The world watched with shock and awe as pressured methane bubbled to the surface of the Baltic Sea in the Swedish economic zone on September 26.
Some 80 metres below the surface, the first strike on critical subsea infrastructure in European history had taken place.
It was an aggressive act of sabotage on the Russian-owned Nord Stream gas pipeline that spans around 1,200 kilometres between from Vyborg, Russia and Lubmin in northeastern Germany – the largest gas pipeline connecting Russia and Europe.
Who destroyed the pipeline?
It will be a mystery with many twist and turns to come. No one yet has claimed responsibly. It’s likely no one ever will.
But the consequences are immense.
Just weeks away from the European winter, there is now NO WAY of sending Russian gas to Europe.
For perspective, at the begging of this year, Russian gas imports accounted for 40% of all of Europe’s gas, according to the European Commission itself.
Europe must secure alternative sources of gas
Enter the United States gas market.
After decades of floundering demand and profits, U.S. natural gas producers have found a lucrative, and desperate, new market and the White House is on board.
This exclusive from Reuters this week.
“The White House has ruled out any ban or curbs on natural-gas exports this winter, in a bid to help alleviate energy shortages in Europe, according to two people directly involved in the discussions.
In March, U.S. President Joe Biden committed to deliver 15 billion cubic metres (bcm) more of liquefied natural gas (LNG) to Europe following Russia’s invasion of Ukraine and has already surpassed that goal.”
Most U.S. natural gas stocks have been on a tear since the war in Ukraine broke out.
And Asia Markets pointed out the case for a bull market in natural gas, even long before the war.
But now, will the consequences of subsea warfare, see a generation bull market emerge another sector?
Enter Shipping stocks
How does one transport Natural Gas without a pipeline? With one of these.
That is a Liquified Natural Gas (LNG) tanker owned by Tsakos Energy Navigation Limited (NYSE: TNP).
There are a handful of these types of shipping stocks listed globally, most have rallied impressively since hitting record-lows in 2020.
But, there are many investors who think a major new cycle in shipping stocks is just getting started as demand increases following a decade of underinvestment in big new ships.
One of those is Chris MacIntosh, the Founder of Capitalist Exploits Independent Investment Research and Managing Partner of Glenorchy Capital.
MacIntosh has been recommending stocks such as Tsakos via Capitalist Exploits long before the recent rallies, and he thinks the upside has much further to run (year-to-date Tsakos has rallied over 100%).
“With a dramatic increase in profits from tanker companies, you would be forgiven for thinking that they would be inclined to start building again. But perhaps not. Think about it — virtually all tanker companies have either gone through bankruptcy or have had to issue significant amounts of equity to stave off bankruptcy. They (and their investors) are in no mood to take on more risk,” he says.
He believes the world is “light years away” from an oversupply situations of tankers.
“These companies are reminiscent of the same position shale oilers were in after the shale oil bust some 7 years ago.
“We think the upside is just getting into gear and will persist for some time. We anticipate continued margin expansion in the sector as well as strong dividends to be paid out.”
As MacIntosh pointed out in a recent newsletter, shipping stocks such as Tsakos, despite having seen big year-to-date gains, are nowhere near their previous highs.
| Name | Ticker |
|---|---|
| Ardmore | NYSE: ASC |
| DHT | NYSE: DHT |
| Euronav | NYSE: EURN |
| Frontline | NYSE: FRO |
| International Seaways | NYSE: INSW |
| Pacific Basin Shipping | HKG: 2343 |
| Scorpio Tankers | NYSE: STNG |
| Star Bulk Carriers | NYSE: SBLK |
| Teekay Tankers | NYSE: TNK |
| Tsakos | NYSE: TNP |
