Bidding pipeline in West Asia remains very strong: Larsen & Toubro

Engineering conglomerate Larsen & Toubro (L&T) on Monday said its bidding pipeline from West Asia remains strong. The company commentary followed after news reports that oil major Saudi Aramco has cancelled the bidding process for one of its planned expansions, where L&T was a potential contractor.

According to energy news portal Upstream, Saudi Aramco, the world’s largest oil exporter, has cancelled the bid process for multiple engineering, procurement, construction, and installation contracts potentially worth upwards of $10 billion for the expansion of its huge Safaniyah oilfield.

Subramanian Sarma, Whole-time Director & Sr EVP (Energy), L&T said, “Our bidding pipeline in West Asia remains very strong and there are many prospects which remain very active.” The company did not share a comment on details specific to its exposure to the Safaniyah oilfield project.

 

Analysts tracking L&T noted the company was an L1 bidder for a $2.5 billion contract related to this expansion project.

Sarma in the company response added, “Also, several opportunities are arising from energy transition-related investments, such as blue ammonia, desulphurisation, gas production, gas transportation infrastructure, and petrochemical projects.”

Sarma further noted, "L & T Energy enjoys a healthy order book situation in the Gulf with orders at an all-time high, guaranteeing strong revenue visibility for a long period of time." He added, “The Indian market offers enough opportunities for L&T – both downstream and upstream with government-led capex outlay.”

As of December 2023, L&T’s outstanding orderbook was at Rs 4.69 trillion. In January, domestic brokerage firm Kotak Securities had flagged the high 30 per cent share of Saudi Aramco in this order backlog as a concern. However, analysts on Monday also clarified the reported cancelled bids for the Safaniyah expansion project were not part of L&T’s outstanding orderbook or announced order wins.

Saudi Aramco in January had announced it has received a directive from its Ministry of Energy to maintain its Maximum Sustainable Capacity (MSC) at 12 million barrels per day (MMBD), and not to continue increasing MSC to 13 MMBD.

L&T’s shares in Monday’s trade closed at Rs 3,339.95 per piece, down 1.45 per cent from its previous day’s close.