Arabtec has won contracts worth nearly Dh1 billion in Saudi Arabia as the company tries to shrug off last year's restructuring and strengthen its oil and gas construction business.
In its third major new business since a company restructuring last year, the UAE’s largest publicly traded builder said its oil and gas subsidiary Target Engineering had won seven contracts worth a total of Dh930 million with the national oil and gas firm Saudi Aramco.
The contracts to upgrade six plants and refineries across Saudi Arabia come despite fears that the Saudi government will be forced to renegotiate and postpone deals because of labour market reforms and falls in the global oil price.
The contracts include upgrades to facilities at Saudi Aramco’s liquefied natural gas plants in Shadqam and Al Othmania, work at the company’s Abqiq and Yanbu refineries, a project to construct new buildings at its Ras Tanura terminal and work on the power network at its Tanjib facility.
Arabtec said that the wins reflected "the positive results of the successful restructuring process, which was carried out by the company … including the technical and administrative aspects of its subsidiaries".
The contract wins are Arabtec’s third major new business awards announced since the former managing director Hasan Ismaik left the company last year, and a second since then for Target Engineering which announced it had won two contracts worth a total of Dh560m from Adnoc in January.
Arabtec, under the leadership of the former managing director Hasan Ismaik, expanded aggressively into both Saudi Arabia and the specialist oil and gas construction business. The company increased its stake in Target in an attempt to diversify away from the cyclical UAE construction market and pursued both oil and gas, construction and affordable housing work in the broader Saudi economy.
Last week the contractor Drake & Scull International reported that fourth quarter profits plunged 71 per cent, driven lower by a slowdown in the Saudi and UAE property markets.
“The news today is positive and with oil prices at such low levels we expect to see more of these sort of contracts awarded as countries attempt to increase production to make up for the lower oil price,” said Allen Sandeep, director of research at Naeem Holding investment house.
“However, as far as Arabtec is concerned the market still has a number of unanswered questions regarding major projects which have gone very quiet, which is subduing the share price. Also there is a general concern about the construction market slowdown and the oil price, which is bound to have an effect on the company.”
Arabtec shares closed down 0.32 per cent yesterday at Dh3.07.
lbarnard@thenational.ae
Follow The National's Business section on Twitter
