Companies around the globe are lining up to help the Japanese after their unprecedented crisis. Last Friday, I wrote about one of the world’s top steelmakers that will see significant growth.

Today I’m going to focus on the effect that Japan’s woes have had on the oil and gas industry, and a few companies which stand to benefit.

On the oil side, crude giant Saudi Aramco has indicated that it’s prepared to help on the supply side. Aramco CEO Khalid Al-Falih promised that his company will do whatever it can to accommodate Japan’s needs: “Japan will have a priority in the months to come as it deals with this disaster and tries to recover.”

There’s no question Japan’s needs have significantly changed since the earthquake. Still, promising to deliver oil is one thing; getting it there is quite another matter…

The Oil Tanker Industry Steps Up

[ad#Google Adsense]Japan has more than 200 commercial ports, and many are off-limits to foreign ships, primarily due to the nuclear contamination risk. Currently, only 66 ports are fully operational in post-quake Japan, with the rest having sustained damage from the quake and/or the tsunami.

The U.K. P&I Club insures a fleet comprised of vessels from more than 50 nations, and it issued a stern warning to all of its customers: ships and their crewmen who venture into Japan’s nuclear zones will not be insured by their carriers if radiation is later detected.

In spite of that risk, the world’s top five lines in the oil tanker industry have promised to lend a hand, and still travel to the oil offloading facilities in Toyko Bay, which has yet to be affected by radiation.

  • Frontline Ltd. (NYSE: FRO) is one of these tanker lines. Its fleet features a mix of 76 very large crude carriers (VLCCs) and Suexmax tankers.
  • Teekay Corporation (NYSE: TK) is also assisting in the operation. Its fleet is twice the size of Frontline’s, and contains more than 150 similarly sized vessels.

Japan’s headaches are likely to change the country’s energy mix for some time. While this is certainly good news for crude carriers, perhaps the greatest opportunities lie ahead for natural gas producers, and, in particular, LNG carriers.

Russian Gas and LNG to the Rescue

With the six nuclear reactors and the associated power generation at Fukushima offline — likely forever — Japan’s current 15% electrical power gap will have to be made up in other ways, and fast.

Analysts widely agree that Russia is probably the country that stands to benefit the most from Japan’s shortfall in its energy supply.

That makes Gazprom OAO (PINK: OGZPY), the giant Russian gas supplier, very, very happy.

Thierry Bros, a senior gas and LNG analyst at Societe Generale, told Reuters television: “The question marks raised over the future of nuclear energy also make [natural] gas a much surer option… playing to Russia’s advantage. So the first one to benefit from this is Russia, and ultimately, Gazprom.”

Societe Generale has estimated that Japan’s natural gas supply shortfall could amount to 5 billion cubic meters (bcm) in 2011, and an additional 2 bcm in 2012.

On the LNG front, oceangoing LNG averaged about 6% annual growth from 2000-2009, according to analysts at Seoul-based KB Investment and Securities. That number is now expected to rise to 7.7% annually in the wake of Japan’s power woes.

With Australia’s Greater Gorgon natural gas project coming on-line in a few short years, it too could provide a massive boost to the LNG tanker market.

That view is shared by South Korea’s Daewoo Shipbuilding and Marine Engineering. It’s one of the world’s largest shipbuilders, and expects LNG crude carriers to make up a large part of its business in the coming decades.

Daewoo Executive Vice-President Hwang Tae-jin told LNG World News: “The LNG market has been slowly recovering from virtually zero orders from late 2008 to early 2010… and the nuclear crisis in Japan will obviously boost further growth.”

Clearly, Japan’s energy gap is threatening the entire global economy. It’s now estimated that as many as five million automobiles could either be delayed or not produced at all as a result of parts shortages in Japan.

This is due more because of the lack of power to run the plants, than any damage to the plants themselves.

We all hope Japan rises once again. While we wait, we’ve got three great opportunities to play the energy gap left in the wake of Fukushima’s demise.

Good Investing,

— Dave Fessler

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Source:  Investment U