Siemens to acquire gas turbine business from Rolls-Royce
Global energy giant Siemens is buying the Rolls-Royce Energy aero-derivative gas turbine and compressor business, which will strengthen the company’s position in the growing oil and gas industry as well as in the field of decentralized power generation. The purchase price is £785 million or about €950 million. The transaction is expected to close before the end of December 2014, subject to regulatory approvals.
In addition, as part of the transaction, Siemens will get exclusive access to future Rolls-Royce aero-turbine technology developments in the 4 to 85 megawatt power output range as well as preferred access to supply and engineering services. For this 25 year duration agreement, Siemens will pay Rolls-Royce an additional £200 million, or about €240 million.
By acquiring Rolls-Royce's small and medium aero-derivative gas turbines with a power output of up to 66 megawatts (ISO/wet-rating), Siemens will close a technology gap in its extensive gas turbine portfolio.
Siemens President and CEO Joe Kaeser also recently announced the company’s new Vision 2020, which plans for Siemens AG to position itself along the electrification, automation, and digitalization value chains that are projected to have the greatest long-term potential. The measures include the purchase of the major part of Rolls-Royce’s energy business and the contribution of Siemens’ Metals Technologies into a joint venture. In addition, Siemens is making its organization flatter and more customer-oriented.
“Our Vision 2020 addresses our company’s long-term perspectives along the modern electrification and automation value chains. By expanding share-based employee participation in our company’s success, we’re creating a sustainable ownership culture at Siemens,” said Kaeser.
The company also plans to expand its share plans for employees below the senior management level and increase the number of employee shareholders by at least 50 percent to more than 200,000. Siemens plans to make up to €400 million available annually for that purpose. In addition, the launch of the previously announced share buyback program of up to €4 billion will happen in the near future.
The focus on electrification, automation and digitalization is the result of the in-depth and extensive analysis begun in August 2013, according to Kaeser. The company has identified the fields where it will be able to achieve long-term growth and high profitability with its products.
In order to take full advantage of the market potential in these fields, Siemens is realigning its organizational structures. As of Oct. 1, 2014, the organization will be streamlined by eliminating the sector level and bundling business into nine divisions instead of the current 16. In addition, healthcare will be separately managed in the future.
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Trafigura and Yara International explore clean ammonia usage
Reducing shipping emissions is a vital component of the fight against global climate change, yet Greenhouse Gas emissions from the global maritime sector are increasing - and at odds with the IMO's strategy to cut absolute emissions by at least 50% by 2050.
How more than 70,000 ships can decrease their reliance on carbon-based sources is one of transport's most pressing decarbonisation challenges.
Yara and Trafigura intend to collaborate on initiatives that will establish themselves in the clean ammonia value chain. Under the MoU announced today, Trafigura and Yara intend to work together in the following areas:
- The supply of clean ammonia by Yara to Trafigura Group companies
- Exploration of joint R&D initiatives for clean ammonia application as a marine fuel
- Development of new clean ammonia assets including marine fuel infrastructure and market opportunities
Magnus Krogh Ankarstrand, President of Yara Clean Ammonia, said the agreement is a good example of cross-industry collaboration to develop and promote zero-emission fuel in the form of clean ammonia for the shipping industry. "Building clean ammonia value chains is critical to facilitate the transition to zero emission fuels by enabling the hydrogen economy – not least within trade and distribution where both Yara and Trafigura have leading capabilities. Demand and supply of clean ammonia need to be developed in tandem," he said.
There is a growing consensus that hydrogen-based fuels will ultimately be the shipping fuels of the future, but clear and comprehensive regulation is essential, according to Jose Maria Larocca, Executive Director and Co-Head of Oil Trading for Trafigura.
Ammonia has a number of properties that require "further investigation," according to Wartsila. "It ignites and burns poorly compared to other fuels and is toxic and corrosive, making safe handling and storage important. Burning ammonia could also lead to higher NOx emissions unless controlled either by aftertreatment or by optimising the combustion process," it notes.
Trafigura has co-sponsored the R&D of MAN Energy Solutions’ ammonia-fuelled engine for maritime vessels, has performed in-depth studies of transport fuels with reduced greenhouse gas emissions, and has published a white paper on the need for a global carbon levy for shipping fuels to be introduced by International Maritime Organization.
Oslo-based Yara produces roughly 8.5 million tonnes of ammonia annually and employs a fleet of 11 ammonia carriers, including 5 fully owned ships, and owns 18 marine ammonia terminals with 580 kt of storage capacity – enabling it to produce and deliver ammonia across the globe.
It recently established a new clean ammonia unit to capture growth opportunities in emission-free fuel for shipping and power, carbon-free fertilizer and ammonia for industrial applications.