Today, US-based Shaw ranks as one of the most active players on the Gulf petrochemicals scene, having won in the past year alone contracts totalling well over $1,500 million. Its emergence as a competitive EPC bidder has been down to a combination of factors: the integration of US-based technology licensors Stone & Webster and Badger into the fold; a significantly improved balance sheet; a changing contracting environment in the Gulf; and of course the explosion in regional petrochemicals projects.

Shaw started off life in 1987 as a fabrication shop in Baton Rouge in Louisiana and in 1993, it made its first foray into the Gulf, establishing the Shaw Nass fabrication joint venture in Bahrain. Seven years later, the company underlined its intent to break into the process and EPC business by acquiring the assets of Stone & Webster.

'When we bought Stone & Webster in 2000, a number of its businesses were in decline and certainly the business in the Middle East reflected that,' says president and chief operating officer Tim Barfield. 'The initial driver for the acquisition was the power business in the US and specifically the combined-cycle business. But the more we looked at its process capability and particularly its ethylene and FCC [fluid catalytic convertor], we felt we had a jewel.'

Stone & Webster's focus on the US power market had its downside, however. When the US combined-cycle boom went bust in 2001/02, Shaw was hit by two of its major customers going into bankruptcy and a third undergoing a major financial restructuring. 'We fought very hard to get the money back we were owed,' says Barfield. 'Over the past two years, we have managed to bring our net debt down to the 5 per cent range, which means that now we have a very strong balance sheet to go forward with.'

The lesson was a salutary one however, and underlined the dangers of over-reliance on one particular market and sector. 'We have had a philosophy that we want to do well in our home market, which at the moment is very active. But we also feel that long-term, growth and stability is dependent on being strong in a number of markets. The Middle East with its financial resources, availability of feedstock and the number of projects planned all point to this region as being one of the premier if not the premier market long-term,' he says.

A marked shift in contracting strategies by clients has paved the way for the return of Shaw Stone & Webster into the regional petrochemicals sector. Like many of its US EPC counterparts, the company has been increasingly wary of the traditional lump-sum turnkey (LSTK) approach, which places the risk burden on the contractor's shoulders. Says Barfield: 'If you look at the projects now, the vast majority are not full LSTK: they generally have an open-book phase, which allows you to go deep into the engineering and procurement and gain a very strong feel for the project. We are pleased that this is happening: it is the method we like and it is part of the reason we are here.'

A central plank in Shaw's regional strategy is to leverage its technology capabilities, which were further strengthened in 2003 with the acquisition of Badger. 'T