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M&R subsidiary wins $620m project in the US

Extending the geographical reach of its Australian-based subsidiary pays off.

The strategy of Murray & Roberts (M&R) to geographically expand the activities of its Australian-based oil and gas engineering and construction subsidiary Clough is now bearing significant fruit.

M&R on Monday announced that Clough USA had been awarded a $620 million petrochemical engineering, procurement and construction (EPC) project in the United States.

The group said this multi-year project signified Clough USA’s first major contract award and underlined the successful establishment of Clough in North America.

It said Clough USA had secured a limited notice to proceed and should receive the full notice to proceed by October.

$4bn Snowy hydroelectric package

The contract award follows M&R reporting in January this year that Clough, in a joint venture with Italian company Salini Impregilo, had been selected as the preferred tenderer for the estimated $4 billion civil works packages for the Snowy 2.0 hydroelectric power project in Australia.

Both these contracts are expected to significantly grow M&R’s group order book.

Henry Laas, the group chief executive of M&R, said in February last year the US was the market where the group saw the best potential for project opportunities for its oil and gas business.

Acquisitions

However, Laas said they needed to buy a business in the US that they could leverage and grow to establish themselves in that market. 

Laas added that the group’s oil and gas business had the benefit of its investment in liquefied natural gas in Australia for the past decade, but there was not much happening in that market now because the big projects have been built and commissioned.

Clough USA is a wholly owned subsidiary of M&R, which was established earlier this year when M&R acquired Saulsbury Industries’ Gulf Coast downstream and chemical business and EPC portfolio based in Houston for $5.2 million.

US growth prospects

Laas said at the time the acquisition of a US-based EPC contractor in the oil and gas sector would give the group’s oil and gas platform the ability to deliver projects to a rapidly growing market in the US.

“This is a small but strong project controls organisation, staffed with competent people with a full EPC capability for projects up to $300 million.

“Clough will market its new EPC capability to its major global clients operating in America, such as Exxon, Chevron, ConocoPhillips and Shell,” he said.

The acquisition of the Saulsbury Gulf Coast business unit followed Clough’s acquisition of privately owned specialist Canadian EPC firm Enercore Projects headquartered in Calgary in 2015, and that of US-based boutique engineering company CH-IV International for $5 million in 2014.

M&R is still the subject of a proposed hostile takeover by German family-owned holding company Aton, although the Competition Commission last month recommended that the Competition Tribunal prohibit the transaction.

M&R’s share price closed 0.9% lower at R12.15 on Monday.

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