Dubai oil rig builder plans expansion

Lamprell, the Dubai oil services company fresh off the US$336 million buyout of a competitor, is eyeing a boom in Iraq.
Nigel McCue, the chief executive of Lamprell, is bullish on oil and that this year will not be a repeat of 2008. Jaime Puebla / The National
Nigel McCue, the chief executive of Lamprell, is bullish on oil and that this year will not be a repeat of 2008. Jaime Puebla / The National

Lamprell, the Dubai oil services company, plans to start up operations in Iraq to take advantage of a boom in oil exploration.

The Iraqi government is opening up virgin oilfields to international companies, and Lamprell is eager to get a slice of the work, from building rigs to planning the engineering.

It is in talks with potential partners to set up bases in Kurdistan and southern Iraq, home to major oilfields, said Nigel McCue, the chief executive of Lamprell.

"The market is promising and obviously there's been a lot of activity to date," he said. "We're hoping to get something established there before the end of the year."

Lamprell, one of the 350 largest companies listed on the London Stock Exchange, last month bought Maritime Industrial Services, a competitor, for US$336 million (Dh1.23 billion).

The acquisition of the Sharjah-based company, which brought with it a third UAE shipyard as well as footholds in Saudi Arabia, is part of Lamprell's effort to build up its position in the Middle East.

"Two thirds of the world's oil and gas reserves are in the Middle East, and yet we have very little exposure to it," said Mr McCue.

"We'll be looking at expanding the businesses throughout the region."

Chief in that expansion is Iraq, whose government pre-qualified 41 companies this month to bid for fresh exploration blocks.

That represents a pool of potential customers for Lamprell, which builds rigs for Saipem and Transocean, among the world's five largest oil contractors.

The rigs, given names such as "Jupiter" or "Perro Negro 4", ultimately serve producers from Saudi Aramco to Abu Dhabi National Oil Company seeking reserves deep underground.

One sticking point is if a global economic slowdown eats into energy demand, as the recession did in 2008. The oil price slumped that year from $147 to $36 a barrel.

"That had the effect of slowing down projects, and there was a hiatus in the decision making which did have an effect on us," said Mr McCue.

"We had to make cutbacks at that time."

This month the oil price has fallen as much as 20 per cent from highs earlier this year, and producers and consumers are forecasting a slump in demand growth.

But Mr McCue remained "bullish" on oil and insisted this year would not be a 2008 playback.

"We're seeing a very large order book and a big pipeline," said Mr McCue.

"We're not seeing any slowdown."

Lamprell is also finding a growing segment of its order book coming from a competitor to fossil fuels - wind.

Offshore turbines require special vessels when they are installed, and Lamprell is building more such ships as the EU approaches a 2020 deadline to source one fifth of its power from renewables.

"Between the UK, Germany, Denmark and the European countries, demand is very high," said Mr McCue.

"Prices [for electricity] will increase and you can see the capital investment is taking place."

Published: August 17, 2011 04:00 AM


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