GE Power Systems: In the frame

02 August 2002

Gas turbines have come a long way since Franz Stolze designed the world's first prototype axial compressor unit in 1872. Much of this development has been down to the endeavours of one company, General Electric (GE) of the US, which has made its heavy-duty turbines a power industry standard. The company sold its first turbine in the Middle East in the 1950s to Bahrain's Sitra refinery, then owned by Caltex of the US. It rests outside the refinery as a monument to the company's achievements in the region.

Last year GE Power Systems, which has grown to cover the entire supply chain for power services, earned revenues of more than $20,000 million, making it a leader in power generation technology, energy services and management systems. The Middle East and the Indian subcontinent accounted for $1,800 million of these earnings making it one of the most important regions for business. Double-digit growth year-on-year has become the norm for a company that has an asset base to rival that of some small countries.

This appetite for growth has not changed since the departure in February of long-standing chief executive Jack Welch who masterminded the company's ascent in the 1990s. Welch's replacement, Jeff Immelt, has quickly established a reputation as an equally forceful boss, albeit in tougher conditions in the US market. 'Jack was a legend, and Jeff Immelt has what it takes to become one,' says Nabil Habayeb, regional executive general manager for Africa, India and the Middle East at GE Power Systems. 'He has come from a sales background and he understands what it takes to sell,'

A strong balance sheet has not only enabled GE to develop new technology: it has also financed a series of key acquisitions that have given the company access to the entire power supply chain. This was demonstrated in 1994 when it took a majority stake in Italy's Nuovo Pignone. Six years later, GE acquired the turbines business of UK-based Kvaerner Energy. Others brought under GE's wing include Conmec of the US and the Newcastle-based PII Group.

The strategy paid off last year when demand for large-scale gas turbines in the US led to a refocus of manufacturing capabilities for the international market. At the same time, demand for gas turbines in the Middle East region has been stimulated by moves to privatise power utilities and the shift from oil-burning plants to gas turbines and combined cycle units.

'We anticipated demand forecasts increasing and planned our growth accordingly,' says Habayeb. 'Several acquisitions covered this. They enabled us to focus on providing equipment to our key customers in the region well ahead of market demand.'

Much of GE's success in the Middle East has been down to its Frame-5 and Frame-6 units, which have taken on the mantle of the region's workhorses. 'We have been a leader in bringing the latest technology to the market for the last 60 years,' says Habayeb. 'Our Frame-5 turbines, both single and double shaft, have enjoyed great successes in the Middle East and continue to do so. But we have since developed bigger and more sophisticated turbines. No one in the industry spends more than GE on research and development.'

Frame-5 turbines, with an output in the range of 28/32 MW, have given way to the much bigger 85/185-MW Frame-7 and 126/256-MW Frame-9 units that are common in the region's new power and desalination plants. In Saudi Arabia, where GE sold its first Frame-3 turbine to Saudi Aramco in 1956, the company mainly sells Frame-7 Cycle-60 units. 'The Frame-7 turbine now forms the backbone for power in the kingdom,' says Habayeb.

In the rest of the Gulf, GE has started to score significant sales with its larger Frame-9 turbines geared to 3,000 revolutions per minute. Its latest contract for Frame-9 turbines came in May when Italy's Enelpower ordered four MS9001E units for the 820-MW Ras Laffan independent water and power plant (IWPP) in Qatar. The company is now developing an H series Frame-9 which can generate up to 480 MW in combined cycle. 'Since this product is not commercial yet, the company cannot speculate on our regional demand,' says Habayeb.

New opportunities

GE is monitoring a wide range of new opportunities. Says Habayeb: 'The Saudi gas initiative is potentially the biggest. It is going to drive a lot of growth in the future. Dolphin is also a big project. We are keeping a close eye on Shuaiba in Kuwait and the aluminium projects in Dubai, Bahrain and Oman.'

With a profusion of GE turbines of varying ages and capacity in operation throughout the region it is no surprise that servicing and maintenance should make up a large chunk of the division's profits. Last year servicing agreements in the Middle East alone accounted for some $800 million in revenue.

'We have aligned our interests with that of our customers, guaranteeing turbine availability through long-term service agreement packages ranging up to 22 years,' says Habayeb. 'Ensuring machines are always available helps our customers plan and offloads their risk on to us.'

GE has established a number of joint venture companies around the region to service its major markets in Saudi Arabia, the Gulf and North Africa. In March the company opened its latest, Gulf Turbine Services, in partnership with Abu-Dhabi-based Gulf Aircraft Services Company (Gamco). The facility, located on the Mussafah industrial estate, has the capability to carry out turbine repairs on units up to and including the 120-MW Frame-9.

Apart from selling and servicing installed turbines for power generation, GE plans to develop its rental business in the Middle East using light-weight aero-derivatives mounted on portable trucks. This side of the business has already scored significant successes outside the region. The company supplied all the portable power requirements for the Olympic games held in Sydney in 2000. GE Energy Rental - operating out of Jebel Ali free zone - can service short-term power demand up to 25 MW. 'We have adapted the engines used on Boeing 747 aircraft to fill this role,' says Habayeb.

Andy Critchlow

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