BHEL to Execute $80 Million Gas-Turbine Contract for Petroleum Development of Oman

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Researched by Industrial Info Resources (Sugar Land, Texas)--Indian engineering equipment manufacturer Bharat Heavy Electricals Limited (BOM:500103) (BHEL) (New Delhi, India) has secured an $80 million order to supply two gas turbines with capacities of 126 megawatts (MW) each for the Amal power project developed by Petroleum Development of Oman (PDO) (Muscat, Oman). The scope of the contract includes delivery, erection and commissioning of the gas turbines at the project site. The gas turbines and allied components for the project, located 700 kilometers from Muscat, will be manufactured at BHEL's Hyderabad facility, while the control systems will be procured from the company's electronics division in Bangalore. This is BHEL's first order under the six-year rate contract signed with Oman in January this year. The price agreement, secured by BHEL amidst stiff international competition, has a provision for a three-year extension.

BHEL has extensive experience in overseas projects, having completed the installation of about 150 gas turbine installations globally. The company has executed orders in China, Malaysia, Iraq, Vietnam, Sri Lanka, Italy, Saudi Arabia and Oman. Oman remains a very important and key market for BHEL in this segment, as this will pave the way for the company's long-term plans to gain a market stronghold in the Middle East. The recently awarded contract will take the total number of BHEL's gas-turbine installations in Oman to 15. The company has executed seven power plant orders on an engineering, procurement, construction (EPC) basis in the manufacturing, petroleum and utilities sectors. The turbines supplied by BHEL account for about 50% of the installations owned and operated by PDO. Some of the projects executed by BHEL in Oman include the Rusail power station, the Wadi Al Jizzi power station, and the Hubara and Qarn Alam power plants. BHEL has supplied Frame-6 turbines, manufactured by General Electric (NYSE:GE) (Fairfield, Connecticut) for the Wadi Al Jizzi and Hubara projects and Frame-9 and Frame-6FA units for the Rusail and Qarn Alam power plants, respectively. The company has also executed three compressor package contracts for PDO.

PDO is Oman's primary oil and gas exploration, discovery and production entity. The company, which is 60% government-controlled, accounts for approximately 80% of the crude-oil production and almost the entire supply of natural gas in Oman. Royal Dutch Shell (NYSE:RDS.A) (The Hague, Netherlands) holds 34%; Total SA (NYSE:TOT) (Paris, France) has 4%, while Partex Oil and Gas (Lisbon, Portugal) holds a 2% stake in PDO.

Globally, PDO is actively involved in the process of Enhanced Oil Recovery (EOR). EOR is a technique that augments the amount of oil that can be produced from an oilfield. Using this method, 30-60% more oil can be extracted from an oilfield, which otherwise would have yielded only 20-40% more using conventional primary or secondary techniques. Recently, PDO announced that despite the economic crisis, it was going ahead with its three EOR initiatives. This includes the polymer injection project in Marmul, the miscible gas injection project in Harweel and the steam injection project in Qarn Alam. The projects in Qarn Alam and Harweel, when completed and commissioned, are expected to add 40,000 barrels per day (BBL/d) each to the output from the source. The company's oil production and condensate in 2008 increased to 633,000 BBL/d, in comparison to 607,000 BBL/d in 2007. In 2009, Oman has a planned total oil and condensate output of 805,000 BBL/d. PDO is expected to produce 540,000 to 560,000 BBL/d of oil and 80,000 to 90,000 BBL/d of condensate during this fiscal year.

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