Leighton Bags $1.67 Billion in Contracts in Australia, Iraq and Hong Kong

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading Australian contractor Leighton Holdings Limited (ASX:LEI) (St. Leonard's, Australia) has been awarded a $766 million contract by Chevron Australia Pty Limited (Perth, Australia) to undertake underground and civil works on the Gorgon Liquefied Natural Gas (LNG) project in Western Australia. The contract will include underground and concrete works, cabling, piping, earth works and drainage systems. Work will begin shortly and is likely to be completed by mid-2013.

Last year, a consortium of Saipem SpA (BIT:SPM) (Milan, Italy) and Leighton Holdings secured a $1.06 billion contract to design, construct and deliver a 2.1-kilometer jetty to supply LNG from the Gorgon project to export terminals. According to Ray Sputore, the general manager of Leighton Contractors Pty Limited (Chatswood, Australia), nearly 1,500 workers will be employed across both projects. In a related development, media reports indicate that Southern Cross Engineering Limited (Christ Church, New Zealand) is holding discussions with Leighton to provide underground instrumentation and electrical contracts for the Gorgon project.

The Gorgon LNG project is located on the northwestern coast of Western Australia. The 15 million-ton-per-year facility, which will consist of three trains, each with capacities of 5 million tons per year, will be located on Barrow Island. The project, which requires an estimated investment of $41.5 billion in the first stage, is considered to be one of the largest investments in Australia. There are plans to increase the capacity of the LNG facility to 25 million tons per year in the future. The project is being jointly developed by Chevron Corporation (NYSE:CVX) (San Ramon, California), Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands), Tokyo Gas Company (TYO:9531) (Tokyo, Japan), Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas), Chubu Electric Power Company Incorporated (TYO:9502) (Nagoya, Japan) and Osaka Gas Company (TYO:9532) (Osaka, Japan). Chevron Australia will be the operator of the project.

The Gorgon LNG project, which is expected to create 6,000 direct and indirect jobs in the region, has awarded several contracts. The Kellogg Joint Venture Group, which is a joint venture between KBR Incorporated (NYSE:KBR) (Houston, Texas), Clough (ASX:CLO) (Perth), JGC Corporation (TYO:1963) (Tokyo), and Hatch (Mississauga, Canada), secured a $2.61 billion downstream contract. As of April 2010, contracts worth $18.3 billion were awarded to various companies, with Australian companies securing more than 30% of the deals. Leighton Holdings is among the top contractors.

Recently, the Asian subsidiary of Leighton Holdings was selected to construct a ramp, tunnels, two bridges and perform landscaping activities at the Central and Wan Chi bypass in Hong Kong. The contract, which is valued at $174 million, will be executed immediately and completed by 2016.

The Iraqi government has awarded Leighton Holdings a $733 million contract to construct a 1.8 million-barrel-per-day LNG terminal in Basra. The contract has been secured by Leighton Offshore Private Limited, a subsidiary of Leighton Holdings. Last July, Foster Wheeler (NASDAQ:FWLT) (Clinton, New Jersey) secured a contract to provide project management consultancy services for this project. The terminal is expected to be ready in 15 months. Iraq is proposing to build three undersea pipelines and four floating terminals. The projects are part of Iraq's strategy to increase oil production from 2.5 million barrels per day to 12 million barrels per day by 2017.

By 2014, Iraq is expected to contribute 11.08% and 9% of the Middle East region's supply and demand, respectively. During this period, oil demand in the country is forecast to reach 1.08 million barrels per day. This fiscal year, Iraq is expected to produce 2.49 million barrels per day of oil. By 2014, the country's oil output is likely to reach 3.01 million barrels per day. In August this year, Iraq's oil export was 1.79 million barrels per day, yielding $3.9 billion in revenues.

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