Downstream contractor focus: Fluor

What are your operations in the Middle East and North Africa region?

The Middle East and North Africa region has been a key region for Fluor for a long time. We have been involved in many projects in the region for more than 60 years and currently have offices in Kuwait, Saudi Arabia, Abu Dhabi and Qatar.

What is the most significant project?

Some of the most significant projects we are currently involved in includes:

Dow/PIC OL2K project in Kuwait; Various KOC projects in Kuwait
Yansab Petrochemical project in Yanbu Saudi Arabia
Tasnee Cracker/Polyethylene and Polypropylene Expansion projects in Jubail, Saudi Arabia
Sipchem Acetyls project in Jubail, Saudi Arabia
Saudi Kayan project in Jubail, Saudi Arabia
Habshan 4 project in Abu Dhabi
Berth 6 project in Qatar
Master plan study in Lybia

What’s the fast growing area of your business?

The current economic situation has obviously had an impact on virtually all business segments. In addition to the very strong position Fluor has in the Middle East in petrochemicals and gas processing, our polysilicon business has promise for strong growth. We are in a dominant position in polysilicon projects worldwide and are currently also involved in frontend activities for various polysilicon projects in the Middle East.

You signed a contract with Saudi acrylic monomer facility, have you started the development of the project?

Yes, we have. We are selected as the project management contractor for this project and are in addition involved in the project design packages/FEED for the acrylic acid and esters facility.

Recently one of your contracts in Kuwait has been cancelled, does this affect your relations and presence in Kuwait?

The cancellation of the new refinery project, which affected various contractors, was very unfortunate. However it will have no impact on the strategic importance of Kuwait for Fluor’s future operations there. What are the challenges facing your operations in the region? In spite of the challenging economic situation, there is still a very significant amount of construction project activity in the region, and consequently there is still pressure on the construction labour market Going forward, as the Middle East still offers opportunities in an otherwise geographically and a somewhat depressed market, we see the competition intensifying.

Do you have enough skilled people to conduct your projects in the region?

Yes, we are able to staff our projects with highly skilled and experienced people, the more challenging part, as stated above, is the availability of skilled construction labour.

Has the skilled labour market changed much in the last year?

Whereas Fluor still has a very healthy backlog, it appears that many of our competitors are in a different situation, which causes them to be extremely aggressive in their pursuit of new work. As far as construction labour is concerned, and as stated above, we currently still see some pressure on this component of the labour market.

Are you seeing anything exceptional in the current market?

It appears that several of our competitors, in need of new work, are willing to assume very substantial risks, which is different from what we experienced over the past 3 to 4 years.

How would you describe the last 2 years of business?

It was a perfect storm in the positive sense. Many business segments were at the peak of their respective cycles at the very same time, thereby putting tremendous pressure on the market for labor and material and equipment.

Is the credit crunch affecting your business? In what ways?

Yes. Some of our customers are containing cost and are reducing their capital spending. Limited liquidity in the financing market has compounded this issue further and in addition, customers who are less dependent upon financing are taking a ‘wait and see’ approach, hoping to hit the market at the lowest point. There are still exceptions as a handful of very big companies are not really slowing their investment plans.

How is demand for your services from the petrochemical sector in the Middle East?

We still see a number of good opportunities in the petrochemical sector in the Middle East and due to our track record, our strong resume and specific capabilities and good client relationships, we hope to capture our fair share of this demand.

If you had to forecast your next two years, where would you expect business to be?

Compared to other geographical regions in the world, the Middle East will continue to offer more new opportunities, which will result in more severe competition. However, as I said before, due to our capabilities as well as due to our positive and long-term track record in the region, we are confident that we will continue to be an important EPC player in the region.

What are the challenges unique to building a petrochemical plant?

In the past 3 to 4 years, the main challenge was to ensure that material was delivered in a timely fashion in order to support the construction schedules. In addition it has been a challenge to obtain qualified construction craftworkers. Finally, as ‘time to market’ is obviously very important in this business segment, we typically work under challenging project schedules.

Have you seen lead times on major components shorten in the last year?

Over the last year we have not seen a material improvement in delivery times as vendor shops were still filled with work awarded to these vendors in the past 3 to 4 years.

Have there been any significant casualties in the energy EPC market in the last year?

From a Fluor perspective, none that have impacted us.