L&T eyes $50-60 billion opportunity in Middle East, to focus on oil-to-chemicals business: Report

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, Moneycontrol reported, quoting Subramanian Sarma, whole-time director and president (energy) of L&T.

“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 said.

The construction and engineering giant has plans to optimise this opportunity on its own but is also looking out for potential joint ventures with other major engineering, procurement and construction (EPC) companies for its bigger projects, according to the report.

The whole-time director also said the current pipeline for the conventional projects remains strong, while the green energy projects are picking up pace. The company sees an opportunity in blue ammonia and carbon capture projects in the Middle East, whereas green hydrogen development remains notable in Europe.

L&T's focus will now also be on the development of green hydrogen projects along with its existing engineering business. The company's strategy for the development of green hydrogen is to focus on electrolyser manufacturing, EPC projects, and manufacturing for India to export outside, as per the report.

Insights into Larsen & Toubro:

L&T, India's largest construction and engineering company, has a market cap of $60.11 billion, according to Companiesmarketcap data. It has 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 at 20 per cent in the first quarter of 2022, and now it has reached close to 40 per cent over the quarters at the end of the fourth quarter of 2024.

Analysts have expressed concerns about the company's heavy Middle East order book due to the rising geopolitical crisis in the region, as well as the influence of commodity prices on the company's earnings. As the Middle East projects have fixed rates, any fluctuations in commodity prices can impact the company, they say. 

L&T's shares closed 0.07 per cent higher at ₹3,650.45 on Monday, July 15, compared to ₹3,648 on last week's closing day. 

According to Larsen & Toubro's Bombay Stock Exchange filing, the company will hold its board meeting on July 24 to consider its April-June quarter results.