America is now the world’s largest exporter of liquefied natural gas (LNG).
LNG is natural gas that has been cooled to -260°F and condensed into a liquid. This reduces the volume of natural gas by about 600 times. And allows it to be loaded onto ships and transported around the world.
It’s one of the biggest sources of energy for many countries in Europe and Asia.
In 2023, America exported 88.9 million metric tons of LNG. That’s a 15% increase from the previous year. And over four times more than its LNG exports just five years ago.
And this rapid growth is expected to continue over the next decade.
Here at the Intelligent Income Daily, we’re focused on finding the safest income investments on the market. Natural gas is one of the most widely used fuels in the world. And with the right investments in natural gas infrastructure, you can lock in reliable profits.
Today I want to show you why demand for LNG is set to soar in the coming years. I’ll also give you one way to profit from the sector while collecting reliable high yields.
America’s LNG Export Trend
Germany, Vietnam, and the Philippines started importing LNG for the first time in 2023. And four more countries are expected to begin LNG imports this year.
The reason is simple – natural gas is one of the cheapest and cleanest sources of energy. Even as countries switch to renewable energy, they still need large amounts of traditional fuels.
And natural gas produces about half the carbon emissions compared to coal when it is burned to produce electricity.
China has been on a natural gas shopping spree. Last year, one of the country’s largest private energy companies signed a 20-year deal to buy gas from the U.S. And other state-owned energy companies are in discussions for more natural gas deals.
Over the past few years, Asia’s largest economy has been locking in long-term contracts for LNG shipments. According to the consulting company Rystad Energy, China’s LNG imports could double over the next decade.
India is also looking to power its growing economy with natural gas. It expects demand for the fuel to nearly quadruple by 2030.
European nations are also looking for LNG deals to avoid future energy shortages and reduce the use of coal. After Russia’s invasion of Ukraine in 2022, Europe lost its largest source of natural gas. So they started importing more LNG to make up the difference.
Today, more than 60% of America’s LNG exports go to Europe. And recent events in the Middle East could increase that number.
Europe’s second-largest supply of LNG comes from Qatar and has to travel through the Suez Canal.
But Houthi rebels in Yemen have been attacking ships sailing through the Red Sea with drones and missiles. That makes the transportation much more dangerous.
The only alternative is to go all the way around Africa, adding thousands of miles to the journey.
That means the safe and reliable LNG from America is becoming more attractive.
More than 17 new LNG plants are on track to be built by 2028 in the U.S.
According to the Energy Information Administration, America’s LNG exports are projected to increase by 150% over the next decade as you can see below.
How to Profit From This Growing Trend
You might think that investing in LNG shipping companies would be a good idea. But their earnings depend on commodity prices and shipping rates which can change rapidly.
Instead, the better way to benefit from the growth of LNG is to invest in natural gas pipelines.
Before any gas gets loaded onto a ship, it first has to be transported from the oilfield to a refinery where it is processed and cooled into LNG.
The pipeline companies that transport the gas act like tollbooths and get a reliable profit, no matter what the price of natural gas is. That means they have reliable earnings that grow as demand for gas increases.
One quick way to add pipeline companies to your portfolio is through the Global X MLP & Energy Infrastructure ETF (MLPX). This exchange-traded fund owns a collection of the top pipeline companies.
MLPX yields 5.2% and has produced 97% returns over the past three years. That’s 3 times better than the S&P 500.
Demand for LNG is going to keep increasing. Don’t miss out on this trend.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily