This latest development in the natural gas industry could put a hold on the monopoly Russia has been holding over the European states. It’s called Liquefied Natural Gas, or LNG, and it’s the real opportunity in natural gas for you commodities fans out there.

LNG is particularly interesting as it relates to all the hubbub that’s resulted from the joint crisis in Ukraine and Russia. From the beginning, I’ve been writing that the Ukraine/Russia dustup would, on the scale of global importance, ultimately amount to nothing more than a regional conflict – one that would certainly consume Europe’s attention, but one that Europe would be reticent to react to for one crucial reason: People hate being cold!

You see, Russia is a behemoth when it comes to commodities – in particular, a supergiant of natural gas. Russian gas fields supply 30% of the gas demand in the European Union, and for some countries Russia accounts for 100% of the local supply. Nearly half of all the Russian gas that flows into Europe flows through Ukraine.

So while Ukrainians battle for the direction of a country and Russians battle to bring home native Russians who got corralled into Ukraine against their will during the Soviet era, for Europeans this is all about staying warm in the brutal blows of winter.

Everyone, you see, has their loyalties … and sometimes those loyalties are entirely personal.

For us, the investor, Europe’s personal loyalties tell us why a particular specialty in natural gas is soon to generate monumental opportunities.

Aside from some verbal wrist slapping, Europe has done conspicuously little to actually penalize Russia. The Continent’s impotence is because European leaders have no leverage – and they know that painful reality all too well. Russian president Vladimir Putin has all the leverage. He has the power to send much of Europe into a deep freeze this winter. If he decides in a fit of vengeance to shut off the natural gas spigot, Europe is screwed. It either freezes, or it pays huge premiums to bring in liquefied natural gas from elsewhere in the world through a limited number of LNG terminals on the Continent.

That’s not an idle concern.

In late June, Russia openly threatened to clamp off natural-gas deliveries to any nation that dared circumvent Moscow’s gas embargo on Ukraine through what’s known as “reverse-flow supply,” or selling Russian gas exported to Europe back into Ukraine.

Aside from the gun battles, political tensions are high because western Ukraine wants into the European Union, and the European Union wants Ukraine. But Russia is irritated by the possibility of losing influence over what was once a Soviet state. And the new Russia is feeling its Wheaties these days.

After a decade of impoverished upheaval in the wake of the Soviet Union’s collapse, Russia has found new vitality and confidence on the world stage. And if it catches soft-hearted European nations secreting natural gas into Ukraine, Putin will absolutely make good on Russia’s threats.

LNG Subverts Russia’s Advantage in Commodities

The whole affair highlights an investment opportunity in natural gas.

To be clear up front, I am not a fan of natural gas as a commodities investment. Too much of the stuff is too readily available in too many places around the world today. The U.S., Poland, Russia, coastal Africa, the Middle East, offshore Australia and just off the Black Sea coast of Romania – natural gas is all over the place. China has huge supplies, though the country’s infrastructure is still immature.

The point is that, outside of temporary spikes on extreme weather events, natural gas prices will be largely range-bound for years. Only traders will make money betting on temporary directional shifts. Long-term investors won’t make a dime … except in one area.

The abundance of natural gas is boon for the liquefied natural gas industry. In its gaseous state, natural gas is not easily transported around the world. It must cross borders via pipelines – which is precisely the problem Europe has: It’s dependent on Russian gas that flows into the Continent through a pipeline network that Russia controls at the source.

LNG eradicates that worry.

Natural gas is chilled to -259°, at which point it becomes a liquid 600 times more dense than gas. That allows companies to efficiently ferry gas around the world in large, special-built tanker ships. LNG, thus, gives Europe the opportunity to get out from under the Russian threats, and it negates any future worries about a lack of natural gas in the winter.

That’s precisely why Lithuania, currently 100% dependent on Russia for its gas needs, is now building a floating LNG terminal offshore that will take deliveries of liquefied gas from around the world and pipe it into Lithuania’s energy grid, entirely bypassing Russia. In the wake of Russia’s recent threats, I am certain we will see a host of European nations pursue a similar strategy.

That’s where the investment opportunity exists: LNG services.

LNG is the Real Future of Natural Gas

I’ve been putting readers of Sovereign Investor into stocks of energy-service companies all over the world, and we’re up as much as 250% in those investments. But the area I am most excited by is LNG services.

The world is rapidly moving toward natural gas for a host of cost and environmental reasons. But many, many countries haven’t a readily available supply of gas within their borders and, thus, are importing gas from Australia, the Middle East and elsewhere. Soon enough they’ll be importing from the U.S., once LNG terminals along the Gulf Coast are operational. (And my Sovereign Investor readers banked a handsome 87% gain in Cheniere Energy, when I first recommended that stock in 2011, before the LNG boom exploded – and some who heeded my advice to grab the stock when it fell amid a temporary European debt dustup gained more than 200%.)

Similar gains are available all over the industry still. We remain in the early days of the LNG revolution. I currently have my readers in a European LNG play that is already benefiting as countries the world over add LNG terminals to their coastline … and it’s perfectly positioned to be a primary beneficiary of what will certainly be Europe’s accelerated interest in adding more LNG to the Continent’s energy network.

Natural gas is the future. But the commodity itself is not the opportunity – it’s the companies that are turning the commodity into a far more valuable product and getting it to the places where it’s most needed.

Until next time, stay Sovereign …