NEW YORK ( TheStreet) -- Liquefied natural gas prices could jump 71% as Japan and China fight for the resource and India builds out its massive power infrastructure projects.
According to Bloomberg data, record Japanese imports to replace nuclear power after the Fukushima Dai-Ichi March-mega earthquake-induced disaster and a 27% leap in China's first-half purchases may send prices to roughly $20 per million British thermal units this winter, up 71% from last year and the highest since 2008.
"The Asian market for LNG likely will see a material revaluation upward as Japan uses more LNG to offset the loss of Fukushima nuclear power generation capacity," says MKM Partners analyst Curtis Trimble.
With Chinese and Korean demand also growing substantially over the next few years, Trimble expects the global LNG market to remain relatively tight, despite the number of large-scale projects due to come on line in the coming years.That said, even before the tsunami hit Japan, the major exploration and production companies were already making hefty investments in LNG projects in Australia and the Asia-Pacific region, Raymond James analyst Stacey Hudson says. "These companies anticipate hefty growth in Asian gas demand for power generation," she said. Hudson also includes India as one of the countries that will continue to exhibit strong demand for energy as they continue to grow. "There are millions of people in India who do not have access to the power grid. As infrastructure is built out, gas demand for power generation is poised to increase," she said. In the meantime, Exxon Mobil (XOM - Get Report) continues to watch its LNG shipments grow, as the company develops its operations, encouraged by the rising prices. The Bloomberg report indicates that North American exports could see significant growth by 2016 to feed the Asian demand. Furthermore, the exports could help these rapidly-growing Asian economies keep inflation from rising oil and coal prices in check. Trimble of MKM Partners cautions that the same economic conditions that likely will lead to reduced crude oil consumption also will likely put a cap on expectations for ever-increasing LNG demand growth. Liquefied natural gas-exposed stocks were mostly popping. Golar LNG ( GLNG) was popping 6.3% to $35.85; Teekay LNG Partners L.P. (TGP - Get Report) was rising 1.2% to $34.23; Teekay Corporation (TK - Get Report) was adding 1.4% to $26.68; Cheniere Energy (LNG - Get Report) was down 0.4% to $7.16; Chevron (CVX - Get Report) was up 0.6% to $99.30; Exxon was gaining 1% to $74.46; and EOG Resources (EOG - Get Report) was increasing 1.1% to $88.69. -- Written by Andrea Tse in New York.
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