AroniSmartInvest In Action: Russia, Ukraine, Golar, Gas, Natural Gas, Liquefied Natural Gas

First, why is the crisis in Ukraine relevant?

Russia, being the world’s second-largest producer of natural gas, after,… you guessed it.., the United States of America, is expected to retaliate against Europe, in response to the economical sanctions imposed by the West on key Russian leaders and businesses. European countries, getting more than 30% of their gas from Russia, and most through Ukraine,  would feel the punch if Russia retaliates.

And how about Liquefied Natural Gas?

In order to export gas, natural gas that is,  exporters must convert the natural gas into liquefied natural gas or LNG  in order to reduce volume, for ease of storage and transportation. Some companies have perfected the gas liquefaction  process and  acquired specialized transportation infrastructures, tankers, and vessels.

Who is to mostly benefit from the crisis?

First the USA: as Europe feels squeezed by Russia’s retaliation, it is expected to turn to the United States for LNG supply.

Second, LNG companies: Europe, by turning to the Unites States for LNG, the imports from the US are expected to increase. This would in turn, benefit the US and the West LNG industry, especially liquefaction, storage and transportation of natural gas.

Who showed up in AroniSmartInvest™ in Action?

Golar LNG Ltd(Nasdaq: GLNG): Based in Bermuda, and founded in 1946,  Golar LNG Limited, is one of the largest independent midstream liquefied natural gas (LNG) companies. It owns and operates LNG carriers and  engages in the transportation, regasification and liquefaction, and trading of LNG. Since the beginning of the crisis,  Golar LNG stock has increased by 27%, going from $33.76 on February 27, 2014 to 43.04  on  March 22, 2014.

GasLog Ltd (NYSE: GLOG): Based in Monaco, Europe, and a subsidiary of Blenheim Holdings Ltd, GasLog Ltd  provides maritime services for the storage, and transportation of LNG and LNG vessel management services. GasLog Ltd  can claim a large,  modern, efficient, and wholly owned fleet of LNG carriers.  This has shown in its stock, since the beginning of the year, and especially the beginning of the Ukraine crisis.

Since the beginning of the crisis, GasLog stock has increased by 16%, going from $21.06 on February 27, 2014 to 24.30  on  March 22, 2014.

However, the uncertainty remains in the market due to a planned oversupply of more modern, efficient and large vessels and tankers that is expected to hit the market from late 2014 to  2016. That may explain why certain stocks remain fragile, such as that of  Cheniere Energy Partners (NASDAQ: CQP).  The increased capacity created by the large deliveries of  the planned modern, more efficient  gas tankers may present a challenge to the bottom line of some LNG operators.

Disclaimer: AroniSoft LLC currently owns shares of one of the two stocks (GLNG & GLOG) analyzed.

©2014 AroniSoft LLC.