Wood Group eyeing potential Canadian acquisition

Wood Group is looking to acquire a Canadian company as a way to expand its own production services network (PSN) brownfield group there. Wood Group Chairman Allister Langlands described the potential move as driven by large current capital expenditures in the country that the company expects to feed a very long tail of operating expenditures.

Langlands described Colombia “as a good open competitive market” in response to being asked where he saw potential for Wood Group to grow in the next 5-8 years, concluding the company would continue to grow its business there. He also described Africa as very important and noted that as international oil companies and large European and North American independents continued to develop Angola, Nigeria, Mozambique, and Uganda opportunities for Wood Group to expand in that region would emerge.

“The Caspian—and Kazakhstan in particular—is another area to grow,” said Langlands. “We’d like to do more in the Middle East [as well], but we’re being selective. “Middle East customers, principally the national oil companies, like to buy on an [engineering, procurement, and construction] fixed-price basis. That doesn’t fit our risk profile or what we think we’re good at.” He went on to say that Wood Group would likely do small engineering projects and brownfield support in the region, but wouldn’t be pushing to become a major construction company there.

When asked about increasing its presence in Qatar in particular, Langlands acknowledged both that it’s a place Wood Group should be doing more business and that the company was a bit late there. “Most of the spending has been downstream there, rather than upstream,” Langlands continued, “because you’ve got one large field producing all this gas. It’s more about what you do with it. But in the production area moving forward we’d certainly like to do more.”

Australia was the next area flagged by Langlands, who noted that the seven LNG projects in the country were “about two thirds of the way through” capex that would likely lead to large opex opportunities.

Russell Grant, Rolls Wood Group (Repair & Overhauls) Ltd. RB211 project manager, said the division was applying the joint-venture model it established in Malaysia in 2005 as Rolls Wood OTEC Sendirian Bhd.—building a turbine repair and overall site for the Rolls-Royce RB211 turbine in-country and training local staff—to its recently established Rolls Wood Brazil Ltd. venture to support the Petrobras turbine fleet.

An alternate approach is being used toward China. Rolls-Royce turbines sold there have so far been serviced by Rolls Wood. Rolls-Royce, however, has subsequently provided PetroChina with a license which will allow them to do some of their own maintenance. PetroChina has built a site but not yet put it into operations. Grant said Rolls Wood “expects to see engine carcasses [in Aberdeen from China] for probably the next 12 months,” but in that period will also train PetroChina technicians in the processes and inspection criteria needed to carry out their own maintenance, still sending parts that need repair to Rolls Wood for refurbishment and return.

Contact Christopher E. Smith at chriss@ogjonline.com.

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