GE, Schlumberger agree CO2 alliance

MILAN, May 28 (Reuters) - General Electric Co. (GE.N) and oilfield services company Schlumberger Ltd (SLB.N) have agreed to work together on carbon dioxide (CO2) sequestration technology and storage, an executive said on Monday.

The accord is the first global pact on C02 linking an energy technology provider and an oil industry company, Diarmaid Mulholland, regional general manager for GE's energy services in Europe, told Reuters.

"It's more of a long-term alliance. It's going to take a number of years for this really to get up and going," he said. Sequestration calls for capturing CO2, a gas blamed for global warming, and injecting into the earth.

The pact calls for GE to provide integrated gasification combined-cycle (IGCC) systems to capture CO2 from coal-fired plants. Schlumberger will furnish expertise and management for storing CO2 at least a kilometre (0.6 mile) underground.

The alliance needed a regulatory framework to spur use of the technology, said Mulholland, who is based in Milan.

There are two IGCC demonstration plants in Italy. One is at the Saras SpA (SRS.MI) oil refinery on Sardinia and a second at ERG SpA's (ERG.MI) ISAB refinery in Sicily, where asphalt is gasified, he said.

He noted that half of electricity was generated by coal, and India and China were building power plants fired by pulverised coal at a rate of one a week.

The partners will look for business in western Europe and the United States initially. (Reporting by Ian Simpson)