WOOD has won contracts worth $53 million (£42m) in the key Middle East region as it seeks to reduce its reliance on the subdued North Sea oil services market.
The Aberdeen-based engineering giant will provide project management services for major projects on onshore fields in Abu Dhabi in support of the national oil company’s aim to achieve a significant increase in production capacity in coming years.
The contract wins provide a boost for Wood as the company tries to increase its share of oil and gas services markets in areas in which investment is increasing.
Abu Dhabi’s Supreme Petroleum Council recently approved a $132 billion five-year investment plan that will involve developing three giant gas fields.
The emirate forms a part of the UAE, which sees potential to become a net exporter of gas.
Wood was hit hard by cuts in spending in the North Sea made by oil and gas companies amid the deep downturn triggered by the sharp fall in the crude price between summer 2014 and early 2016.
While firms have started to approve North Sea projects in response to the partial recovery in the crude price since late 2016 the supply chain remains under pressure.
In its interim results statement in June Wood said North Sea activity was showing moderate growth on 2017 but from a low base.
The outlook for the oil price has clouded in recent weeks.
Brent crude has fallen from the four year high of $85 per barrel reached in October to around $71/bbl in response to strong growth in production in the US and international trade tensions.
It fell from $115/bbl in June 2014 to less than $30/bbl early in 2016, before major exporters agreed to curb output to support the market.
Yesterday Saudi Arabia suggested OPEC members and other big suppliers could cut production by a further 1 million barrels daily citing weakening demand.
Led by chief executive Robin Watson, Wood bought London-based AMEC Foster Wheeler for £2.2bn last year to help increase its presence in overseas markets and a wider range of engineering sectors, including nuclear and environmental.
AMEC Foster Wheeler provided project management services in Abu Dhabi.
The head of Wood’s Asset Solutions business in Europe, Africa, Asia and Australia, Dave Stewart, said the Abu Dhabi contracts demonstrated its strategic focus on continuing to broaden the capabilities it delivers to the oil and gas market in the region.
Meanwhile shares in Eland Oil & Gas rose five per cent after the company said it had won an extension to a key licence in Nigeria
Aberdeen-based Eland said the West African country’s oil ministry had agreed to the firm extending its interest in Oil Mining Lease 40 in the Niger Delta for a further 20 years, from October 22.
Eland chief executive George Maxwell said the agreement paved the way for partners in OML 40 to maintain significant investment in a way that would bring big benefits to Nigeria.
The company bought into OML 40 in 2012 although Shell stopped production in 2006 following security concerns.
Eland restarted production from the Opuama field on OML 40 in 2014. It subsequently had to suspend production for 16 months following sabotage on the terminal used to process the output.
However, the Aim-listed firm made $45m profit in the first half of this year, during which total output from Opuama hit a record 25.000 barrels per day Production costs on Opuama are relatively low.
Shares in Eland closed up 5.5p at 107p.
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