Category — Oil & Gas

According to global deal tracking firm Dealogic, India’s inbound M&A volume has surged to $23.4 billion, about equal to the record level of 2007.

American companies were involved in 17 per cent of the inbound mergers in India making the US the second most active conuntry. The United Kingdom was the top acquirer into India with deals worth $15 billion; BP’s $9 billion big for Reliance Industries’ oil and gas blocks was the largest piece. Other countries that were active were Germany (6 per cent), Japan (4 per cent), Denmark (3 per cent).

Coal India Limited is getting ready to invest $100 million in return for 15 percent of a a joint venture in Australia. The 85 percent owner of the JV will be the world’s largest private sector coal company, Peabody headquartered in St Louis, Missouri, not far from where I attended business school.

The object of desire is the Wilkie Creek coal mine, in Queensland, Australia, which has an estimated coal reserve of 400 million tonnes. It is located in the Surat Basin of southeast Queensland and produces 2.35 million tonnes of low-sulphur, low-nitrogen thermal coal annually.

Coal India, which had its initial public offering in 2010, touched a 52-week high, with the share shooting up 2.37% in early trade. By the end of day, the stock had jumped 3.25%, in a market that was otherwise subdued. The rally helped Coal India surpass another state-run Indian energy giant, ONGC (Oil & Natural Gas Corporation), in terms of market capitalization.

What this means:

India’s burgeoning energy demands are sending companies, government owned and private, in the search for resources worldwide. Note that Indian companies made investments in shale gas and coal mines in the Eastern USA last year.

GMR Energy  announced the signing of a long-term service agreement with GE Energy for the expansion of the Vemagiri power plant in Andhra Pradesh.

Powered by two GE frame 9FA gas turbine-generators, the plant will produce over 768 MW of additional electricity by 2012. Under a 15-year contractual service agreement, GE will supply parts, services and repairs for the gas turbines. “By teaming up with GE, we are positioning the Vemagiri plant to make a long-term contribution to a modern and efficient energy infrastructure,” GMR Group CEO (Energy) Raaj Kumar said.

When I was part of the Presidential Executive Mission to India last November,  General Electric CEO Jeff Immelt and Boeing CEO Jim McNerney flanked Barack Obama in his first public appearances in Mumbai.  Immelt’s  GE Energy unit had just won its largest order  in India to supply  six gas turbines, three steam turbines and generators for a 2,400 megawatt power plants being built by billionaire Anil Ambani’s Reliance Energy in the small town of Samalkota, Andhra Pradesh.

Last month, President Obama was at General Electric’s plant where these turbines are being built. Here is what he had to say

That’s why I traveled to India a few months ago — and Jeff was there with us — where our businesses were able to reach agreement to export $10 billion in goods and services to India.  And that’s going to lead to another 50,000 jobs here in the United States.  (Applause.)  Part of the reason I wanted to come to this plant is because this plant is what that trip was all about.  As part of the deal we struck in India, GE is going sell advanced turbines — the ones you guys make — to generate power at a plant in Samalkot, India — Samalkot, India.  Most of you hadn’t heard of Samalkot — (laughter) — but now you need to know about it, because you’re going to be selling to Samalkot, India.  And that new business halfway around the world is going to help support more than 1,200 manufacturing jobs and more than 400 engineering jobs right here in this community — because of that sale.  (Applause.)

So it’s a perfect example of why promoting exports is so important.  That’s why I’ve set a goal of doubling American exports within five years.  And we’re on track to do it.  We’re already up 18 percent and we’re just going to keep on going, because we’re going to sell more and more stuff all around the world.  (Applause.)   When a company sells products overseas, it leads to hiring on our shores.  The deal in Samalkot means jobs in Schenectady.  That’s how we accelerate growth.

I have maintained that exports from America are crucial to the recovery. Exports to India can go up by 500 percent or more in five years, if governments are supportive. This is good for poor farmers in near Samalkot whose children can’t get light to study at night. It is good for engineers in New York.  Let’s make it happen, friends.

India’s federal Planning Commission projects an investment of $300 billion in electrical power between 2012-2017 which is the period covered by the “Twelfth Five Year plan”, according to member B.K. Chaturvedi

The commission estimates that India will see capacity addition of 100 gigawatts during the period; this cCapacity addition will result in investment of at least $100 billion. Chaturvedi says a similar investment of around $100 billion is expected in distribution and transmission during the next plan period. And, that overall investment, including generation work in progress currently, will come to $300 billion of the $1 trillion infrastructure development planned.

The bulk of this power investment will result in coal-fired power plants, but India is also investing vigorously in nuclear, solar, hydro-electric, gas and oil, bio-mass and more. This investment will be a combination of government and private spending and may include debt funded from foreign sources.

This opens up many opportunities for foreign companies across the ecosystem, despite serious challenges in succeeding in this sector in India.