Cheniere Energy and Venture Global, US LNG heavyweights, reap an unexpected windfall

Iran's retaliation could achieve what a decade of US gas diplomacy struggled to move forward.

A drone strike on Ras Laffan, the Qatari complex that produces a fifth of global LNG, was enough to send European prices jumping 39% - and UK prices 45% - in a single session. The North American market - Henry Hub - was calmer, increasing just 3.5%.

The two leading US liquefied natural gas exporters, Cheniere Energy and Venture Global, did not wait for a second Iranian salvo to put numbers on their good fortune. The former rose 5.6% yesterday, the latter 17.5%. The reason for the gap is that Venture sells a third of its volumes at spot prices, compared with less than a tenth for Cheniere.

Analysts are unanimous: no supplier can replace Qatar in the short term. New US capacity exists on paper - Golden Pass will open in a few weeks - but reaching full operating pace will take months.

In Europe, the spectre of 2022 is once again looming. That year, the loss of Russian gas supply shattered price records and brought European industry to its knees, until US and Qatari LNG took over.

After a long ramp-up, Cheniere, which has multiplied its revenue tenfold in ten years, has become structurally highly profitable. Over the past five years, the Texas-based group, with its terminals at Sabine Pass and Corpus Christi, has returned $22bn to shareholders, overwhelmingly through share buybacks.

It commands a market capitalization of $52bn - which some considered unfairly depressed, thereby justifying the sustained share buybacks - and an enterprise value - i.e. market capitalization plus net debt - of $83bn.

Venture Global's situation is somewhat more speculative. The group, which owns terminals in Louisiana, has a market capitalization of $28bn and an enterprise value of $66bn.

That is because Venture has invested a stratospheric $42bn in its infrastructure over the past five years, funded largely by debt, while its cash flows remain deeply in the red.

For the group, which was therefore walking a tightrope, events in the Middle East are a blessing that will last as long as it can buy gas cheaply in America before reselling it in Europe at six times the price.