ABB Ltd. (ABB - Analyst Report) recently received an engineering, procurement and construction (EPC) contract from Algerian oil and gas company Sonatrach for a new liquefied petroleum gas (LPG) pumping station. The contract is valued at $100 million and the order was booked in the fourth quarter of 2012. The contract includes capacity expansion of LR1 pipeline in Algeria. The plant is expected to be complete by Mar 2015.
The new pumping station situated in the Hassi Messaoud District is part of an expansion project to add a second LPG pipeline between Haoud El Hamra and Hassi R’Mel. The primarily objective of this 400-km pipeline is to increase transportation capacity from 4.5 million tons a year to 11 million tons.
As per the terms of the contract, ABB will be responsible for the design, engineering, procurement, commissioning and start-up. However, the construction and installation part of the project will be handled by Sarpi, which is a 50% joint venture company owned by ABB and Sonatrach. In addition, ABB will also provide a comprehensive LPG pumping station including electrical, piping and mechanical equipments.
The contract would expand the connectivity of Hassi R’Mel, Algeria’s largest gas field and also the center of the country’s natural gas transport network; as it is from here that gas is transported by pipeline to terminals on the Mediterranean coast for export to European countries or for processing into liquefied natural gas.
Prior to this, in 2009, ABB had received a $490 million worth contract to supply approximately 900 km of trunkline and flowlines and install about 600 km of them in Algeria. Apart from this, ABB has other projects that are under execution including the field infrastructure for the El Merk oil and gas fields, a contract worth $650 million and one of the largest EPC contracts in ABB’s history, a gas flaring elimination project at Haoud Berkaoui, and the delivery of utilities, storage and export facilities for the central processing plant at Menzel Ledjmet East in the Berkine Basin.
ABB currently has a Zacks #3 (Hold). However, some other companies operating in the similar industry and worth considering at the moment are Orion Marine Group Inc. (ORN - Snapshot Report), Willdan Group Inc. (WLDN) and Harris & Harris Group Inc. , all having a Zacks Rank #2 (Buy).