GE to Seek $6 Billion in Australian Contracts Amid Resource Boom
General Electric Co. (GE) is seeking $6 billion in contracts out of Australia by the end of the decade as it taps the country’s growing role as a supplier of liquefied natural gas, iron ore and wind power.
“We see a really significant opportunity set here,” John Anderson, senior regional executive overseeing GE’s energy business in Australia, New Zealand and Papua New Guinea, said in a telephone interview from Melbourne.
Growth areas such as Australia may account for half of GE’s industrial revenue by 2020, up from 37 percent of its $94 billion in industrial sales last year, the company has said. GE’s sales in Australia of equipment for customers ranging from energy producers to mining companies rose 67 percent to almost $3 billion last year, outpacing China and Latin America.
The Fairfield, Connecticut-based company is involved in all the LNG projects being built in Australia and will bid for more contracts as the industry expands, Anderson said in his first interview since accepting the new role in January. With $180 billion of LNG projects advancing, Australia is set to surpass Qatar as the largest exporter of the fuel by the end of the decade, according to Sanford C. Bernstein & Co.
“There’s a significant prize to be had for both maintaining that position and expanding it,” said Anderson, who received degrees from the University of Western Australia and Curtin University and returned to Australia following a 25-year career at BP Plc mostly in the U.K. and the U.S.
BG Group Plc (BG/), ConocoPhillips and Santos Ltd. are going ahead with more than $50 billion of LNG developments on the coast of central Queensland in Australia’s northeast for fuel exports to Asia. Those projects may expand.
GE opened a $100 million service and maintenance facility in Perth last year that will also train workers for the oil, gas and mining industries and may start a similar center on the east coast, he said. Keeping resources projects on schedule and budget amid a contest for labor will be a challenge for the industry, he said.
“There’s enormous pressure to get that right,” according to Anderson.
GE forecasts sales will rise as much as 25 percent this year in fast-growing regions such as Australia, Latin America and Africa. The company supplies natural gas compression systems, power-generation equipment and wind turbines, among other equipment and services.
Australia’s expansion is being driven by China, the nation’s biggest trading partner, which is buying up iron ore, coal and natural gas as millions of people in the world’s most populous nation move to urban centers.
The boom has sparked a “feeding frenzy” for companies such as GE that provide equipment and services to LNG and mining projects, Peter Strachan, a resources analyst at StockAnalysis in Perth, said by phone today.
“There’s going to be a hiatus toward the end of the decade,” he said. “But there is certainly three or four years of strong activity. There are plenty of projects going ahead that could keep the momentum rolling.”
GE’s energy division is expected to double its workforce in Australia and New Zealand to 1,000 this year from about 500 in 2007, Anderson said.
GE has won more than $1 billion of work to supply equipment and services to the Inpex-led Ichthys LNG project, a $150 million contract for Apache Corp. (APA)’s Julimar gas project and an agreement to supply gas turbines for Fortescue Metals Group Ltd. (FMG)’s Solomon mine project. Chevron’s Gorgon LNG venture off northwest Australia awarded GE more than $1.1 billion of contracts, GE said in 2010.
A group including GE also received a contract to supply 22 of the company’s wind turbines for the 55-megawatt Mumbida wind farm in Western Australia, GE said last year. The pact marked the first use of GE wind turbines in Australia.
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