LNG and brownfield opportunities abound for construction, engineering and consulting firm KBR
The Interview started by outlining key sector trends. Firstly, there is new dialogue around engineering, procurement and construction contracts and how to more appropriately share risk between construction companies and their clients – partly due to the high percentage of projects with cost overruns. The other is “the usual thing” of how commodity prices affect demand. For instance, once Brent blend crude oil hits a certain price, companies are incentivised to carry out capital expenditure (capex).
In terms of the shifting perspectives on lump-sum contracts in the industry, other major contractors have announced reduced appetite in taking on such terms. For KBR, involvement in the Ichthys project has led to a rethink on risk and alternative contract models. Alliance-type arrangements, where there is “pain share, gain share”, have been explored. Moreover, for LNG projects, moving from mega-trains to smaller-trains is a boon for clients, as they “reduce that timeline between the day you pump out the first dollar and the day you expect your first gas sales by probably between 40% and 50%”.
The specialist also outlined the main markets for KBR; capex, such as LNG trains, and brownfield services were highlighted. Regionally, it was noted that the “big opportunities” lie in the Middle East and Africa and Asia-Pacific. This is owing to a growing preference for asset owners to outsource maintenance in the former and maturing assets that will need upkeep in the latter.
KBR’s core strengths and the obstacles it is facing were also discussed, as well as the issue of project backlogs and global opportunities in LNG.
To access all the human insights from Third Bridge’s KBR Global Engineering Construction Opportunities Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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