in OPEC is minor. But as the driving force in the founding of GECF and the physical location for the organization’s administration, Qatar is a far more important player on the gas side.

In addition, Moscow is actively seeking a prominent role in the developing gas side of global market making.

That has brought it into closer policy negotiations with Qatar, Iran, and others.

There are essentially two main reasons why the Gas Exporting Countries Forum (GECF) has not developed into a policy-making organization like OPEC:

First, OPEC establishes monthly quotas for oil production among its members, and while these quotas usually are not enforceable, they nonetheless do act as an external restraint on domestic decisions. That is something nations like Russia are not going to agree to.

It is for this reason that Russian is an observer at OPEC meetings, not a participant.

Second, until recently, export of natural gas was confined to pipelines, largely involving overland border crossings.

Even in those cases where sea beds are used (for example the Russian-sourced Nord Stream lines to Europe or the Blue Stream lines to Turkey), there are still national demarcations and restrictions on the use of in-country pipe segments.

That has dramatically changed with the advent of widespread trading plans for liquefied natural gas, or LNG.

Transformed into liquid form, LNG is transported via tanker, opening up significant markets serviced by new hubs. Control over pricing at these hubs will transform the broader energy trade.

So, to sum up, Qatar is the world’s leader in LNG, Russia is ramping up its deliveries from the far north and the Pacific coast, while Iran has placed national emphasis on using the vast South Pars natural gas deposits to feed its accelerating LNG trade.

This last point is made more difficult by the re-imposition of U.S. sanctions.

France’s Total pulled out of the largest Iranian LNG project, but Chinese companies have moved in to replace it. Meanwhile, Russia has developed ways for Iran to export finance without American involvement.

In the LNG sector, rapidly expanding deliveries to Asia are prompting importers to set the agenda whether Washington approves or not.

Take Advantage of the U.S.’s LNG Domination

Global demand for LNG is expected to double by 2035, and LNG project investments are expected to total about $366 billion.

Fact is, however, the Asian drive in the LNG market is not something that can be denied.

China in particular is driving Asian LNG demand – it’s also expected to become the largest LNG importer in the world – and this demand is not going to decrease anytime soon.

The sheer amount of the LNG that the Chinese needs means that they’re going to have to get it from one place – the U.S.

U.S. LNG exports increased by over 50% in 2018, and we are now one of the largest exporters of this vital fuel in the world.

More than half of the global export projects in development right now are LNG terminals, and 15 of those are for U.S. facilities.

In other words, the U.S. could win big from the LNG industry moving forward.

Which is why now is a great time to move into the industry.

And I have just the recommendation.

Trading at just under $10 at the moment, this opportunity is at a bargain price. But I don’t expect it to stay that way for long.

For one thing, this company is working on an LNG facility of its own, and it has the backers to pull it off.

And it could gain from the increased U.S. LNG exports coming up in the next few years.

So do you, in fact.

Early investors could make some serious bank out of this remarkable opportunity, and you could be among them. Just click here to learn all about it.

Sincerely,

Kent

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