LNG: the new big and profitable venture

What the world sees as a full-fledged sector now was not even feasible just a few years ago. Liquefied natural gas sector has become global in no time. Today LNG is shipped all over the world and is considered a cheaper source of gas. Moreover, it is the global shipping industry that has benefited the most. Today LNG shipping is being seen as a highly profitable business, unmistakably by the soaring shipping rates. Well it might surprise everyone, but the shipping scenario was not as rosy just a few years ago when around 30 percent of the global LNG shipping capacity was idle. There was a time when United States of America was importing LNG from the rest of the world. However, when the gas production started to rise as the country entered into the famous gas glut, the discovery of gigantic shale gas reserves in United States rendered importing LNG unfeasible as natural gas prices went down massively. The other major consumer of LNG, Asia was also unable to provide any respite to the LNG shipping sector due to the continuous rise in the global gas supply and the fall in gas prices. On the contrary, the situation today is a complete reversal of the past, and the shipping capacity is overbooked for another couple of years. Unfortunate enough, it took a natural calamity to revive the LNG shipping sector. The nuclear catastrophe of Japan eroded the prospects of nuclear energy from the world energy map, and drove up the demand for LNG. Apart from Japan, demand in other Asian countries like China, India and South Korea has also crawled up, offering higher margins to the LNG shippers. However, due to the limited number of shipping firms, vessel manufacturers and long production process with high costs, the shipping industry is poised to face a holdup. Good news for the investors lie in the shipping industry for a change as on the supply side, production of cheap LNG from Qatar and Australia is likely to feed the demand from Asian markets, However, with increasing supply from East Africa, Canada and USA, a fear about a slide in prices is inevitable for the producing countries. Nonetheless, up until a point where new vessels and tankers join the demanding network, at least investors have huge profit opportunities in the LNG shipping sector.