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Natural Gas Market Faces Disruption from Russia-China Deal

natural gas market

Russia and China made waves in the global natural gas market today (Wednesday) by finally closing a 30-year deal after nearly a decade of negotiations.

Beginning in 2018, Russia will provide China with 38 billion cubic meters of natural gas annually from its huge fields in Siberia worth about $400 billion over the 30-year life of the contract.

The deal will require the construction of a vast new natural gas infrastructure, with Russia expected to spend $55 billion and China $20 billion.

"This is the biggest contract in the history of the gas sector of the former USSR," declared Russian President Vladimir Putin after the agreement was signed in Shanghai between Gazprom OAO (OTCMKTS ADR: OGZPY) and China National Petroleum Corp (CNPC).

The announcement comes amid recent shifts in the European natural gas market away from Gazprom in favor of more imported LNG (liquefied natural gas) and political tensions between Russia and other European countries over the annexation of Crimea and other threatening moves toward Ukraine.

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Money Morning Global Energy Strategist Dr. Kent Moors said Russia had two objectives in becoming a much bigger player in China's natural gas market.

"They wanted to move Gazprom revenues, essential to Russia's central budget, from a politically insecure European direction to a more amenable Chinese one," Dr. Moors said. "And they wanted to outflank U.S. intentions to use LNG exports as a weapon in lessening Moscow's influence over both the European and Asian markets."

One part of the deal that was not disclosed was how much China will pay, although President Putin did say the natural gas price would be tied to the price of oil, which is how Gazprom's deals with Europe are structured.

The haggling over price was why the negotiations had dragged on for years. In the accompanying video, Dr. Moors discusses why the time was finally right for this deal to happen, which country had the upper hand, and how it will affect the natural gas market in Europe.

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Five Natural Gas Stocks Drinking Profits from the Utica Shale "Sweet Spot"

natural gas stocks

The Utica shale formation hasn't gotten as much attention as some of the others, but that may be about to change as drillers home in on a "sweet spot" in southeastern Ohio that is producing staggering amounts of natural gas.

Wells drilled in the Utica "sweet spot" were the main reason Ohio natural gas production more than doubled from 89.4 billion cubic feet in 2012 to 203 billion cubic feet in 2013.

This stunning development will pay off handsomely for these five natural gas stocks in particular...

The Irresistible Future of Natural Gas Investing

Today, I'm flying back from Houston... again.

It seems I've been spending quite a bit of time in Texas these days - and for good reason. The rollout of our exciting 25-well oil and natural gas investing project is just one.

But another revolves around the tremendous changes in the industry itself, especially when it comes to natural gas.

In fact, I just presented the keynote address before the annual meeting of the Gas Compressor Association at the Moody Gardens Convention Center in Galveston.

It dealt with the inescapable and irresistible future of natural gas.

Investing in Natural Gas in 2014: Five Reasons You Want In This Market

Nat gas

Even now, after several years of hype, investing in natural gas remains one of the best ways to cash in on the biggest U.S. economic boom in decades.

And 2014 figures to be the year when all the catalysts driving the U.S. natural gas industry come together.

Already U.S. natural gas production is one of the most stable and intelligent investments available. And given that midstream providers typically offer higher-than-average yields as well as heavy capital appreciation potential, investing in natural gas stocks offers a rare double-upside scenario.

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The Most Unlikely Beneficiary of the Natural Gas Boom

An array of energy's sub-industries are making a fortune from America's natural gas boom.

Rigs, pipelines, rail, wastewater treatment, trucking, seismic imaging, well-site security... And a lot more opportunity is on the way, like the deal Kent just uncovered.

But perhaps the most unlikely beneficiary of the shale revolution is the coal industry.

After all, "King Coal" has been dethroned in recent years by the swelling supply - and bargain prices - of clean-burning natural gas. Indeed, thermal coal at the Australian port of Newcastle, the Asian benchmark price, is currently near lows not seen since November 2009.

Australian producers have especially been struggling. They've been cutting costs and paring back production because U.S. and large project financiers like the World Bank are pulling away from coal projects.

And overall, ever-increasing environmental regulation is discouraging coal-powered electricity.

But the dynamic is suddenly changing.

That's why these $19 coal shares could jump to $26...

A 795,000 Mile Long Pipeline to Big Energy Profits

At the request of a major player in oil and gas pipelines, I was given a major task.

I had to estimate how much of the U.S gas and oil infrastructure needs to be replaced by 2025.

Then I needed to estimate the extent of additional connectors that would be needed to handle new domestic hydrocarbon developments.

And you thought Super Bowl Sunday was a lot of pressure.

Betting on the Coming Boom in Natural Gas Prices

There is still some way to go before prices hit the $4+ level - still the perceived "breakeven" point for many producers. But low temperatures in the Eastern U.S. are certainly bringing gas back into play. Here are two ways to profit.

Three Natural Gas Stocks Ready to Ride the Price Rebound

Natural gas prices have gone from $1.85 per million British thermal units in April to $3.14 Tuesday - a seven-month high - for a 70% increase in three months.

Natural gas prices declined to a decade-low in 2012 thanks to oversupply. But with unusually mild winter weather followed by scorching summer heat, natural gas has seen a slight resurgence in prices over the last few weeks.

This gives investors hope natural gas has broken out of its rut.

The price change started last month. On June 14, natural gas futures saw a 12% jump, hitting $2.46 per million British thermal units (BTUs) after a surprising bullish storage report, according to CNBC.

At that time, CitiFutures energy analyst Tim Evans told CNBC that the U.S. Energy Information Administration (EIA) natural gas weekly storage report meant "there's not much reduction in coal-to-gas switching as had been anticipated or that production may have declined a bit in the latest period."

Regardless, Evans said, "it's a bullish surprise, and supportive" of prices.

Indeed, prices have continued rising as July has delivered record-breaking hot temperatures.

In its July Short-Term Energy Outlook on July 10, the EIA reported Henry Hub natural gas prices (NG-W-HH) in 2012 will have an average of $2.58 per million BTU; this comes in a little higher than June's $2.55 estimate, although still well below 2011's $4 estimated average.

But this is pushing natural gas toward a slight improvement in 2013 as the EIA has forecast prices increasing $0.64 (25%), to $3.22 per mm BTU.

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