FT noted “analysts expect that Japanese utilities will scramble for crude, thermal coal and liquefied natural gas (LNG) as replacements [for the shut down of at least 9,700 megawatts of nuclear capacity.”  Meanwhile UK wholesale gas prices for delivery next winter (“an indicator of LNG as Britain is a large importer of super cooled gas”) surged to record highs (since November 2008) of 74.85 pence on Tuesday; SocGen, for one, theorized that half of Japan’s loss in nuclear capacity will be need to be replaced by gas which equates to roughly one extra tanker carrying 145,000 cubic meters of LNG a week.  The French investment bank further projected an aggregate extra demand of 5 billion cubic meters (bcm) this year and 2 bcm above pre-quake levels (around 88 bcm) for the foreseeable future (UBS, using a more worst-case scenario analysis, used a ceiling of 12 bcm).  That said, many analysts don’t foresee a problem given global overcapacity that the International Energy Agency pegged at 200 bcm in 2011.  Qatar and Russia (the world’s biggest LNG and gas exporters, respectively) in particular will supply Japan with extra LNG cargoes, reporters note (Japan, in fact, is a fairly sizeable trading partner for GCC countries given its energy needs; an estimated 20 percent of Qatar’s LNG exports are already shipped there); as to the former, we remain intrigued by Nakilat as a proxy on the industry’s performance going forward and wonder whether its downtrend is due for a respite.  Per Rasmala, an investment bank, the company enjoys longstanding relationships with its upstream partners, the two state-controlled Qatari LNG giants Qatargas and Rasgas, and strong government support (the state owns 17% of Nakilat shares).  Moreover as the world’s largest LNG ship owner, with almost double the capacity of its nearest competitor, Nakilat’s wholly-owned vessels (which contribute nearly 90% of gross revenues) “incorporate the latest in shipping technology with significantly more capacity, lower operating costs and greater safety than conventional ships” according to analysts.  Yet the firm recently posted full-year net profit of QR665mn ($182.69 million) in 2010, up 13% on QR589mn registered in 2009 but short of consensus estimates (as was its 0.75 riyals per share cash dividend).  Additionally analysts expect wholly owned charter revenue to have “limited growth because . . . it is only the portion of the price paid by the charterers that corresponds to Nakilat’s operating expenses that is allowed to rise in accordance with U.S. CPI.  This results in a situation whereby revenue for the wholly owned ships increases by only the same amount as [forecast increases] in operating expenses.”  Operating margins, therefore, may have a fairly sticky ceiling regardless of spot LNG shipping rates.

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