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L&T Targets $50-60 Billion Middle East Investment in Oil-to-Chemicals Sector

Larsen & Toubro (L&T) is eyeing the opportunity to make investments worth $50-60 billion in projects converting oil to chemicals (O2C) and petrochemicals in the Middle Eastern region from the financial year 2025, according to Subramanian Sarma, whole-time director and president (energy) of L&T, as reported by Moneycontrol.

“There’s a $50 to $60 billion opportunity in O2C projects. I expect these to come up for execution maybe in FY25, or sometime next year,” Sarma told Moneycontrol. “Between now and March, you will see conventional projects, but beyond the next financial year, we will see a lot of new developments in oil-to-chemicals and petrochemicals, new crackers, etc.,” he added.

The construction and engineering giant plans to capitalize on this opportunity independently but is also exploring potential joint ventures with other major engineering, procurement, and construction (EPC) companies for its larger projects.

Sarma also noted that while the current pipeline for conventional projects remains strong, green energy projects are gaining momentum. L&T sees opportunities in blue ammonia and carbon capture projects in the Middle East, whereas green hydrogen development is more prominent in Europe.

L&T’s focus will now include the development of green hydrogen projects alongside its existing engineering business. The company’s strategy for green hydrogen development involves focusing on electrolyser manufacturing, EPC projects, and manufacturing for both domestic and export markets.

L&T, India’s largest construction and engineering company, has a market cap of $60.11 billion, according to Companiesmarketcap data. It reported a consolidated total order book of ₹4.75 trillion as per the fourth quarter data for the financial year 2024.

L&T’s international order book exposure in the Middle East was 20 percent in the first quarter of 2022, which has now increased to nearly 40 percent by the end of the fourth quarter of 2024.

However, analysts have expressed concerns about the company’s heavy Middle East order book due to rising geopolitical tensions in the region and the impact of commodity prices on earnings. Since Middle East projects have fixed rates, any fluctuations in commodity prices can affect the company’s profitability.

L&T’s shares closed 0.07 percent higher at ₹3,650.45 on Monday, July 15, compared to ₹3,648 on the previous closing day. According to L&T’s Bombay Stock Exchange filing, the company will hold its board meeting on July 24 to consider its April-June quarter results.

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