LNG (LIQUIFIED NATURAL GAS)

Aussie firms miss the train

AUTRALIA'S skills and materials shortage has made local companies uncompetitive in winning contra...

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But even though Australian content in the fifth train would be much less than in previous expansions, local companies could have a chance for a slice of a sixth train, the development of which could overlap the construction of the fifth train, according to Woodside chief executive Don Voelte.

An estimated $A900 million of work relating to the fifth train would still go to Australian suppliers, but this proportion would not be as high as it was in previous trains, Voelte said on Friday.

"Due to a number of factors, including the current skills shortage in Australia, it is more efficient for the plant to be prefabricated in modules off-site and transported to the Burrup Peninsula for assembly and commissioning," he said.

Voelte said before tenders were called for the fifth train, consultants searched the region to identify fabrication yards capable of doing the work. Two Australian companies were invited to submit tenders - one declined and the other submitted a tender but could not complete the work to the project schedule to deliver gas in 2008 and its price was about 250% above Woodside's provisional budget.

"We had no option but to continue negotiations with two international companies who submitted globally competitive tenders and had the capacity and experience to complete the work on time and on budget."

A major contract covering the pre-fabricated modules will be awarded next month.

Voelte said the skills shortage had become a very serious problem and Australia could not provide sufficient engineers to meet Woodside’s requirements and overseas-based engineers did not want to relocate to its Perth headquarters.

"We have come to the realisation that we cannot hire enough people in Perth," he said.

"We are anticipating building regional offices in the outskirts of London and Houston, Texas."

Voelte said the NWS partners could well start building a sixth train even before the fifth train had been completed.

“We at Woodside anticipate the possibility of further LNG trains being built on the Burrup in the near future, even possibly overlapping construction of Train 5,” he said.

It is likely a sixth train would be fed by Woodside’s Pluto gas discovery, probably in combination with Chevron’s Wheatstone find. Voelte has said several times in the past few months that Woodside would be prioritising the development of Pluto.

The question is, will Australian firms be ready to meet the requirements of that development?

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