Major oil firms eye Asian power industry
Major oil firms eye Asian power industry
SINGAPORE (Reuter): As Western players intensified the competition for Asia's potentially huge power generation business, major oil companies were likely to join the market battle, industry sources said yesterday.
"We are seeing entry of oil companies in Asia," a Singapore- based executive of an independent power producer (IPP) said. "As capacity's accounted for in the West, so these companies would turn to the emerging markets in the East.
"At the moment, we don't feel the oil companies breathing down our necks, but they will be."
The power generation business could be colossal in Asia, which it is reckoned needs additional capacity of 290,000 megawatts which would cost some US$350 billion to install.
The sources said some of the energy companies became involved in the power business by supplying fuel for power plants or through managing co-generation facilities in their oil refinery complexes.
Some want to get involved now to add new and profitable markets for their natural gas and liquid fuels.
Latest entrant into the power industry is major U.S. oil firm Mobil which set up Mobil Power in February.
"Oil companies' participation in Asian power business is a coming trend," Mobil Power's executive vice-president Doug Hatch told Reuters.
"Mobil Power will be happy to be developer, co-developer or take substantial partnership in power projects. It ties up with our ability to supply fuels," he said.
Mobil had budgeted $500 million as direct equity investment in power generation projects which in the next five years are expected to total $2 billion worldwide. More than half of the projects are likely to be in Asia.
"Mobil is in various stages of progress in discussions in 20 to 25 projects worldwide, some of which are in early stages and others more progressive," Hatch said.
Mobil Power is keen to invest in such countries as Taiwan, Korea, Thailand, Indonesia, China and Vietnam.
Hatch said it was developing a 600-megawatt plant in southern Vietnam in partnership with a Vietnamese government company and U.S. engineering firm Raytheon.
U.S. gas-producing giant Enron is already prominent in the Far East, involved in a controversy with India's Maharashtra state government over its $2.8 billion power plant project, the largest foreign investment in India.
Leading U.S. oil major, Exxon Corp has one of the few significant profiles among oil companies in Asian power. It has teamed up with Hong Kong's China Light and Power Co to supply electricity to Hong Kong.
Sources said Amoco Corp, Atlantic Richfield (Arco) and Shell are also interested in Asia's power-generation business, especially in China which needed infrastructure to sustain economic growth.
Another U.S. oil firm Texaco is interested in building power plants in China if it found gas off China and if China wanted to use the gas for power generation.
A consortium led by Texaco last week clinched a deal to build a $300 million, 300-megawatt power plant in Batangas in the Philippines.
The IPP executive said major oil companies had power development expertise from managing power generation at their refineries.
"Oil companies have huge resources to compete in the power business," he said. "They have access to and good knowledge of fuel needed to generate the power. It's easy to run a refinery, and it's easy to run a power plant."