WOOD Group yesterday announced its biggest-ever

contract, a 16-year deal worth $800m (#490m) to boost oil output from fields in the Lake

Maracaibo area of Venezuela.

The Aberdeen-based engineering company is leading a consortium that will take over an existing water injection system in the area.

This pumps water into oilfields owned by the Venezuelan state oil company PDVSA to force more viscous heavy oil out of the ground.

Sir Ian Wood, the chairman and managing director of Wood Group, said the deal had clearly established his company's reputation as a credible bidder for similar mega-contracts elsewhere in the world. ''It is a breakthrough for Wood Group. It really is a step up . . . it puts us into a bigger league,'' he said.

Sir Ian noted that Wood Group had beaten fierce competition for the Venezuelan contract from three rival consortia led by much larger US engineering


Wood Group has a 49.5% stake in the winning SIMCO consortium which will take over the management of Lake Maracaibo's biggest water injection system, expand it and improve its


The Scottish company's junior partners are two Venezuelan firms and the Texas-based oil services group POI.

SIMCO will take over the operation of two onshore water treatment plants and 15 platforms in Lake Maracaibo which are linked by 800 kilometres of underwater pipelines to 170 injection wells.

The consortium will also design, build and operate five new water injection platforms in the lake, which is connected by a narrow strait to the sea.

The contract includes an option to build and operate a further five water injection platforms. If PDVSA gives SIMCO the green light for their construction, the total value of the deal will rise to over $1000m (#590m).

Sir Ian said: ''Wood Group's unique combination of maintenance, engineering and project management skills, plus our world leading position in the overhaul of industrial gas

turbines, pumps and compressors, was a key factor in the success of our bid.''

The company has established a growing presence in Venezuela over the past five years to take advantage of business opportunities created by the progressive

privatisation of its oil industry.

This was run by PDVSA as a state monopoly for more than 20 years, but the government in

Caracas is now farming out new exploration blocks and mature oilfields in need of investment to international oil companies.

At the same time, PDVSA is sub-contracting more work to the private sector to help meet its ambitious target of doubling Venezuelan oil production to six-and-a-half million barrels per day by 2006.

Wood Group, which made its name as a provider of offshore services in the North Sea, already has 400 employees in Venezuela.

Now it plans to recruit a further 200 to undertake the water injection contract, which could lead to further work of a similar nature.

Sir Ian said: ''We are looking forward very much to co-operating with PDVSA in improving water injection performance and enhancing oil recovery.

''We hope to win other similar business in the future.''

Last month Wood Group boosted its presence in Venezuela by acquiring Bompet, a manufacturer of well heads and valves, based in the western oil port of Maracaibo, but that move does not have a direct bearing on its new PDVSA contract.

The company's local partners in the SIMCO consortium are Venezolana de Proyectos, which will design the new water injection platforms and Constructora CAMSA which will build them.

The US partner, POI, is an established PDVSA supplier which will provide expertise on Venezuelan procurement and operations.

Wood Group will manage the overall water injection project and provide the expertise to maintain the gas turbine engines which drive its pumps.

It has plenty of experience of managing water injection projects in the North Sea, Colombia and Alaska.

The privately-owned company, which operates in 25 countries around the world, made a pre-tax profit of #16.1m last year on turnover of #467m.

Sir Ian said yesterday he was confident that ''1998 is going to be a pretty good year in terms of growth''.

He declined to give details of any further deals in the pipeline, but said he was hopeful of further rapid expansion in Latin America and South-east Asia.

Turning to the North Sea, he once more criticised the Government for creating uncertainty in the oil and gas industry by delaying the publication of its review of the offshore tax regime.

However, he expressed confidence that Brent crude prices would rise to $16 a barrel from their present level of around $14 by the end of the year.

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