GE Wins Saudi Contract - Analyst Blog

Saudi Aramco has chosen General Electric Co. (GE) as the supplier of a collection of extensive equipments and services for expansion of the Shaybah gas-oil processing facilities. The contract is valued at about $500 million.

The upgradation of the Shaybah facility will develop the oil extraction process, aiding in the economic development of the country.  Saudi Arabia has one of the fastest growing economies in the world and with continued investment in this region GE is committed to be a part and gain from the country's technology innovation and infrastructure development initiatives. General electric has been working in Saudi Arabia for the last 80 years on various energy projects of the country.

The Shaybah project is the largest project with Saudi Aramco. The project aims to enhance the power capacity of the existing facilities by 729 megawatts with the help of 11 gas turbine-generators, 44 compressors, motors and services to be provided by General Electric. The project also involves construction of a new Sabkha NGL recovery plant for recovery of the precious natural gas liquid (NGL) components, used in petrochemical applications, from gas produced at Shaybah.

General Electric has one of the best infrastructure franchises worldwide with solid organic growth rates, exposure to favorable secular trends and a large installed base supporting a growing annuity-like service business. Infrastructure businesses of the company are helping to build energy, health, transportation and technology infrastructure of the new century.

These businesses provide products and services that help the developing regions to participate in the global economy, while also assisting the developed regions to upgrade with cleaner, more efficient and better infrastructure technologies.

However, the company's global expansion is subject to economic and political risks pertaining to various operating geographies.

Operating in more than 100 countries globally and employing about 300,000 people worldwide, General Electric Co. is a diversified infrastructure, finance and media company. Within the energy sector, the company aims to develop and install technology for the efficient use of natural resources. Major competitors of General Electric are Honeywell International Inc. (HON), Siemens AG (SI) and United Technologies Corp. (UTX).

We currently maintain our Neutral rating on General Electric, with a Zacks #3 Rank (short-term Hold recommendation).

 
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