Natural gas is an abundant resource. It's also cleaner and cheaper than other fossil fuels, such as oil and coal.
However, natural gas has a significant disadvantage. Gas must travel from production basins to market centers by pipeline. Since it's not easy to build pipelines across oceans, that puts many international markets out of reach. Companies must turn natural gas into a pressurized liquid and transport it using specialized ships that can carry it to overseas markets.
Energy companies are investing billions of dollars in building liquefaction facilities in hopes of cashing in on the growing international demand for liquefied natural gas (LNG). Here's a look at what's ahead for the sector and the companies in the best position to cash in on the growing global LNG demand.
Law of Supply and Demand
What are the top LNG companies?
Many of the world's largest LNG producers are state-controlled companies. Qatargas, owned by the government of Qatar, is one of the world's largest LNG producers. Qatar was the world's top LNG producer until 2023, when the U.S. overtook the Middle Eastern nation as the LNG leader for the first time in history.
Although state-owned companies are a force in the LNG market, they're not alone. Several publicly traded energy companies rank among the LNG sector's biggest producers. Here are five top LNG stocks for investors to consider:
1. Cheniere Energy
NYSE: LNG
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2. ConocoPhillips
NYSE: COP
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ConocoPhillips (COP -2.28%) is becoming a major player in the global LNG market. The U.S. oil and gas giant owns interests in LNG production facilities in Australia, Qatar, and Equatorial Guinea.
The company is actively expanding its global LNG portfolio. It has a 30% interest in Port Arthur LNG, which should start up in 2027. It's also an investor in two new LNG expansions in Qatar (North Field South and North Field East). Additionally, the company has signed LNG purchase agreements for projects on the U.S. Gulf Coast and the west coast of Mexico. It has also signed regasification agreements in Europe and sales contracts in Asia.
ConocoPhillips' investments in LNG will help fuel considerable free cash flow growth through the end of the decade.
3. ExxonMobil
NYSE: XOM
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NYSE: SHEL
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5. TotalEnergies
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LNG has a bright future
The world's economies will need an increasing supply of cleaner fuel in the decades ahead to help combat climate change. Due to its abundance and lower carbon emissions compared to other fossil fuels when burned, natural gas appears poised to provide a significant portion of that supply. LNG gives it the global access needed to reach key markets.
LNG demand is growing due to the rising global need for the cleaner-burning fuel. That fuels the belief that LNG stocks could do exceptionally well in the coming years as companies benefit from a global need for this type of fuel.
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