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January 10, 2014 at 15:52 PM EST
LNG Terminal Stocks: Outlook for 2014 Brighter Than Ever
This year looks to be the best ever for liquefied natural gas (LNG) terminal stocks. LNG terminal stocks refer to the companies building facilities to export LNG from the United States to areas where natural gas prices three or four times higher - like Asia. This massive new LNG industry comes from the United States' abundance of natural gas resources. It has triggered a race among energy companies to turn former import terminals into export facilities. In fact, Money Morning Global Energy Strategist Dr. Kent Moors calls the coming increase in LNG traffic is the "single most decisive change in worldwide energy transfers this decade." The post LNG Terminal Stocks: Outlook for 2014 Brighter Than Ever appeared first on Money Morning - Only the News You Can Profit From .

This year looks to be the best ever for liquefied natural gas (LNG) terminal stocks.

LNG terminal stocks refer to the companies building facilities to export LNG from the United States to areas where natural gas prices three or four times higher - like Asia.

This massive new LNG industry comes from the United States' abundance of natural gas resources. It has triggered a race among energy companies to turn former import terminals into export facilities.

LNG Terminal Stocks

In fact, Money Morning Global Energy Strategist Dr. Kent Moors calls the coming increase in LNG traffic is the "single most decisive change in worldwide energy transfers this decade."

LNG Terminal Stocks in 2014

LNG stock news in 2013 highlighted how this price difference is encouraging companies to partner in exporting deals.

And after a standstill of several years, the Obama administration is moving ahead with LNG project approvals - which means more LNG terminal stocks will soar in 2014.

Prior to 2013, only one company - Cheniere Energy Inc. (NYSEMKT: LNG) - had been granted approval to export LNG to countries without a free trade agreement with the United States. Its well-advanced Sabine Pass, La. facility may be exporting some LNG by the end of 2015.

That is one project out of a total proposed 27 LNG facilities that have applied to the U.S. Department of Energy for a green light.

To date in 2013, another three LNG projects have been given the okay to proceed from the Obama Administration.

These other projects receiving government approval are: Cove Point, Md. - owned by Dominion Resources (NYSE: D); Lake Charles, La. - controlled by BG Group PLC (BRGYY) and Energy Transfer Partners (NYSE: ETP); and Freeport LNG in Freeport, Texas - a partnership between Michael S. Smith and ConocoPhillips (NYSE: COP).

The key to success for these projects and others waiting in the government's queue will be the ability to get customers to sign long-term LNG contracts...

Cheniere has signed contracts for the sale of LNG from Sabine Pass to Britain's BG Group, Spain's Gas Natural Fenosa, South Korea's Kogas, and India's Gail. It recently inked another contract with Indonesia's Pertamina to sell gas from its proposed Corpus Christi LNG facility.

Not surprising then that its stock more than doubled in 2013.

Freeport also has a number of deals signed, including with Britain's BP, South Korea's SK, and Japanese firms Toshiba, Osaka Gas, and Chubu Electric. COP stock climbed 20% in 2013.

Dominion's Cove Point signed LNG deals with Japanese companies Tokyo Gas and Sumitomo. The company's stock soared in 2013.

The Lake Charles project has only BG Group signed up as a customer so far. Nevertheless, the LNG terminal stock of ETP has gained 19% in the past year.

LNG Terminal Approvals Bullish for These Stocks

There are another 20 or so LNG export projects awaiting government approval.

Many of these will never see the light of day as the market simply cannot support every project. The two west coast projects (Jordan Cove Energy and Oregon LNG) and the remaining east coast project (Elba Island) are unlikely to come to fruition.

One project that is likely for approval - it's next in line - is the Cameron LNG facility in Louisiana.

It's majority-owned by Sempra Energy (NYSE: SRE) and has an impressive customer list. Its LNG clients will include Japanese giants Tokyo Electric Power, Mitsui, and Mitsuibishi.

Another client: France's GDF Suez. This company is Europe's largest LNG importer and the world's third-biggest seller of liquefied natural gas.

Most of the LNG export projects that will likely be up and running later this decade - and turn into the best LNG terminal stocks to buy - will be somewhere along the Gulf Coast.

Other candidates likely getting the government nod eventually (11th and 9th on the list) are Golden Pass Products and Gulf LNG.

The former is owned 70% by Qatar Petroleum and 30% by ExxonMobil Corp. (NYSE: XOM). The latter is 50% owned by Kinder Morgan Energy Partners LP (NYSE: KMP) and 46% owned by General Electric Company (NYSE: GE) Financial.

One final Gulf Coast site (fifth on the list) that may succeed is a floating LNG terminal project in Lavaca Bay, Texas, put together by Excelerate Energy. The project is a joint venture between German utility giant RWE AG ADR (RWEOY) and American billionaire George Kaiser.

Here's why politics will play a role in the success of LNG terminal stocks in 2014: The Political Plot Thickens in LNG Exports

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The post LNG Terminal Stocks: Outlook for 2014 Brighter Than Ever appeared first on Money Morning - Only the News You Can Profit From.

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