L&T in talks to acquire stake in Chinese firm

Engineering and construction major Larsen & Tourbo (L&T) has initiated talks with two Chinese petroleum engineering companies for a strategic alliance. Sources close to the development said L&T was in talks with two Chinese majors CNOOC and Sinopack.

"L&T will sign a strategic alliance that may include equity participation with any of these two companies within a couple of months. The move aims at having a commendable presence in the oil exploration sector in the Chinese market," they said.

However, the company kept mum on the development. An L&T spokesperson said L&T would not comment on speculation.

Hong Kong Stock Exchange-listed CNOOC is one of China-based oil majors and is a subsidiary of China National Offshore Oil Corporation, the country's largest offshore oil producer. China National holds 70.64 per cent stake in CNOOC. Sinopack is a drilling company.

Earlier, L&T had expressed its intention to venture into deep water oil and gas exploration engineering. It has always been considering tie-ups with or acquiring oil exploration engineering companies.

The company, in August last year, signed a memorandum of understanding for setting up a greenfield manufacturing project in China. The proposed plant in Wuxi New District "" a hi-tech industrial park in the Jiangsu province "" will manufacture high-end air circuit breakers.

In late 2004, L&T had acquired 50 per cent stake in Valdel and formed a joint venture firm L&T Valdel Engineering to expand its products in detailed engineering for the offshore oil and gas segment.

In December 2005, it bagged an Oil and Natural Gas Corporation's Rs 1,000 crore turnkey project for building four well platforms and inter-connecting pipelines for Mumbai High north and Bassein fields.