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) 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) was rising 1.2% to $34.23; Teekay Corporation (TK) was adding 1.4% to $26.68; Cheniere Energy (LNG) was down 0.4% to $7.16; Chevron (CVX) was up 0.6% to $99.30; Exxon was gaining 1% to $74.46; and EOG Resources (EOG) was increasing 1.1% to $88.69. -- Written by Andrea Tse in New York.
>To contact the writer of this article, click here: Andrea Tse.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV