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GE eyes oil & gas technology buys, deals; sees more orders
SINGAPORE (Reuters) - General Electric Co's (GE.N) oil and gas unit aims to boost its order book by 5-10 percent in the next few years by buying technology and securing more deals from companies pursuing deepwater, liquefied natural gas (LNG) and unconventional projects, senior executives said on Wednesday.
The conglomerate is riding on a global resource wave, as explorers try to tap oil and gas reserves in harder-to-reach deepwater fields and as companies pour money into LNG projects in Australia to meet growing demand from energy-hungry Asia.
"Our ambition is to grow anywhere from 5 to 10 percent," Prady Iyyanki, vice president of turbo machinery at GE Oil & Gas, told Reuters on the sidelines of the World Gas Conference. He was referring to growth for the unit's order book.
"We want to get broader and deeper."
Oil and gas orders at the unit grew from $1 billion in 1994 to $15.7 billion in 2011, mainly through acquisitions, he said. The company provides technology and machinery to the oil and gas industry while also offering maintenance services.
"In South America, it's the offshore and if you look at the U.S., it's the unconventionals. In Asia, it's just the GDP growth," Iyyanki said when asked about potential growth areas. "In the Middle East, we see aging units which needs upgrade."
FLOATING LNG, AUSTRALIA
GE also provides technology and turbines for multiple LNG plants in Australia such as Chevron Corp's (CVX.N) Gorgon and Wheatstone as well as Inpex Corp's (1605.T) Ichthys.
GE is in talks to provide equipment for Malaysia's floating LNG project, after securing a contract to supply steam turbine and compressor to Royal Dutch Shell's RDsa.L Prelude project.
Australia is expected to surpass Qatar as the top LNG exporter by the end of the decade, but swelling costs, tightening credit and mounting foreign competition to supply Asian buyers may slow projects.
"We do see a little bit of a slowdown in LNG prospects but it depends on how North American gas exports come into play," Iyyanki said.
Rising costs for oil and gas exploration is demanding better and more efficient technology especially in fast-growing deepwater areas, Iyyanki said.
The global average cost of producing a barrel of oil equivalent per day is expected to rise to $92, nearly double the $48 a barrel in 2011, GE said.
NEW TECHNOLOGY, EMERGING ECONOMIES
The company is also investing in new technology such as compressing natural gas in a box for home use and micro LNG, one-tenth of the size of a usual liquefaction plant, that can be used on ships.
GE is on the lookout for more buys in technology and regions such as emerging economies where it expects strong growth, Iyyanki said.
The Fairfield, Connecticut-based company makes electric turbines, water-purification systems, medical equipment and other infrastructure equipment that developing nations invest in as they industrialize.
"We put the big building blocks in place. There are niche technologies which will be relatively small acquisitions," said John Lammas, vice president engineering at GE Oil & Gas.
(Additional reporting by Jonathan Gordon; Editing by Himani Sarkar)
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