Rotary Engineering, a Singapore oil and gas infrastructure services firm, said it expects to win contracts worth up to S$300 million ($199 million) from oil major Exxon Mobil in Singapore. The company also plans to invest up to S$30 million (US $20 million) in a new fabrication yard in China.
Chairman Chia Kim Piow, who founded the company in 1972, said Rotary tendered for several contracts worth S$200-S$300 million for Exxon Mobil's multi-billion dollar Singapore Parallel Train (SPT) project at the petrochemical hub on Jurong Island.
"We have a very good chance of winning most of the SPT projects we have tendered for. The results are expected next month," Chia said in an interview on Thursday. The SPT project includes Exxon-Mobil's second world-scale steam cracker.
If successful, Rotary will start work in the second half of 2008 and finish in 2010. Shares in Rotary, valued at just over US $500 million, jumped 4.6 percent on Thursday to a 2-week high, outperforming the Straits Times Index, which fell 1.2 percent.
Rotary, which has contracts to build oil and chemical storage tanks, terminals and processing facilities in Singapore, China, Thailand, and the Middle East, had an order book of S$585 million at end-June. Chia said Rotary, which has cash reserves of S$110 million, was looking to buy companies that either manufacture components needed in its engineering projects or are involved in the logistics business. Rotary has acquired several firms across Asia in the past few years. "We are looking for opportunities that will make the business more holistic and add value to our global workshops," said Chia.
A logistics acquisition would help Rotary, which makes and pre-assembles pipe racks at yards in Indonesia, Thailand, Singapore, Saudi Arabia and China, before shipping them to sites for assembly - an increasingly popular method to reduce construction costs in the global energy industry.
Chia said Rotary plans to invest up to S$30 million in a new 10-20 hectare fabrication yard with a 200-300 metre waterfront at the Dalian Changxing Island Harbour Industrial Zone in China. "The fabrication facility in Changxing Island will allow us to take advantage of the growing modularization of process plants and take advantage of China's competitive labour," he said.
The Changxing Island Zone will incorporate a deep-water port, equipment manufacturing industry, shipbuilding and petrochemical industry base. A nuclear power plant is also planned, according to The Economic Research Institute for Northeast Asia's Web site (www.erina.or.jp).