Fluor Corporation (FLR - Analyst Report) recently announced that its joint venture (JV) with Daewoo Engineering & Construction and Hyundai Heavy Industries has received a contract from Kuwait National Petroleum Co. (KNPC). This JV won the bidding process for designing and constructing the Mina Abdullah Package 2 project, an upcoming Clean Fuel refinery in the Middle East region.
As per the deal, Fluor is to provide complete services package that includes engineering, procurement, construction (EPC) services. The package also comprises post-construction services like commissioning, initializing and testing support. The synergies of the deal will be recorded in Fluor’s first-quarter 2014 results.
Kuwait National Petroleum is planning to expand the production capacity of the Mina Abdulla and Mina Al-Ahmadi refineries to as much as 800 thousand barrels per day. The increased production of eco-friendly fuel is expected to meet the growing demand for low-sulfur containing transport fuel. The refineries will be equipped so as to keep the sulfur content to as low as 1%.
The $12 billion bid for the two refineries was approved on Feb 10, out of which Fluor received the contract for $3.4 billion (962 million dinars). The other winning companies are Foster Wheeler AG (FWLT - Analyst Report), JGC Corporation and Petrofac.
Acting through its subsidiaries, Fluor Corporation is one of the major professional services firms, which provides engineering, procurement as well as construction and maintenance services, along with project management services worldwide. The company’s expertise and resources in these arenas will help in the execution of the project.
Fluor currently has a Zacks Rank #2 (Buy). Other players in the engineering and heavy industry, which look attractive at current levels, include AECOM Technology Corp. (ACM - Analyst Report) and Quanta Services, Inc. (PWR - Analyst Report). Both these have the same Zacks Rank as Fluor.