Back in October, while the world was busy putting out the fires of a financial crisis that still burns, little-thought-of Turkmenistan made a bombshell of an announcement. It seemed to gather little notice at the time. But it could become much more important as the Russian-Ukraine dynamic gets worse.

Gaffney, Cline and Associates, a British consulting firm, completed an audit of Turkmenistan’s Yoloten-Osman natural gas deposits. Based on GCA’s first results, the fields have a minimum of 4 trillion cubic meters of gas… and as much as 14 trillion cubic meters of gas, a truly staggering sum. The announcement put Yoloten-Osman among the four or five largest natural gas fields in the world.

The country’s biggest field was Dowalatabad, a rich and extraordinary field in its own right. Yoloten-Osman is at least five times as large.

And Turkmenistan has many gas fields not yet explored.

“Without doubt,” the Asia Times weighed in, “Turkmenistan is closing its gap with Russia and Iran, hitherto listed as having the world’s largest and second largest gas reserves… If the GCA results are confirmed, Turkmenistan will have reserves just 20% lower than that of Russia and outstrip Iran by far.”

Turkmenistan has the potential to rival Russia’s clout in natural gas and provide an alternative for Europe. By creating a pipeline from Turkmenistan, through Azerbaijan, Georgia and onto Turkey, the EU could bypass Russia entirely.

You can be sure the Russians won’t like that. Again, from the Asia Times : “[Russia] is no longer the superpower in the world of natural gas, as was widely regarded… Turkmenistan is, unquestionably, also a gas superpower of comparable muscle power to Russia.”

The effort to bypass Russia via a southern route is an old game. Tamerlane, the 14th century conqueror of Central Asia, wanted to do the same thing when he sought to divert trade from the northern Silk Road — controlled by the Golden Horde — to a more southerly course through Bukhara and Samarkand (in present-day Uzbekistan).

Today, the five Islamic republics that were once part of the Soviet Union are back on the center stage of geopolitics. Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan — all have huge oil and gas reserves. The names sound odd today, perhaps. But Americans will get to know their names as well as they know those of Iran, Iraq and Afghanistan.

The race is on to court these countries of the steppe, taiga and desert. In this, China may already have a lead, as it often seems to when it comes to securing energy supplies. Beijing is financing a $2.6 billion pipeline through which natural gas will flow from Central Asia to China. It’s doing its best to cozy up to the fab five.

Russia, too, is already close to them. Russia relies on Turkmen gas to meet its obligations to Europe, for instance. Russia and Turkmenistan have an agreement in place through 2009. But the powers that be in old Ashgabat have been sticking it to Russia. They’re making Russia pay up for its gas supplies. In 2007, Ashgabat raised the price to $100, from $65, per 1,000 cubic meters. Then in 2008, the price went to $130… and then to $150 in June 2008.

As the Asia Times remarked, “Russia will have to rework its bonding with its Central Asian partners.” It’s as if Turkmenistan just drew an ace face up — and now Moscow is starting to sweat it a bit. Turkmenistan now has even more clout to peddle with eager Americans, Europeans and the Chinese — all who want Turkmen gas and the opportunity to build out the infrastructure. Russia will have to play the game like everyone else. Turkmenistan is in the driver’s seat.

Source: Turkmenistan Emerges as Serious Natural Gas Player

But still, the merger of two small AIM–listed resource stocks Victoria Oil & Gas (VOG) and Bramlin (BML)may be more than just a case of two drunks leaning on each other for support. Sharing the same chairman, Kevin Foo, they should at least be pretty familiar with one another and the link goes rather deeper than this.

‘Blue sky’ potential

The major shareholder of Victoria Oil & Gas is the Abu Dhabi-based, Noor Petroleum. Not only does Noor know of Bramlin, it is also introducing into the enlarged group the assets of Falcon Petroleum (PFC). Victoria has signed a twelve month option to acquire the latter, which consist of exploration licenses over 45,000 sq kms of land in Mali and Ethiopia.

This adds some ‘blue sky’ potential to the group. But the more immediate areas of interest are Victoria’s operations in the former Soviet Union and those of Bramlin in Cameroon. The share price of Victoria today is just 6p. But back in 2006 they hit 260p after independent consultant, DeGolyer & MacNaughton, estimated that its West Med project in Siberia contains 1.1bn barrels of prospective recoverable oil equivalent, mostly in the form of gas.

The shares became a great favourite of private investors, but this reserve estimate was subsequently reduced by 9% putting the shares into a tailspin from which they have never recovered.

West Med is located in the Nadym-Pur-Taz region of Western Siberia. Along with the Yamalk region of Russia, this is the heartland of Gazprom and holds approximately 20% of the world’s proven gas reserves. West Med lies next to the super-giant Medvezhye field and about 120km from Urengoy, the largest gas and gas condensate field in the world.

This clearly has massive potential but production is some way off. Victoria has appointed GeoDynamics to conduct a passive seismic survey this winter focused on a new target location, and then drilling of the next exploration well is not expected until 2010 with a further two wells scheduled for 2012.

Jackpot potential put off course – but new deal could produce cash flow

So although Victoria may eventually hit the jackpot here, for the time being it is costing it money and its plans have been blown badly off course by the suspension of production at its Kemerkol field in Kazakhstan. This 65 sq km license area to the east of the Caspian Sea was put into production in March 2006, and in the first half of this year it produced thirty thousand barrels.

However, in a stark illustration of the perils of doing business in the region, Victoria then faced a challenge to its title to Kemerko, a challenge that was upheld by a regional court. Victoria has taken the matter to Kazakhstan’s Supreme Court and hopes for a ruling very soon. In the meantime, it has countered with its own action for breach of warranties against one Olga Elfteriadi. It is claiming $14.75m – the original cost of the license – as well, possibly, as the $23m that it has spent developing the field.

Victoria is confident of winning the day, but the court action has meant that it has had to suspend production at Kemerkol. So one attraction of the deal with Bramlin is that it with it a property that should soon be producing some cash flow. This is Bramlin’s Logbaba project, which is located within the eastern suburbs of Douala, the economic capital of Cameroon.

Not yet on City radars

Four wells were drilled here by Elf back in the 1950s, all encountering gas. An evaluation of only a small section of the area by RPS Energy in July found reserves with a net present value of $169m. Given that industrial users sit almost on top of the field and otherwise have to pay about $23/mcf for imported gas from Equatorial Guinea, they should certainly be prepared to pay the $15 proposed by Bramlin while the task of supplying them should be neither too difficult nor expensive. Bramlin has already signed some letters of intent with customers and plans to start drilling early next year with first deliveries scheduled for late 2009.

With Victoria issuing 163 million new shares to acquire Bramlin, the new group will still be valued at only £26m, just over half the £50m value at which City investors are perceived to take an interest in small companies.

However, Victoria has raised the possibility of acquiring further distressed oil and gas companies, while its share price could of course rise depending on progress in Cameron and the Former Soviet Union. But with many of Victoria’s shareholders suffering from burnt fingers they are unlikely to take too much on trust.

This one has not yet got the credentials that make it a good “bounceback belter” candidate for 2009 – not like the three I’ve just uncovered here.

Since the beginning of this year, the price for this fuel source has increased by almost 50% — though compared to crude oil, it’s positively cost-efficient and currently accounts for around 40% of the electricity generated in the U.S.

In December of 2005, natural gas reached its peak price of $15 per million BTUs (British Thermal Units). This was due to many factors including unusually high temperatures over that summer and the devastating hurricanes that marked that year.

New record highs for natural gas prices?

Prices are currently around $12 per million BTUs. But this year, a cold winter has already had an impact – reducing inventories by 16% compared to last year.

Adding to this, less LNG (liquid natural gas) imports are anticipated and NOAA, the National Oceanic and Atmospheric Administration, is predicting two to five major hurricanes with Categories of 3 or above this season.

This could mean major profits for investors and there are plenty of potential winning natural gas stocks out there.

My favorite is a small San-Diego-based supplier that is having a banner year…

My natural gas stock choice is Royale Energy Inc.

Royale Energy Inc. is experiencing 52-week highs daily but it still has a long way to go.

Operating as an independent oil and natural gas producer in the U.S., the company owns, operates and leases oil and gas interests in California, Texas, Utah, Oklahoma and Louisiana. It also engages in the developmental and exploratory drilling.

Don’t wait too long to make your move…

In March, the company announced that its oil and gas reserves were up 28% and rumor has it that they are expecting to confirm a significant reserve discovery in the next few weeks.

Happily, Royale Energy is no fly-by-night operation — it’s been around since 1986.

With a market cap of about $59 million this company has the potential — and the room — to grow.

In 2006, Fortune magazine named it one of America’s 100 top fastest growing small public companies – looks like they were right on target.

The stock price has already seen a 69% increase this year so you don’t want to wait to jump onboard for maximum gains.

If your looking for a winning natural gas stock, I recommend you buy shares of Royale Energy Inc. (ROYL:NASDAQ) at or under $9. I’m looking for (at least) a 20% increase in price by January 2009.

Source: Rising Oil Prices Good for Natural Gas Stocks

International oil majors now control a mere 6% of oil and 20% of gas reserves, according to the report. The rest is in the hands of national oil companies.

The unpalatable reality is that national producers such as Venezuela or Russia today have less need of international oil majors to help them develop their untapped reserves.

“There’s an air of panic about the world’s energy-guzzling nations,” says Manraaj Singh

“Russian oil production, the world’s second biggest, has peaked. It may never return to current levels.

“Leonid Fedun, 52, vice-president of Lukoil, Russia’s largest independent oil company, told the FT he believed last year’s Russian oil production of about 10 million barrels per day was the highest he would see “in his lifetime”.

“It’s fueling concerns that the world’s biggest oil producers cannot keep up with rampant Asian demand.

Oil prices are going to keep on rising, says Black Bear of the Secret Order of Jurojin, regardless of who is in control of reserves.

“People have been asking me if it’s too late to buy oil. Heck no, not if you think oil is going to $140 or $150 per barrel this year — and I do. But there’s a better bargain in energy, which I recommended that Secret Order of Jurojin subscribers buy this week: natural gas.”

“You can play natural gas with one of the natural gas ETFs, or with an undervalued natural gas producer. Or, you can go for the leverage of futures and futures options on natural gas. Be sure that any trade fits your risk profile, and run ideas past your investment advisor.”