The oil and gas unit of engineering and construction group Murray & Roberts (M&R) is actively pursuing projects in “complementary markets”, owing to a slowdown in new project activity in the Australasian oil and gas sector.
The value of M&R’s oil and gas order book has fallen to below R4-billion, from nearly R5-billion in December 2016 and from better than R20-billion in December 2013.
The decline contributed materially to the fall in the JSE-listed group’s overall order backlog, which stood at R22.1-billion at the end of December, down from the R24.5-billion reported in December 2016.
CEO Henry Laas acknowledges that the group’s order book is low and that it could prove difficult to replenish the backlog, despite strong prospects for its underground mining platform, where orders stood at R15.3-billion at the end of December.
Besides the weak oil and gas market outlook, M&R’s power and water unit is also struggling to replenish its backlog, which has been dominated by the Medupi and Kusile mega coal-fired power station projects for more than a decade. Demobilisation of M&R crews at both Eskom project sites will begin later this year.
Nevertheless, Laas remains optimistic about oil and gas prospects for the medium term, pointing to a rise in project-preparation activity in the sector, which could translate into project activity in 18 to 24 months.
It is, thus, moving ahead with an oil and gas-related acquisition in the US market, with the intention of adding construction capabilities to its existing design and engineering capacity in that market. The acquisition is expected to be finalised before the end of June.
The oil and gas unit has been fully integrated into M&R since the 2013 buy-out of Clough’s minority shareholders.
Clough activities remains largely tied to Australia, which is emerging from an intensive phase of liquefied natural gas (LNG) project activity.
The immediate focus has turned to opportunities in the Australian metals and minerals sector, as well as the country’s general infrastructure market, where Laas says the investment prospects over the next ten years could exceed that which took place in LNG in the previous ten years.
Clough CEO Peter Bennett stressed that Clough had historically participated in above-ground mining-related projects, as well as in the infrastructure markets.
“Australian miners are not necessarily looking to grow capacity, but are pursuing projects to maintain their capacity,” Bennett explains, adding that Clough expected to pursue contracts for conveyors, stackers and rail-loading facilities, as well as for water treatment plants and mine-site power stations.
Clough is also aiming to participate in New South Wales’ large infrastructure roll-out, which could involve investments of up to A$140-billion over the coming ten years.