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There’s little doubt that the aftermath of Japan’s earthquake, and the resulting tsunami, have completely knocked out expectations of how efforts to move to cleaner sources of energy would play out.

Prior to those events, nuclear power was assured of a bigger piece of the energy demand pie, not just in the U.S., but globally. Japan and China usually appear to care not a whit what the West is doing. But in light of the near-disaster (something that’s still not completely off of the table) they have put their ambitious plans for nuclear expansion on “hold” while the government reassesses plans and safety measures.

So, the question at the moment is, how will Japan make up the lost power generation capability of the plants that were destroyed, as plants that are of similar age and design are taken offline?

Oil is certainly a possibility, but according to an article in “The Economic Times”, the Asian low sulfur fuel oil market is fairly tight, so moving in that direction would likely be a costly proposition.

This brings us to LNG [liquid natural gas]. Because of the explosive growth in shale gas, LNG imports have slackened notably in the U.S., but the situation is considerably different in the Asia Pacific countries. The LNG market has been growing steadily for several years, as those economies have rebounded from the global recession, and are joining in the efforts to shift to greener energy sources. LNG has benefited from both factors. In fact, according to a California Energy Commission reported, dated 07/01/10, Japan has 28 LNG regasification terminals.

There are two shipping firms that I think may well benefit from any upswing in LNG shipping. The first is one that I’ve been following, off and on: Teekay LNG Partners (NYSE:TGP). The second, is one that I only became aware of while thinking about which firms might benefit from the events in Japan in the near term: Golar LNG Ltd. (NASDAQ:GLNG).

Teekay LNG Partners (TGP)

Morningstar has no analysts following Teekay, and assigns no star rating to the firm. But according to its analysis, TGP’s fleet consists of three LNG carriers and five crude carriers. Yet the Teekay Corporation website shows 21 LNG carriers on its fleet list. The only explanation that I can come up with to account for the discrepancy is that only three carriers were spun off to TGP when it was formed.

As is the case with TK Corp, and its various entities, the focus tends to be on longer term charters, rather than the spot market. At Friday’s (3-18-11) price of $39.98, (it hit a new 52 week high of $40.50 on Friday, as well), TGP has a yield of 6.03%.

Golar LNG Ltd. (GLNG)

The second firm, Golar LNG, is interesting not only because it has LNG carriers. The company also pioneered a process for retrofitting LNG carriers, turning them into floating storage and regasification plants (FSRU).

Formed in 2001, GLNG is controlled by various trusts under the control of John Fredriksen, of Frontline (NYSE:FRO). Starting with six ships, in 2001, GLNG currently has a fleet of 15 vessels, of which four appear to be conversions to storage/regasification plants (FSRU). At least two of the FSRUs are under long term contract to Petrobras (NYSE:PZE).

GLNG closed at $22.96 on 3-18-11, providing a yield of 4.36%

Sources:

The Economic Times
The California Energy Commission
TK Corp. company website
Golar LNG Ltd. website
Morningstar


Disclosure: I have no positions in any stocks mentioned. I may initiate a long position in TGP and/or GLNG over the next 72 hours.

Source: 2 Liquid Natural Gas Carriers That Could Benefit From Japan's Nuclear Fallout