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Fluor (FLR) & Partners Win Rovuma LNG Contract in Mozambique

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Fluor Corporation (FLR - Free Report) , JGC Corporation of Japan and TechnipFMC of France — together referred to as JFT — have been selected by Mozambique Rovuma Venture S.p.A. (MRV) for its onshore liquefied natural gas (LNG) production complex that is to be built in Cabo Delgado, Mozambique.

Although value of this engineering, procurement and construction contract is not yet disclosed, Fluor announced that it will book its portion of the work in fourth-quarter 2019. The company, which has more than 55 years of work experience in Africa, has been executing more than 750 projects across the continent.

The JFT consortium will utilize the companies’ expertise to develop the phase 1 of the project that includes the development of Area 4 of the ultra-deep Rovuma Basin and a giant offshore natural gas field with up to 15 trillion cubic feet of natural gas located off the coast of Mozambique.

MRV — a joint venture of Eni SpA (E - Free Report) , Exxon Mobil Corporation (XOM - Free Report) and China National Petroleum Corporation (CNPC) — holds a 70% interest in the exploration and production concession of Area 4. Meanwhile, Galp, Kogas and Empresa Nacional de Hidrocarbonetos (ENH) hold 10% interest each.

Fluor’s Energy & Chemicals business, which has been recording dismal results over the last few quarters, is expected to benefit from this contract win. The company has been facing reduced volume of project execution activities for several downstream projects, a large upstream project, and the completion of a large chemicals project. Over the past six months, the stock has lost 56.8%, underperforming 11.7% collective decline of the stocks belonging to the industry. Further, the company’s Zacks Rank #4 (Sell) reflects its innate weakness.

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Going forward, Fluor — which shares space with Jacobs Engineering Group Inc. in the same industry — anticipates an increase in front-end engineering awards, which have been at a low level over the past couple of years. Fluor is also tracking multiple large projects including derivative and LNG plants in North America, along with upstream projects that include pipelines and downstream projects in the Middle East. The company remains optimistic about investment projects, particularly LNG projects in North America including the LNG Canada project with Shell, chemical facilities, as well as pipeline projects in the United States. It also expects strong prospects for refining and chemical projects in the Middle East and Asia.

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