Christine St Anne is Morningstar's online editor.

Is liquefied natural gas (LNG) the new oil? That was a question posed at a recent Fidelity Worldwide Investment lunch in Sydney.

According to the firm's portfolio manager Kate Howitt, the natural resource boom is changing into a "growing love affair" with LNG.

Howitt noted that the pipeline for LNG exports remains strong.

According to Howitt, LNG will drive the next leg of the boom. Already, LNG projects are among Australia's 14 largest planned resource projects, including the $40-billion Gorgon development in Western Australia.

"By 2020, Australia will be the largest LNG-exporting nation in the world and will continue to benefit from exports to China," Howitt said.

LNG has been touted as the next big resource export for some time.

Morningstar senior resources analyst Mark Taylor says LNG is moving towards becoming one of the world's primary energy sources.

"The outlook for LNG in the long-term is certainly bullish. LNG as a primary energy source has been growing faster than other energy sources. It is the second primary energy source now, behind coal," Taylor says.

"If you look at the energy mix, oil production has been relatively flat. Coal has been picking up the slack, supporting the peak oil theory that there is not enough oil to be produced."

Perpetual global energy analyst Andrew Blakely, however, is not bullish over the longer term, citing a future of oversupply as the bottlenecks in Qatar ease and as new supply starts to pump out of Tanzania and Mozambique.

He also says US companies could affect supply in the LNG market as they start to produce gas from their shale gas operations.

Morningstar's Taylor sees this move as a detracting point for Australia, at least for the short term.

Taylor says there are early signs the US has started to use technology that can convert that gas into LNG. This LNG will eventually be shipped to Asia - in direct competition with Australian companies.

"This could be a little bit of problem in the short term, but not in the long term because all it will do is force the price of gas up in the US, making it too expensive to export," Taylor says.

For Blakely, over the next five years LNG will move to a position where "its relevance in the Australian economy will massively increase".

As an investor, he wants exposure to the highest-returning investments without the cost pressures.

As such, Blakely likes Oil Search (OSH) because of its LNG projects in Papua New Guinea (PNG).

In particular, he likes the "rich liquids" that come with the company's gas production. The liquid component of the gas produced delivers lucrative returns.

Blakely also says the labour costs in PNG are not high - a factor Australian companies have to grapple with.

While Taylor acknowledges Oil Search's PNG operations produce quality gas, the company is not without its risks.

In PNG, the sovereign risks are high, terrains are rugged, and companies have to deal with a number of cultural issues when it comes to negotiating with the various tribes.

"There are also earthquakes and landslides. Risks are much higher there," Taylor says.

He also believes Oil Search's LNG projects are not as diversified as those of a company like Woodside (WPL), given all its "eggs are in one place, that is, PNG".

A big boy's game

Unlike other natural resources such as coal, the LNG sector is not peppered by small companies run by less-experienced individuals, Taylor says.

"It's definitely a big boy's game," he says.

He says only large companies are positioned to outlay the billions of dollars required to build LNG infrastructure projects.

Santos (STO) manages the Gladstone LNG project in Queensland, while Origin Energy (ORG) has the Australian Pacific LNG project.

Taylor believes Woodside is one company that is well-placed to benefit from growth in the LNG market.

The company has emerged as a first mover in the LNG sector, having spent billions of dollars and many years building up its LNG infrastructure.

"Woodside is well-placed for a number of reasons. The company has been in business for over 20 years in shipping LNG. It has a huge knowledge bank. It also has tried and trusted LNG delivery platforms with a reliable track record of supply," Taylor says.

Blakely acknowledges Woodside is a "great company" but says it cannot escape the high labour costs.

In particular, he believes the company will find it increasingly difficult to start up greenfield projects in a high-cost market.

Taylor says Woodside is well-placed to grow its business incrementally by just building more trains. The company has already got its second major LNG footprint through its Pluto project in Western Australia.

"Once you have got your footprint in place, the expense to add more LNG trains is incremental. Woodside is on a substantial growth path," Taylor says.

Across the globe

At the Fidelity lunch in Sydney, global resource company BG Group was identified as a well-priced stock that is perfectly positioned for the LNG growth story.

Headquartered in the United Kingdom, the company has interests in a number of LNG projects around the world, including the Queensland Curtis LNG project.

Fidelity's global team believes it is an even better stock than Woodside.

The firm says BG is the company best-placed to grow from the demand for LNG because it is globally diversified. It has shale gas assets in the US and exposure to Brazil.

According to Fidelity, BG also has top-tier, long-life assets with strategic value. This means any asset sale could unlock significant value.

Taylor says BG is a much larger company than Woodside with a long history of trading gas.

"It operates in a more interesting space than Woodside because it sits at the coal face, as well as producing gas and selling into Asia. There is a lot of pulling together in that company."