- Middle East identified as key region for worlds third largest contractor
- Bechtel says low energy prices and slow economic growth worldwide dampened results for 2014
- One of the major wins in 2014 was the Shaeen alumina refinery in Abu Dhabi
The Middle East featured strongly in US-based Bechtels recently released annual report, which showed dampened results for 2014 when compared to 2013.
Low oil and natural gas prices combined with low worldwide growth and increasing global uncertainty create a challenging macroeconomic environment for EPC companies like Bechtel, the company said in the reports covering letter.
In March, Bechtels Europe, Africa, and Middle East president David Welch told MEED that the construction market is out of equilibrium as lower oil prices change the rate of return on major projects.
The contractor, which was ranked as the third largest contractor in the world in 2014 by US publication ENR, posted revenues of $37.2bn for 2014, down 5.6 per cent on the 2013 revenues of $39.4bn. New work books also fell to $18.4bn from $34bn, and backlog dipped to $70.5bn from 2014 from $88.2bn in 2013.
The company now has four instead of five. They are: Infrastructure; mining and metals; oil, gas and chemicals; and nuclear, security and environmental. The Middle East region plays a key role in three out of four of them.
For infrastructure the firm said it is building on its work at Jubail, helping to define four new economic cities in Saudi Arabia adding that the prospects in the region are also promising. It expects increasing demand for rail as public transport networks connecting the GCC countries are developed.
Bechtels largest rail project in the region, valued at $9.45bn, is Riyadh Metro where it is working in a consortium with the local Almabani General Contractors, Athens-based Consolidated Contractors Company (CCC), Germanys Siemens, and US-based Aecom, on lines 1 and 2. The contract was awarded in July 2013.
Another major transportation scheme that the firm is working on as a contractor is the new terminal building at Muscat International airport. It secured the $1.8bn contract in joint venture with Turkeys Enka and the local Bahwan in 2010.
For mining and metals the company says it is making headway into the regions aluminum market. The successful completion of a feasibility study in early 2014 led to the award of a contract to build the Shaheen Alumina Refinery in Abu Dhabi. The deal was secured in joint venture with UAE-based Petrofac Emirates.
Bechtel had earlier worked on the Sohar Aluminium smelter project in Oman which began operating in 2008.
The oil, gas and chemicals business unit says it is expanding its presence in the Middle East along with North America, Africa and Southeast Asia. The move is part of a strategy to diversifying its customer base and offerings in the LNG, offshore, onshore, petrochemicals, tanks, and pipeline markets.
Construction market is out of equilibrium
The construction market is out of equilibrium as lower oil prices change the rate of return on major projects, says Bechtels Europe, Africa, and Middle East president David Welch.
Investors take a look at these large investments and they say the oil price has to improve or the contractors prices have to come down for the IRR [internal rate of return] to come back to the neighbourhood that we would like it to be in, he says. Read more