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."