Chiyoda To Bid for Saudi Export Refinery Projects
by AFX News Limited
August 19, 2008
Japanese oil and gas engineering group Chiyoda Corp <6366.T> said on Tuesday it and South Korea's Samsung Engineering Co <028050.KS> are preparing to bid for two huge export refinery projects planned by Saudi Aramco jointly with Houston-based ConocoPhillips and France's Total SA.
The orders are estimated to be worth 200 billion yen ($1.8 billion).
Chiyoda President Takashi Kubota also told Reuters in an interview that the company plans to announce one or two alliances with other engineering firms when it unveils half-year results in November.
Chiyoda, which saw its profit squeezed last year due to its heavy concentration of contracts in Qatar, is pursuing new contracts in areas such as refineries, development of oil fields and construction of petrochemical production facilities in Asia and Latin America as it aims to diversify income sources and markets.
The company last year also sought 60 billion yen in funds from Japan's biggest trading house Mitsubishi Corp <8058.T> by issuing new shares to fund its growth strategy, planned mergers and acquisitions, and to pursue energy-related projects jointly with Mitsubishi, which now owns 33.4 percent of Chiyoda.
"We hope to lower the ratio of profit from LNG projects (by diversifying more) to less than 50 percent next business year and after from the 70 percent at present," Kubota said.
Chiyoda, which dominates the global LNG project market with a 50 percent share, saw its net profit plunge 59 percent to 9.6 billion yen in the year ended in March hit by cost overruns and delays in six multi-billion liquefied natural gas projects, the world's biggest, in Qatar.
The result of the bids for Saudi's Yanbu and Jubail refinery projects, designed to process Arabian heavy crude, will be announced early next year, Kubota said.
He declined to elaborate on the planned alliances with peer engineering companies.
Kubota said Chiyoda plans to double the work force at its Singapore unit, now 150, within two to three years as it aims to boost sales in Asia.
It also plans to increase the staff at its Qatar affiliate established in March, Chiyoda Almana Engineering LLC, to 100 to 200 also in within two to three years.
Copyright 2008 AFX News Limited. All Rights Reserved.
Yanbu' Export Refinery Project
Red Sea Refining Co. (Saudi Aramco)
Yanbu' Industrial City Saudi Arabia