Big Oil Bets on LNG For Emerging Market Growth

Chevron, Anadarko, and Royal Dutch Shell each have huge LNG operations that are ideally suited to supply the emerging markets.

Apr 16, 2014 at 10:50AM

In the energy world, natural gas is getting a lot of attention. This is entirely deserved, of course, since production of natural gas has taken off over the past several years. That's due to an abundant supply in the United States, as well as revolutionary drilling techniques that are making previously untouchable domestic supplies available. Drilling down even further into the natural gas industry, one area gaining traction is liquefied natural gas, or LNG.

Liquefied natural gas holds great promise. It's a clear, non-toxic liquid that is formed when traditional natural gas is cooled to extremely low temperatures. As a liquid, it's much easier to store and ship, and since demand for natural gas is exploding across the globe, LNG represents a huge opportunity. Read on to discover why so many members of Big Oil, including Chevron (NYSE:CVX), Anadarko Petroleum (NYSE:APC), and Royal Dutch Shell (NYSE:RDS-B), are making huge investments in liquefied natural gas.

Tapping into emerging market potential
Chevron is perhaps making the biggest effort to build out its liquefied natural gas operations. It's in the process of completing two separate projects in Australia called Wheatstone and Gorgon. These will help supplement Chevron's emerging market presence, since the facilities will be perfectly suited geographically to supply LNG to Asia.

Wheatstone is a $29 billion project which includes two LNG trains with a combined capacity of 8.9 million tonnes per annum and a domestic gas plant. First shipments are expected in 2016. Meanwhile, the Gorgon development is one of the world's largest LNG projects. Gorgon is a little further along, as management expects first shipments early next year.

Australia is already the third-largest exporter of LNG in the world, according to estimates from the U.S. Energy Information Agency. Most of these exports go to Asia, where rapidly emerging economies such as South Korea, Japan, and China have a seemingly insatiable thirst for energy. As a result, Chevron has big plans for its Australian LNG business.

For its part, Anadarko's plans for LNG aren't quite as ambitious as Chevron's, but are impressive nonetheless. Its own LNG operations are focused primarily in Mozambique, which management believes has the potential to one day rival Australia in terms of export capabilities. In response, Anadarko has drilled more than 20 deep-water wells in its Mozambique operations and has discovered an estimated 45 million-70 trillion cubic feet of recoverable natural gas.

Recently, Anadarko struck long-term supply agreements with buyers in Asia for its Mozambique LNG, which it expects to deliver starting in 2018. Anadarko has drilled more than 20 deep-water wells in its Mozambique operations and has discovered an estimated 45 million-70 trillion cubic feet of recoverable natural gas. Long-term contracts such as these are critical for oil majors, as they provide a certain assurance of demand and provide the clarity needed to initiate major projects.

Similarly, Royal Dutch Shell announced it had reached a five or six year agreement to supply Kuwait with its own LNG. Shell, along with European major BP, have been contracted to supply Kuwait approximately 2.5 million tonnes per year over the course of the agreement, according to Reuters. Shell is no stranger to LNG. It actually provided the technology for the world's first liquefaction plant in 1964, according to the company.

Big Oil betting on LNG
Liquefied natural gas is a particularly interesting area of the natural gas business. It holds great promise, since it's easier to store and transport than traditional natural gas because LNG occupies up to 600 times less space. And, thanks to soaring demand for energy in the emerging markets, oil and gas companies are plowing huge amounts of resources into developing their LNG operations.

Chevron is arguably making the biggest bets with its two huge LNG projects in Australia. However, other oil majors are following suit with long-term supply agreements. Anadarko and Royal Dutch Shell will supply emerging nations with their own LNG. For all companies involved, LNG clearly represents an opportunity to increase production in the years ahead.

Will the LNG exportation movement keep up with these 3 trends?
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have found multi-bagger stocks time and again. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.

Bob Ciura has no position in any stocks mentioned. The Motley Fool recommends Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers