The liquefied natural gas (LNG) market has emerged as the hottest sector in the energy industry right now.
Billions of dollars are being spent on developing LNG facilities all over the world.
Last week, U.S. energy firm Anadarko approved the construction of a $20 billion LNG export terminal in Mozambique. When completed, it will be the single biggest LNG facility in Africa.
Meanwhile, Japan’s Inpex Corp. just announced a new deal to revive a $20 billion deal with Indonesia for the construction of an LNG project. The venture is expected to be the largest investment ever in the Southeast nation by a foreign company.
And this is just the beginning of it…
Here in the United States, the Energy Information Administration (EIA) said LNG export capacity stood at 3.6 billion cubic feet per day (Bcf/d) in 2018.
This year (right now), the EIA expects export capacity to sit around 8.9 Bcf/d. That makes the U.S. now the third-largest LNG exporter in the world behind Australia and Qatar.
And that’s incredible news for American LNG investors because export capacity is increasing at a pivotal time for geopolitics.
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Amid an intricate web of global political tensions, Russia’s control over European energy supplies and U.S. sanctions on Iran have prompted the EU to look for alternative suppliers. And the EU’s search for new energy suppliers has, perhaps more than anything, fertilized the American LNG industry for explosive growth.
Back in May, European Commission (EC) LNG imports from the U.S. increased by 272% since 2018. EC data showed record U.S. LNG imports in March of this year totaling 49 Bcf.
Following that, U.S. Energy Secretary Rick Perry signed two export orders that will more than double America’s LNG exports to 112 Bcf by next year. And the EC said LNG imports could increase from there to 282 Bcf by 2023.
Adding to the development of America’s LNG industry is growing demand from Mexico. Mexico was once one of the world’s largest oil and natural gas producers. But after over 10 years of falling production, Mexico’s crude output doesn’t even rank among the top 10 producing nations.
As a result, the nation’s natural gas production has also dropped. Over the past decade, Mexico’s natural gas output has declined by 28%. So they looked to their northern neighbor for supplies.
The EIA reports natural gas exports increased more than 50% in just three years between August 2015 and 2018.
Consequently, LNG facilities are popping up all over. And investors are just now starting to earn big rewards.
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Until next time,
Luke Burgess
As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bull and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.
