Organization of the Petroleum Exporting Countries (OPEC) on its 50th Anniversary has called the Developed Nations Subsidies as “Unfair” and has referred Alternative Energy as the biggest challenge facing the Rich Oil Exporting Nation Cartel.OPEC is being a huge hypocrite as Fossil Fuels Subsides totalled $550 Billion last year which is almost 12x the Subsidies given to Green Energy.However no mention of this fact was said as these Green Subsidies were “not acceptable” OPEC.The OPEC Chief Abdalla el-Badri wanted a level playing field with this nascent Green Energy.OPEC is a 12 Nation Club formed mostly of Middle Eastern Nations who control 80% of the Global Oil Reserves and 33% of the Production.Saudi Arabia is the non-official leader of this Cartel and has been known for its opposition to Climate Change efforts.The other nations too support Saudi Arabia recently blocking a group of Poor Island Nations from accessing climate change data.These Nations have shockingly asked for Aid as Global Warming Concerns reduce the Fossil Fuel Demand.Most of the Middle East Exporters are filthy rich generating huge amounts of cash from the Export of Fossil Fuels.
The US Congress had got into the act in 2009 through 2 Bills to regulate the Hydraulic Fracking Process and told EPA to study the process.The Stakes are high for the Oil and Gas Companies as Shale Gas represent a Huge Opportunity.North America has been a pioneer in this Technology with Shale Gas Extraction expected to spread rapidly in different parts of the world.The EPA Study and US Regulations will be watched closely by other countries which are formulating their own regulations in this regard.
Shale Gas Extraction has seen doubts being raised against its Environmental Safety Record.This new form of Fossil Fuel Extraction has seen a Gold Rush from Global Oil and Gas Majors looking to tap into this major new Energy Form.In the initial helter and skelter,environmental norms have been bypassed.Recently a NGO blamed regulators and companies of illegally diverting millions of tons of water in Pennsylvania.India’s Biggest Private Company Relaince Industries has invested a huge amount in acquiring Shale Gas Assets in order to assimilate this Technology. The Indian government is writing a new Shale Gas Policy as India is said to have geographical formations with potential Shale Gas Deposits.
Coal India Limited (CIL) would be a safe stock to invest in if it priced in the indicated manner that is a $33 Billion Market Capitalization.This stock won’t be a multi bagger but would offer decent price appreciation with almost no downside risks.At trailing P/E of 15x and 3 year average trailing P/E of 20x,the company is not expensive given its competitive strengths.Its dividend yield would be around 1.5% with growth of around ~10-12%.However if you exclude $8.5 Billion in Cash,then the stock seems cheap at around trailing P/E of 11x.It has a P/B of 6x and P/S of around 3x.With its ASP being at a 65% Discount to the International Price,the Company has a huge moat around its business model and I would recommend it as a Buy.
Reliance Industries is known to have one of the smartest management teams in the country.The Reliance Group led by Mukesh Ambani is well connected with proven record in executing huge projects in the Oil and Gas Arena.However outside of their core competence,the Group has suffered.Its Retail Entry has not been much of a success despite big bucks being poured in the last 3-4 years.It entry into marketing of oil based fuels has also meandered without going anywhere.Now the Reliance Group has announced an entry into the Hotels Sector by acquiring a 14% stake in East India Hotels at a significant premium over the market price from the promoter Group.This ~$220 million investment is totally unrelated to Reliance’s activities and make no strategic sense.
Norway has been hailed as the toughest cutter of Greenhouse Gas Emissions amongst the devloped countries promising to cut Carbon Emissions by 30-40% by 2020 from the 1990 Levels.Compared to this USA has promised a measily 17% cut from 2005 levels and the EU only 20% by 2020 from 1990 levels.Norway’s cost of cutting emissions […]