FUNDVIEW-Gas is way forward as oil prices surge-Ecofin
* Nat. gas has even more important role after Japan crisis
* Ecofin more positive on offshore wind turbine makers
* Nuclear power still has a strong future
LONDON, April 11 (Reuters) - With oil prices at two and a half year highs, UK-based investment manager Ecofin expects to benefit from investing in cheaper, more efficient natural gas and in renewable energy over the next two years.
Crude oil prices have risen 75 percent since the second quarter of 2010, but natural gas prices have been largely flat, partly due to prolific U.S. shale gas production, a market many expect to remain over-supplied for years.
"The disparity in price (between gas and oil) is not sustainable and we will not only see gas displacing coal as a source of power generation, but also oil in terms of transportation," chief investment officer Bernard Lambilliotte said, adding gas was six times as efficient as oil.
"We have a big belief in natural gas going forward. It has an even more important role to play after the disaster in Japan," he said.
Ecofin has around $1.9 billion of assets under management in six funds covering the global utility, infrastructure, alternative energy and energy sectors. It intends to launch four new funds this year.
Although the firm invests in countries all over the world, it increasingly favours the United States and China whose regulatory environments are more predictable, competitive and investor friendly.
"Our investment trust has a total gross asset value of about $900 million," said Lambilliotte. "We currently have an exposure to pure natural gas assets of about 10 percent (through a shale play in Texas) and different securities in various countries, bringing it to a total of 20 percent."
He expects a similar size investment in renewable energy in the long run. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
U.S. crude, natgas prices: link.reuters.com/kyx88r
WIND DEVELOPERS BEST PLACED
When investing in renewables, Lambilliotte said it is important to follow large firms "who are taking market share on the manufacturing side," like General Electric (GE.N) and Siemens (SIEGn.DE).
The fund believes wind energy development is the most investable renewables sector.
"In Europe, we are getting more positive on offshore wind, and offshore wind turbine manufacturers, companies like Siemens, REpower RPWGn.DE," said Ecofin's alternative energy analyst Max Slee.
On the solar side, the fund is positive on companies like China's GCL (3800.HK) and Germany's Wacker Chemie (WCHG.DE).
"Pure-play wafer companies will potentially do well," said Slee said. "The module suppliers are the most exposed to price declines, which are possibly imminent."
The fund believes investments in battery material suppliers for electric vehicles and light emitting diode makers could also offer good returns.
The future of nuclear power is still strong, despite several countries scaling back or postponing plans for new capacity after the Japansese tsunami and nuclear crisis.
Manufacturing firms which would benefit from retrofitting old U.S. nuclear plants would be a good investment opportunity.
"The current debate (over nuclear) is a political one," Lambilliotte said.
"We still believe in nuclear but we will not be investing in it this year because it is out of fashion for the time being for psychological reasons," he said, adding that nuclear's costs were "palatable" and it is normally very safe.
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