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Cheniere Energy in 2016: What's Driving the Bullish Sentiment?

PART:
1 2 3 4 5 6 7 8 9
Part 8
Cheniere Energy in 2016: What's Driving the Bullish Sentiment? PART 8 OF 9

Why Cheniere Energy Benefits from Addition of New Markets

Global LNG demand

Three of the world’s largest LNG (liquefied natural gas) importers are Japan, South Korea, and China. They experienced a decline in LNG demand in 2015. According to the EIA (U.S. Energy Information Administration), total imports of LNG by these three nations “declined by an average of 1.0 billion cubic feet per day ([or] Bcf/d) ([or] 5%) in 2015, as compared to 2014, and averaged 18.5 Bcf/d.” However, this decline was slightly offset by the addition of new markets.

Why Cheniere Energy Benefits from Addition of New Markets

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The United States is expected to become the third largest supplier of LNG by 2020. Cheniere Energy (LNG), Kinder Morgan (KMI), and Energy Transfer Equity (ETE) benefit directly from the addition of new markets.

Natural gas pipeline MLPs such as Energy Transfer Partners (ETP) and Boardwalk Pipeline Partners (BWP), which transport natural gas to liquefaction plants, benefit indirectly.

 Why Cheniere Energy Benefits from Addition of New Markets

According to a Cheniere Energy investor presentation, “New markets, such as Egypt and Jordan, benefitted from installing FSRUs.” The above graph shows the increase in FSRUs (floating storage regasification units) as a percentage of total regasification over the last ten years.

In the final part of our series, let’s see what analysts are recommending for Cheniere Energy.

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