Clough and Murray & Roberts executives said the alliance would form a contracting group with an international reputation and the ability to deal with multinational resources companies on a global level, delivering opportunities that were only available to larger concerns. The partners said they would now be able to offer a wider range of engineering services in the oil and gas, power generation and mining industries.
Murray & Roberts chief executive Brian Bruce said the strategic relationship would introduce Clough into regions of the world where Murray & Roberts had a strong presence, creating new oil and gas business opportunities in the Middle East and Africa. It would also give Murray & Roberts access to engineering and contracting opportunities in the oil and gas sector.
Clough CEO David Singleton said the partners were optimistic about the next decade in the oil and gas sector.
“The very significant growth of economies in Asia is driving energy demand,” Singleton said.
“A lot of marginal fields are being developed and there is plenty of new exploration which will drive demand for our services.”
While Clough currently does 70% of its business in the oil and gas sector, Murray & Roberts has never done any specialist oil and gas engineering work. But the partners said their alliance would create new opportunities for both companies in this sector.
The partnership would bring oil and gas capability into Murray & Roberts’ operations, while giving Clough access to new markets, particularly in southern and east Africa, said Murray & Roberts chief executive Brian Bruce.
Bruce said Murray & Roberts had been offering general engineering services to several large clients with oil and gas interests. The strategic alliance would now allow it to expand the range of services offered to these clients.
“Clients and projects are getting bigger, and the best value is to be found in the major projects,” Bruce said.
“There is a need for contractors to get bigger to be able to engage with their clients around the world. There are also lots of uncertainties in the natural resources environment. To reduce the risks, you need knowledge and skills. But no one has enough knowledge or skills for every situation, so partnerships offer a risk management strategy.”
But increasing global reach wasn’t the same thing as becoming a global company, he cautioned.
“I don’t think there is such a thing as a global engineering contractor – knowledge is local,” Bruce said.
“There is a lot of uncertainty and risk associated with new markets because of a lack of understanding of the environment. Local knowledge is essential.”
The partners said they saw Australia, South-East Asia, the Middle East, and southern and east Africa as their core markets.
While they believed they would have opportunities in other markets, generally such operations would involve partnerships with firms with strong backgrounds in these regions, according to Bruce.
For now the partners were concentrating on bedding down their minerals joint venture and they would not be actively looking for new opportunities in oil and gas in the near future, Singleton said.
But Murray & Roberts’ existing general engineering work for oil and gas sector clients, its experience in power plant work, and its strong relationships with many companies in oil and gas-rich parts of the Middle East and Africa meant opportunities were likely to emerge, according to Bruce.
When they felt ready to chase new oil and gas business, the African oil and gas sector would offer the partners many opportunities, he said.
Oil and gas exploration was currently growing strongly in southern and east Africa and in the longer term there would also be big opportunities in west Africa, according to Bruce.
“There are a lot of oil and gas reserves in onshore west Africa,” he said.
“As political situations stabilise we will see more exploration and production onshore. It is potentially a very big region.”
Clough and Murray & Roberts will remain separate entities. The Clough family will gradually reduce its family shareholding to 34.6% while Murray & Roberts builds up to a 29.3% holding in Clough. Murray & Roberts executives Brian Bruce and Norbert Jorek will join the board of Clough.
