LNG in the spotlight

Wall Street forecasters are keeping a close eye on LNG stocks this week in the wake of reports that Russia will no longer allow its cash-strapped neighbour to purchase natural gas on credit.

On Monday Gazprom said it was switching Ukraine to what a statement described as a “prepayment system” on the heels of a billion-dollar dispute over lapsed bills.

The state-controlled energy giant pledged to “make the greatest possible efforts” to prevent the disruption of supplies to other customers but admitted there may be “shortfalls in transit”.

Since Ukraine, Germany and other consumers of Russian gas boast what some experts have called “ample reserves” few believe the cuts will have an significant impact on the European gas trade in the near-term but admit the future remains uncertain.

A leading equity analyst tells TradeWinds that this uncertainty is fuelling renewed interest in shares of publicly-traded operators of LNG carriers that would be in a position to cash in on increased demand for gas from other sources in the event of a prolonged disruption.

Today, all but one of the LNG stocks tracked by the TradeWinds Shipping Index gained traction in early trading but started to lose momentum in the hours leading up to the close. The list includes GasLog Ltd, Golar LNG Ltd and Teekay LNG Partners, among others.

Gazprom has expressed concerns that Naftogaz Ukraine, the primary target of the $4.5bn legal dispute, will “siphon off” gas that flows through the nation to other countries, which may not come as a surprise since roughly 15% of Europe’s supplies pass through Ukraine.

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