GE Wins $300 mil Natural-Gas Contract in China

General Electric Co. said it has won a $300 million contract to supply compression equipment for the second phase of a natural-gas pipeline across China.

GE Oil & Gas executives say the West-to-East pipeline is one of the largest ongoing gas pipelines in the world and, when completed in the next six years, will stretch roughly 20,000 kilometers through 13 provinces and bring $600 million in revenue to GE.

The second phase will extend 8,700 kilometers, 2,000 kilometers longer than the Great Wall, and bringing natural gas to 400 million Chinese residents by the end of 2011. The pipeline is being built by PetroChina, the largest oil and gas producer in China, and will use 28 GE turbo compressors.

GE, Fairfield, Conn., also has supplied equipment for other Chinese pipelines, including a Sinopec line that carries natural gas from the Puguang field in Sichuan to Shanghai in China's eastern region.

GE has been making a push to expand industrial sales in emerging markets, particularly China, as a way to weather an economic downturn in other parts of the world and credit risks in its finance businesses.

The company says it recognized about $600 million in revenues in 2008 from roughly 400 infrastructure projects it sold in China surrounding the Olympics last year. It claims it also has sold 300 China Mainline locomotives since 2005 and hundreds more to nearby Kazakhstan. In January, GE said sales of healthcare products in China were increasing.

GE's Oil & Gas division has been active in China for more than 30 years. It borrows technologies GE uses on aircraft engines and gas turbines. GE's builds the turbocompressor equipment in Cincinnati and Florence, Italy, and ships it to China.

The PetroChina pipeline moves natural gas from remote regions in Northwestern China, near the Kazakhstan border, to Eastern parts of China such as Shanghai.

GE reported Oil & Gas orders down 11% and revenues down 4% in the fourth quarter from a year earlier but showed 22% growth in segment profit and 14% growth in oil and gas-related services.

Joseph Mastrangelo, a vice president for equipment at GE's Oil & Gas unit, said orders are continuing in emerging markets such as Brazil, Russia and China. "They are really taking the long term view," he said of China's government and oil and gas sector.

(WSJ)