The global market for liquefied natural gas (LNG) has grown substantially in recent years and is poised for further expansion in the coming years.

Natural gas is one of the cleanest burning fossil fuels and is seen as a key “bridge fuel” in the transition to renewable energy as many countries seek to reduce their reliance on coal for power generation.

LNG is natural gas that has been cooled to liquid form, taking up 1/600th the volume of its gaseous state, making it economical to transport by sea on specially designed tankers.

Over the past 20 years, global LNG trade has increased fourfold to over 550 billion cubic meters per year currently.

This growth has been driven by rising demand in Asia Pacific markets like Japan, South Korea, and China seeking alternatives to domestic coal production.

In Europe as well, the push to diversify away from Russian pipeline gas imports has accelerated the build-out of LNG import infrastructure.

Going forward, demand is projected to rise by more than 50% by 2040, as industrial coal-to-gas switching gathers pace in China and South Asian and Southeast Asian countries use more LNG to support their economic growth.

New markets are also emerging in Latin America, the Middle East, and Africa that will require significant investment in import terminals and regasification capacity.

This is where Excelerate Energy (EE) plays a strategic role as the largest independent provider of floating LNG regasification infrastructure.

The company operates long-term regasification terminals and leases out its fleet of Floating Storage and Regasification Units (FSRUs) to customers under long, medium, and short-term contracts.

As of today, Excelerate’s fleet comprises one the largest and most versatile FSRUs in operation, with more than 6.900 billion cubic regasified LNG deliveries.

The company’s integrated services span the entire LNG value chain from natural gas procurement and liquefaction to shipping, storage, regasification, and delivery into pipeline networks.

This allows the company to provide turnkey LNG solutions to emerging markets that lack established import infrastructure but have immediate demand for natural gas.

The flexibility and mobility of FSRUs also give Excelerate a strategic edge over fixed onshore terminals by allowing it to redeploy capacity where it is needed most on relatively short notice.

Through its existing terminals and FSRU operations in North and South America, Europe, Africa, and Asia-Pacific, the company is well-positioned to capitalize on growth in global LNG trade flows.

Excelerate estimates that over 50% of all new LNG volumes between 2024-2030 will require some form of regasification capacity.

With limited competition in the FSRU space, the company has a first-mover advantage in many developing markets and can leverage its expertise, scale, and customer relationships to maximize the utilization of its fleet.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Strategist &
Director of Research
at Valens Research

This analysis of Excelerate Energy (EE)’s credit outlook is the same type of analysis that powers our macro research detailed in the member-exclusive FA Alpha Pulse.