...meet the increasing demand for oil and gas in growing economies such as China and India,” says Ayman Asfari, group chief executive officer of Petrofac, the London-based engineering and construction company.

Asfari says that Petrofac’s lump-sum engineering-procurement-construction activities in the oil and gas market are focused on the Middle East, Africa and the Caspian regions. Customers include both national oil companies and integrated and independent oil companies, but about two-thirds of the firm’s work is currently undertaken in conjunction with national oil companies.

Petrofac’s recently awarded projects in the Caspian region include a contract with Karachaganak Petroleum Operating BV for a FEED study for the third phase of the development of the Karachaganak processing complex in Kazakhstan. In Africa, it recently inked a deal with Equatorial Consolidated Group Ltd. to develop onshore and offshore oil and gas reserves in Equatorial Guinea.

The former Soviet bloc and Africa are hotspots for other firms as well. For example, the Jacobs Consultancy UK subsidiary of Pasadena, Calif.-based Jacobs Engineering Group recently started work on a contract to help Slavneft-Yanos, a joint venture of TNK-BP and Gazpromneft, both in Moscow, to develop a plan to upgrade a 300,000-barrels-per-day refinery in Yaroslavl, Russia, so products can meet European specifications.

Petrofac A gas development project in southern Algeria is one of several Petrofac projects in the Middle East and Africa.

In Africa, Sonatrach, Algeria’s state-owned energy company, recently awarded a $2.8-billion EPC contract to Houston-based KBR to design, equip and build a 4.5-million-ton/year LNG facility at Skikda, Algeria.

Studying Hard

FEED studies often lead to EPC and other work for the same companies. JGC Corp., Yokahama, Japan, for example, recently won an EPC contract to design, equip and build an $81-million upgrade of the Juron Island refinery in Singapore after successfully completing a FEED study for a joint venture of Singapore Petroleum Co.

Similarly, Jacobs followed up a FEED study it did for a planned a 2.2-million-ton/year diesel-hydro-treatment project at an Indian Oil Corp. Ltd. (IOCL) refinery in India’s Gujarat State by winning a contract to provide project management and engineering, procurement and construction management services on the $200-million job.

In announcing the deal, Jacobs Vice President Walt Barber called the project “our largest undertaking for IOCL, and is in addition to three projects we are currently executing for them.”

Still more proof of how work begets work is a $175-million contract that KBR’s M.W. Kellogg unit recently won to upgrade Statoil’s gas treatment facility near Stavanger, Norway, after completing a FEED study. MWK was the main contractor on three previous upgrade and expansion projects at the site.

New types of hydrocarbon-related projects for engineering and construction companies also are on the horizon. In November 2007, a joint venture of Chiba, Japan-based Toyo Engineering Corp., Tokyo-based MODEC Inc. and Plain City, Ohio-based Velocys Inc. reached a deal to jointly develop a gas-to-liquid plant for commercial application. The project’s goal is to develop by 2012 an “economical and compact” onsite process to convert natural gas from offshore fields to petroleum-like liquid products. Toyo and its partners note that more than 3,000 trillion cu ft of natural gas remains “unexploited and unutilized” because there currently are no means for delivering it to the world market.

A more immediate challenge to almost every engineering and construction company doing work in the oil and gas market is securing enough engineers, craftspersons and other personnel to staff their projects. “The sector’s capacity to deliver services is constrained by a shortage of skilled personnel, which will result in demand exceeding supply for the foreseeable future,” says Petrofac’s Asfari.