Date:31/12/2004 URL: http://www.thehindubusinessline.com/2004/12/31/stories/2004123101770200.htm

Back L&T looking for overseas buys in offshore oil, gas exploration

Amit Mitra

Mumbai , Dec. 30

AFTER the recent acquisition of 50 per cent stake in Valdel Engineers and Constructors Ltd, L&T is now looking at overseas acquisitions to cement its presence in the engineering business related to offshore oil and gas exploration and production.

As part of its plans to offer complete engineering solutions to oil companies engaged in offshore operations, L&T will be picking up stake in companies that have expertise in installation of offshore platforms and deepwater engineering services.

The company sees major opportunities in the offshore oil exploration and production segment, both in India and abroad, in the coming years.

L&T recently acquired the 50 per cent stake in Valdel at a cost of about Rs 12 crore to form a joint venture, L&T Valdel Engineering Pvt Ltd, to expand its products in detailed engineering for the offshore oil and gas segment.

The new entity will execute the contracts bagged by L&T in this segment, apart from Valdel's own contracts in the area of providing engineering services for installation of offshore well platforms, product platforms and submarine pipelines.

Currently, about 35 per cent of L&T's engineering and construction (E&C) projects division's turnover of Rs 4,500 crore flows from the upstream engineering business, with the company looking at an annual growth of 20 per cent in this segment.

"With the equity acquisition in Valdel, we are now strong in the engineering business related to offshore installations in the normal water depth of below 100 metres," Mr K. Venkataramanan, President (Operations), L&T, told Business Line.

"But to provide a total solutions package in this segment, we have to get into physical installation of the offshore platforms, for which we are now dependent on foreign companies. We also need to get into deepwater engineering, involving installations at water depths of over 650 metres. We plan to get into these areas through similar (Valdel-like) acquisitions."

L&T has already begun the process of scouting for an overseas company with expertise in offshore installations for acquisition.

"We are in talks with some companies and we hope to complete the acquisition process within about a year."

Apart from this, the company is also looking at entities in Houston, US, with expertise in deepwater installations.

"The next phase of India's oil and gas exploration will involve more deep water operations. We have a definitive plan to establish our presence in the engineering space in such projects."

These form part of the plans of the company's E&C division to gear up to exploit the emerging opportunities in the upstream oil and gas projects, diesel and motor spirit quality upgradation projects, LNG/LPG terminals, and petrochemical projects.

"On the international front, the main focus will be on West Asian countries. Initiatives like setting up of the international business development group, finalisation of agent, and posting of country representatives in target countries would enhance the abilities to cash in on the global business opportunities in this segment," said Mr Venkataramanan.