Liquid Natural Gas or LNG is amongst the least understood and appreciated natural resources, as far as the average stock market is concerned. Japan stands out for pioneering the use of this relatively safe and sound form of energy, while South Korea has lost little time in seizing on the opportunity as well. LNG is not the cheapest fuel around, but increasing numbers of countries and industrial sectors have begun to realize the enormous benefits of diversifying their energy sources to include LNG.
LNG is highly attractive for the stock market because producers sign long term contracts with customers well in advance. Few lines of enterprise are as safe in terms of revenue generation as LNG. Investments in this sector can be expected to reliably produce forecast rates of return, provided that executive teams of even average caliber are involved in the operations. Experts believe that demand for LNG will outstrip supplies well in to the foreseeable future.
Woodside Petroleum has an impressive office in Perth, Western Australia, but its LNG reserves in the Indian Ocean are even more imposing in terms of stock market attractions. The company, which has a stellar record of steady returns for the Australian stock market over the past 5 years, is set to make a quantum leap in its future business, with annual production of multiples of 5 million tones of LNG from fields which lie offshore from its home continent.
Top Japanese customers will not only sign commitments to buy the LNG even before major investments are made to process the material, but will invest in minor equity holdings as well. The demand projections are so strong that the Woodside management is able to play hard ball with domestic interests in Australia, which have begun clamoring for shares in the supplies. It is a dream situation for any stock market investor, so Woodside shares are most durable picks.
While LNG is Woodside’s major attraction for the typical stock market investor, it is reassuring to know that the company is also well entrenched in other significant segments of the fuel sector. Besides, it has global operations well balanced between major centers of demand in the first world, and future sources such as the African continent.
