European stock picks highlight LNG
Investment bankers in Europe have tipped Russia’s Gazprom, Norway’s Statoil, France’s Total, and BP and BG Group of the UK as the best medium-term buys for stock market investors in the energy sector, citing their liquefied natural gas activities as a positive sign.
Shares in Gazprom, which is the premium pick of most brokers, have surged to records in the New Year as the Russian natural gas monopoly and future LNG heavy-hitter has forecast a 10 percent rise in annual profits to more than $6 billion.
Russian LNG finance: Profitable? Probably. Risky? Certainly
When Peter the Great traveled through Western Europe in the late 17th century, he relied upon his tremendous personal charm and near 7-foot-tall stature to secure the technical know-how to help him build what would become Russia's first navy.
Some 300 years later, Russia, anxious to join the lucrative global liquefied natural gas trade, hopes to launch a fleet of tankers to deliver Russian LNG to energy-hungry countries in the West and Asia.
It will take more than charisma and compelling economics to initiate this 21st century venture, however. Political risk, opaque legal and business systems, and Russia's short history of contract law and enforcement will distinguish its LNG projects from recent LNG project financings in Qatar, Oman, and Trinidad and Tobago.
LNG trading strategies require diverse approaches
Saeid Mokhatab and David Wood
There is a distinct contrast between two prevailing LNG trading alternatives: 1) the traditional, risk-averse, long-term contract-dependent with a floor price and tough take-or-pay terms; 2) the free market, short-term and long-term trading terms with prices indexed to a volatile gas market benchmark price.
These trading alternatives - result in a quite different balance of risks and rewards among the parties in each case.
Long-term contracts give sellers the assurance that they have defined and secure outlets for substantial volumes of gas at prices usually indexed to market prices for competing fuels.
Mathematical formula finds profit in LNG carrier selection
Sokrates Tolgos
The LNG business is generally governed by risk-sharing consortia as well as by long-term supply and ship charter contracts with durations up to 20 or 30 years.
A reliable and stable LNG supply from the producing to the consuming country is an essential requirement in this business, but equally imperative is the continuous search for increased profitability in the transport chain.
