Investors cash in on energy

Sunday Telegraph
Sunday 10/9/2006, Page: 90

INCREASING demand for energy is generating more investment opportunities in both alternative and traditional energy.

Analysts say oil discoveries and viable energy alternatives potentially offer investors good returns as the world's existing sources diminish.

Oil, coal and gas prices have risen in response to increasing demand, particularly in Asia.

Demand for alterative energy, including ethanol, biodiesel and wind power, is also on the rise, prompting a flurry of investment activity.

Engineering firm MPI Group, which plans a public listing soon, announced last week it would build a new biodiesel plant at Deniliquin for Riverina Biofuels.

The 120,000-tonne capacity plant is the latest in a series of new projects, expanding Australia's annual biodiesel output to 400,000 tonnes.

Western Australia's Sterling Biofuels is also expanding, seeking to raise $35 million from a public float to fund a large biodiesel plant in Malaysia.

Sterling Biofuels group managing director C.R.S. Paragash said the company would target Europe with its product, where legislation will require 5.75 per cent of all fuels to contain biofuels by 2010.

"We believe this level of legislated demand, complemented by our existing contracts for both feedstock and output, puts the company in a very strong position to capitalise on our position in this growing industry," Mr Paragash said.

Wind-power generator Wind Hydrogen Ltd is also planning a float.

It will try to raise $5.4 million to expand its portfolio of farms.

WHL managing director Richard Pritchard said as one of the top windfarm companies around the world, WHL was well-placed to take advantage of growing demand for wind-power energy - an alternative to fossil fuels.

"WHL is well-placed to take advantage of the growing world demand for windpower energy and likely consolidation among smaller wind-farm operators," Mr Pritchard said.

The Australian-based company owns development rights for 27 wind farm projects in Britain, the US and Australia, and is in "advanced discussions" to secure the rights for another 10 projects in Britain, the US and New Zealand.

"We are looking at a number of acquisitions and joint ventures to further extend our project pipeline," Mr Pritchard said.

ABN AMRO Morgans senior analyst Roger Leaning said large traditional energy stocks, such as BHP Billiton, Woodside Petroleum and Santos, would benefit from continued strong demand.

But several junior explorers and producers, such as Horizon Oil and ARC Energy, also offered good prospects.