Ormat Industries (TASE: ORMT) unit Ormat Technologies is likely to sign a contract with Brazilian energy giant Petrobras for the supply of equipment for construction of a power plant. Sources in the entourage of President Shimon Peres, who is visiting Latin America, told "Globes" that the contract was worth tens of millions of dollars.
Ormat builds geothermic power plants under two models. In one, the products model, it builds the plant for the customer, receives payment, and exits the deal. In the other, it owns the power plant, and benefits from the cash flow over the years in which the plant generates power.
The products segment has been very strong for Ormat this year. It expects revenue of $150 million from it, compared with $92 million in 2008, and $80 million in 2007. On the release of Ormat Technologies' third quarter report last week, CEO Dita Bronicki said, "As in previous quarters of this year, we continued to benefit from the significant increase in revenue from our Product Segment resulting from the record backlog that we had at the beginning of 2009. We expect revenue from this segment to return to previous levels in 2010 with a corresponding reduction in margins." In the conference call after the report was released, Bronicki said that the company was in several sets of negotiations on product deals that were likely to boost its orders backlog in this segment. It now turns out that one of the companies Ormat is negotiating with is Petrobras.
Petrobras, or Petroleo Brasileiro, to give it its full name, is a giant energy company controlled by the Brazilian government. Its main activity is in Latin America, but it is active in other regions as well.
Ormat declined to comment on the report.
Published by Globes [online], Israel business news - www.globes-online.com - on November 12, 2009
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