Tecnimont: A turn of the key

06 December 2004
Few of today's lump-sum turnkey (LSTK) contractors can boast a history going back to the 19th century. When Tecnimont's parent company Montedison was formed in 1966 through the merger of power supplier Edison and mining and chemicals company Montecatini, the merged firms had been operating successfully in Italy since the 1880s. Edison in 1883 built Europe's first thermoelectric power plant for continuous distribution of electricity in Milan. Montecatini started its industrial activities in 1888 following the acquisition of a 400-year-old copper mine in Tuscany. In 1973, Montedison - renamed Edison two years ago - joined the engineering and development divisions of its power, mining and chemicals businesses into a single company, giving rise to the formation of Tecnimont.

Fast-forward 30 years, and Tecnimont has established itself as a leading engineering, procurement and construction (EPC) contractor with a strong international reputation. 'Our experience is in performing lump-sum contracts all around the world and we focus on the petrochemicals and oil and gas business,' says Roberto Pratesi, Tecnimont's managing director and vice-chairman. 'We complement these two lines of business through infrastructure and power generation projects.'

The Middle East has naturally become a core market for Tecnimont and, in common with other EPC contractors focusing on the energy and petrochemical sectors, the firm cannot complain about the amount of work on offer. 'I have never seen such a large number of projects at the same time, in particular in the polyolefins business,' says Pratesi. 'Despite the growth in other regions such as China, Eastern Europe and the former Soviet Union states, the Middle East is the most promising area in terms of oil and gas and petrochemicals today. The most important countries for us in the region are Saudi Arabia, the UAE and Iran, all of which are enjoying incredible returns due to the high oil price and [which offer] the opportunity of adding value by transforming the oil and gas into petrochemicals.'

The frenzy of project activity in the Middle East is reflected on Tecnimont's balance sheet, with a fair chunk of its revenues now being generated in the region. Pratesi says that, in 2003, about 42 per cent of Tecnimont's net revenues of almost $1,200 million came from the Middle East and North Africa, about half of which was generated on the upstream side of the business, with the remainder coming from its polyolefin, chemicals and fertiliser businesses.

The company made its most recent mark on the region, when in early October it completed a $1,200 million contract in a consortium with its French subsidiary Sofregaz and Japan's JGC Corporation, the group's leader, to plan and build two hydrocarbon treatment plants in the outskirts of Melitah on the coast and in the desert area of Wafa.

The contract is part of a $9,100 million scheme - developed by Agip Gas, a joint venture of Libya's National Oil Corporation (NOC) and Italy's Eni - which aims to produce 10,000 million cubic metres a year (cm/y) of gas, about 2,000 million cm/y of which will be sold on the Libyan market, with the remaining 8,000 million cm/y to be exported to Italy via the 540-kilometre Greenstream submarine pipeline.

Pratesi is already on the outlook for more work of this scale. 'In our view, the potential for contractor activity in the Middle East and North Africa remains very good,' he says. 'In terms of number of projects, but also because of the need for specialised contractors to carry out the wide range of jobs.'

The backlog of work is already growing. In the UAE, Tecnimont is carrying out the estimated $40 million contract to debottleneck the existing 450,000 tonnes a year (t/y) of polyethylene (PE) capacity at Abu Dhabi Polymers Company (Borouge), which will see output rise by 130,000 t/y. Tecnimont, which built the original two PE

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