ENGINEERING giant WorleyParsons is increasingly looking beyond Australia as new local oil and gas projects start to thin, with Mexico seen as one of its key growth areas.
In an interview at Bank of America Merrill Lynch’s Australian Investment Conference in New York, WorleyParsons chief financial officer Simon Holt indicated Australia was nearing the end of a huge wave of energy investment as giant developments moved closer towards completion.
“Australia has come off some pretty big projects and (while) there’s still some huge construction going on there, for us our earnings are greatest through the detailed design process and there’s no new projects,” he said.
Mr Holt indicated that most of the action in the Australian resources sector was now in the expansion of existing projects. Speaking about the oil and gas sector specifically, he said WorleyParsons saw “no new large projects” in the “foreseeable future”.
WorleyParsons has already become a major player in the growing energy sector in North America, with 50 per cent of its income now stemming from that region.
While its hopes are high for the US in particular, it also sees growth outlets in the Middle East, the Arctic and Mexico.
The company is moving one of its Latin American directors to Mexico in order to capitalise on new laws permitting foreign investment in oilfields in the Gulf of Mexico.
“They want to accelerate the development of their oil and gas fields, through (state-owned oil company) Pemex, and it’s about the foreign investment coming into that,” Mr Holt said.
“We’ve got great technical skills very close to Mexico that can provide services to not only Pemex but also to our current customers.”
WorleyParsons is the second Australian company in the past week to detail the opportunity in Mexico after BHP’s petroleum boss, Tim Cutt, outlined plans to bid on some of the 169 blocks on offer next year as a 76-year state monopoly on energy resources comes to an end.
“We’re very interested in Mexico,” Mr Cutt told Bloomberg. “We’re confident that we are one of the lowest-cost and best drillers in the deepwater Gulf of Mexico. We can build projects better and faster than most.”
WorleyParsons, meanwhile, also has high hopes for its advisory business as a growth driver in what has been a trying period for the sector, with the ASX-listed group this week spending an undisclosed sum to buy US-based oil and gas consultancy MTG.
“We are seeing the opportunity to differentiate from what our peers are doing in the marketplace and we are really wanting to harness that deep technical knowledge and capability we have in our organisation,” Mr Holt said.
“(It’s) a new market opportunity, one that’s actually still with our same customers but a different part of the organisation as we seek to move into that management consultancy. We’re really going to work hard to grow it.”
WorleyParsons would not reveal specific internal goals for the division, but said it could “quite possibly” represent 10 or 20 per cent of pre-tax earnings in the future. The division has developed out of the $90m purchase of infrastructure advisory business Evans and Peck in 2009.
This article was published on The Australian.