INTERVIEW: Wood Group Confident Of Future Nigeria Awards

20th Jul 2010 19:05

By Iain Packham Of DOW JONES NEWSWIRES LONDON (Dow Jones)--John Wood Group PLC (WG.LN) said Tuesday two of its subsidiaries operating in Nigeria, along with Nigerian company Dover Engineering, are close to completing a comprehensive local FEED project--or front end engineering design--for Total S.A.'s (TOT, FP.FR) Egina field, adding that it hopes to do more in-country projects in the future. A director at Wood Group unit MCS Kenny, Frank Grealish, told Dow Jones Newswires that there seems to be a pickup of award activity and the company already has had one request from Exonn Mobil Corp. (XOM) "to do some more work underground there." He said there are a number of projects going through the system but warned that there's a bit of uncertainty because of legislative changes in Nigeria and there is a potential for things to slow down before next year's elections. Grealish went on to say that some people believe that delays over the last few years have resulted in pent-up demand in terms of numbers of projects awarded. "If that does get released and the legislation gets sorted out, you could see a lot of work happening over the next few years," he said. Now that a full FEED has been undertaken locally in Nigeria, Grealish said he expects to see a stronger emphasis on more specialist subsea engineering. The Nigerian government has a major commitment to local content, he said, adding that this has expanded from just purely looking for local fabrication to looking for a lot of the engineering done locally. However, he warned, there's a lag in terms of trying to start that up and building the capability. The main problem to be overcome in the Egina project was a lack of specialist expertise in deep-water and particularly subsea projects, he said. Grealish said that in all of West Africa, only one or two projects are deeper than the Egina project, which is located at water depths of up to 1,750 meters. He was unable to provide a value for the work undertaken but said more than 60,000 man hours in-country was needed, adding that there is a clear correlation to the value of the work done. Grealish said Total has gone to the main large contractors in the calls for tender and he would expect award announcements at the end of the year or early in 2011. He said he expects a lot of the awards to go to the main oil and gas installation contractors and many of the floating production, storage and offloading contracts to go to large South Korean yards or large European contractors. Grealish added that the company is looking at potential opportunities to support some of these companies in terms of detailed engineering. John Wood Group's shares closed Tuesday down 2.8 pence, or 0.8%, at 334.9 pence in a FTSE 250 Market that was down 0.36%. -By Iain Packham, Dow Jones Newswires; 44-20-7842-9269; [email protected] (END) Dow Jones Newswires July 20, 2010 14:05 ET (18:05 GMT)