General Electric Wins $600 Million Contract for Russian LNG "Megaproject"

General Electric (NYSE: GE  ) is going to Russia with love for natural gas projects.

On Wednesday, GE announced it won a $600 million contract to supply key turbomachinery equipment needed to run a natural gas "megaproject" in Russian Siberia. The project in question, run by joint stock company Yamal LNG -- an 80-20 joint venture between Russia's OAO Novatek and France's Total (NYSE: TOT  ) -- aims to tap natural gas sites found on Russia's Arctic Yamal Peninsula and convert the results into liquefied natural gas (LNG) that can be easily transported to customers in Asia and the Pacific.

GE's role in all of this will be to supply the equipment needed to build three production lines, each having the capacity to produce about 5.5 million tons of LNG a year, and each consisting of two main refrigeration units that turn natural gas into a liquid form for transportation. The equipment GE is selling to Yamal includes:

  • Six 86-megawatt Frame 7E gas turbines.
  • 18 main refrigerant centrifugal compressors.
  • Six 24-megawatt variable speed drives.
  • Six waste heat recovery units, known as WHRUs.
  • Ancillary equipment.

GE will also provide necessary services to install and support the equipment when it is first commissioned.

Delivery is expected to be made in H2 2015. Yamal aims to have its first production line operational and running at full capacity by 2017, with the second and third lines starting up in 2018 and 2019, respectively.

In a statement, GE pointed out that it is already "a leading technology supplier for Russia's oil and gas sector," having already sold more than 400 gas turbines, 65 steam turbines, 700 compressors, and more than 600 units of other equipment -- including air coolers, condensers, gas separators, and pumps -- to various energy producers in Russia and the surrounding Commonwealth of Independent States.

GE says the project it is serving with this contract, which it calls a "megaproject," will serve as a model for Russia's growing LNG industry.

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  • Report this Comment On October 02, 2013, at 5:21 PM, chris293 wrote:

    Great news, a contract with Russia for only 600 million dollars sounds like the short end of the stick unless there is more to be gained by General Electric? Think of the debt load of GE, but then all I am seeing is from the outside. Question, is GE taking on debt to pay dividends and bonuses? Is GE working on improving its' profit margin? Technology leadership is not a giveaway program formed in Washington D.C. is it? This is food for thought, at least to me while I am looking for answers to how to increase the value for GE shareholders in the long run.

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