Sunday, June 14, 2009

GE inks $500M in power generation deals in Bahrain

General Electric Co. said Thursday it has signed over $500 million worth of contracts to supply equipment for what will become the biggest power plant in the Persian Gulf kingdom of Bahrain.

The deal reflects the Fairfield, Connecticut-based conglomerate's increased focus on the Middle East, where demand for electrical power is expanding rapidly as its population and infrastructure boom.

Under the terms of the deal, GE will provide equipment and long-term service to the Al Dur Independent Water and Power Project, which is slated to eventually produce 1,250 megawatts of power. That equals 30 percent of the country's existing power output.

«Al Dur is one of the most significant energy projects ever undertaken in Bahrain, and is needed to help meet the country's increasing demand for electricity and water,» said Fahmi Bin Ali Aljowder, minister of works and the minister in charge of the electricity and water authority.

The contracts cover two steam turbines and four gas turbines. GE will maintain the turbines under a 20-year service agreement.

Al Dur is located along Bahrain's southeastern coast. The facility will also produce about 58 million gallons of desalinated water per day.

«The project is an example of the growing trend toward the integration of water and power production at a single site, especially in the Middle East where population and industrial growth rates exceed many other regions of the world,» Joseph Anis, GE Energy's regional head, said in a statement.

The deal comes little more than a week after GE announced the opening of a new office and technology center in the tiny Persian Gulf island nation, which maintains close ties the U.S. and is home to the Navy's Fifth Fleet. That facility is expected to employ about 100 workers.

As it struggles to get its financial house in order at home, GE is increasingly looking to the fast-growing Middle East for new business.

The company inked a similar deal in December worth nearly $3 billion to supply Iraq with 56 gas turbines _ enough to power about 5.4 million average American homes. The first of those turbines was due to be shipped this year, providing much-needed relief from blackouts that continue to plague the country.

Last July, GE's energy division announced a $500 million contract for natural gas-fired power equipment at an aluminum processing plant near Abu Dhabi, the capital of the United Arab Emirates. An additional contract worth $200 million for parts and services was announced in April.

Abu Dhabi has also become an important source of cash for GE, which has seen its financing arm weaken considerably as a result of the global financial crisis.

Troubles at the financing unit have cost GE its top-notch credit rating and forced the company to slash its dividend to shareholders for the first time since 1938.

Oil-rich Abu Dhabi last year entered into a long-term agreement with GE to provide financing in the Middle East and beyond through an $8 billion joint venture. One of the emirate's state-backed investment funds is well on its way to becoming one of the U.S. company's top 10 shareholders.

By its tally, GE has signed more than $8 billion worth of Middle East power-generation projects in the last two years.