Weak oil price creates gas opportunities, says SNC-Lavalin division head
By Karolin Schaps
LONDON (Reuters) - Canadian engineer SNC-Lavalin (SNC.TO: Quote) sees opportunities from weak oil prices as investment shifts to liquefied natural gas (LNG) plants and other gas projects where the company has built expertise, the firm's oil and gas division head said.
Providers of equipment and services to the oil industry have been hit hard by the crude price slide. A barrel of crude fell from above $100 in 2014 to below $30 last year, and has recovered only modestly to about $50 now LCOc1.
"I kind of hope that oil will not get back to $100 because it will increase opportunities in other areas," SNC-Lavalin's head of oil and gas, Martin Adler, told Reuters in London.
"We are quite big on gas so if there is a move to gas then I think we are in the sweet spot there," he said.
SNC-Lavalin's oil and gas division, whose clients include Royal Dutch Shell (RDSa.L: Quote), Saudi Aramco and ExxonMobil (XOM.N: Quote), reported losses from 2012 to 2014 but posted a profit in 2015 after acquiring engineer Kentz for 1.2 billion pounds ($1.5 billion).
The acquisition transformed SNC-Lavalin's energy business because of Kentz's track record in liquefied natural gas (LNG) projects, such as Chevron's Gorgon LNG export plant in Australia and the expansion of Gazprom's Sakhalin LNG terminal in Siberia.
Many oil and gas projects, including some LNG plans, have been put on hold in the market downturn, but bullish LNG demand growth forecasts have underpinned the attraction of the sector in the long term.
The International Energy Agency sees LNG making up more than half of the world's gas trade by 2040, from a quarter in 2000. Continued...