Stephan Bernstein, CEO of GreenRoc, details the PFS results for the new graphite processing plant. Watch the video here.
There are too many variables on PFC's side of the contract to pin actual margins. Hitachi as manufacturers of the AC/DC converter stations might have a clearer idea of their costs apart from variations in raw material costs especially steel. PFC is dependent on too many partners to arrive at their own costs. PFC does not have a yard of their own. So they have to depend on third party yards such as MMHE in Malaysia whom they have picked for the 1st TenneT contract. For the earlier Borwin3 project they used Dubai Drydocks. Then PFC will have to depend upon offshore heavy lift players such as Heerema, Saipem, Allseas and the like to get the installation work done! These will be the main costs for PFC apart from transportation costs from the factory to the site and from the fabrication yard to the site. PFC have much experience in these activities which will definitely help them to keep costs under control. Its for the same reason that Tennet has gone about this novel strategy of awarding Frame Agreements to various contractors in order to secure global capacity in advance for their 2GW project!
Seen many posters talk about largest contract, value EUR 13 billion etc. I t has to be understood that Hitachi & PFC have been awarded a Framework Agreement which will comprise of 6 individual contracts each having a value of approximately a little over EUR 2 billion each! And the value that will be booked into the PFC backlog each time a contract is awarded within the Framework Agreement will be approximately EUR 1 billion! The remaining EUR 1 billion will go into Hitachi's books. First contract has already been awarded with the Frame Agreement. Second contract expected later this year. Then the remaining 4 in the following 3 to 4 years. PFC never said they have won the largest contract in their history. They said they won their largest "Framework Agreement" in history! Total value of the 6 contracts to PFC when fully awarded will be approximately EUR 6.5 billion over a 3 to 4 year period.
Out of the 14 offshore 2GW stations planned by TenneT in Dutch / German waters, 6 have already been included in the Frame Agreement with the Hitachi/PFC consortium at approximately EUR 13 billion total.
Likewise, 5 stations are in the Frame Agreements with GE at approximately EUR 10 billion total.
That leaves another 3 stations costing approximately EUR 6 billion yet to be finalized.
Wonder whether all 3 will go to Hitachi or GE or Siemens. Or whether there will be a split.
Substantial backlog growth is likely to occur towards the later part of 2023 and into 2024. Provided of course PFC is able to manage the financial aspects, technical skills required and the global supply & logistics constraints. The PFC-Hitachi partnership is assured of EUR 10 billion worth of business until 2030 assuming an even split across the 3 bidders by the client TenneT for the estimated EUR 30 billion budget on their 2GW programme consisting of 15 to 20 stations.
PFC is well placed for a number of ADNOC expansion projects where PFC did the original works. Also in Libya where the FEED is being done by PFC. Refinery tenders in Algeria are outstanding for award. Plenty of Green Hydrogen works coming up in Oman where PFC have an excellent record with all the major players - PDO, Shell and BP. The new CEO should probably be able to get PFC back into bidders list in Saudi Arabia and Iraq. Huge opportunities await there!
@ClearViews - Companies don't normally divulge such type of information on the public domain, even competitors of PFC, since they are usually bound by confidentiality clauses with their clients. During results announcements or trading updates some indications might be made but again without going into too much details.
Into February already! Silence regarding new contracts is deafening! As someone mentioned earlier it would be nice to get some major contracts before the new CEO takes over and then get some bigger ones after he takes charge! That would set the stage for dividends by 2024!
Both upstream and downstream oilfield service providers have been consistently reporting large order intakes recently. Haven't seen anything similar from PFC except the TenneT news. Waiting for the $1.5 billion announcement that was mentioned in the TU.
https://www.meed.com/contractors-assigned-for-hail-and-ghasha-megaproject
It looks like PFC is not going to win any part of the work on the mega ADNOC $10 billion+ Hail and Ghasha Project!
Petrofac's name is not among the 6 contractors selected for the onshore and offshore jobs.
Onshore - Technip Energies + Samsung Engineering + Tecnimont
Offshore - Saipem + NPCC + CPECC
https://www.meed.com/contractors-await-official-award-for-jordan-refinery-project
Official award of the contract to the Italian Tecnimont led consortium has still not yet taken place so perhaps there is still hope for the Petrofac led consortium! There is also another consortium led by the Spanish firm Tecnicas Reunidas competing for the contract.
News of the US$1.5 billion assured new contracts should start dropping anytime now after the holiday season! Wonder whether it will be mostly O&G or Renewables! There was no indication in the TU. Doesn't really matter whichever it is actually I suppose as far as PFC is concerned!
From the TU - "E&C is well positioned on a number of near-term prospects, with US$1.5 billion of opportunities where we are at preferred bidder stage, and a further US$3.5 billion of bids submitted. Bidding activity remains high, with an 18-month pipeline, including bids submitted, of approximately US$54 billion, of which US$33 billion is scheduled for award in 2023".
US$1.5 billion submitted and already in the bag! US$3.5 billion submitted but winning chances unknown at the moment. US$28 billion yet to be submitted but will be awarded in 2023. US$21 billion yet to be submitted but will be awarded by June 2024. Prospects look very good indeed. Further Asset Solutions has opportunities for US$11 billion to be awarded in 2023!
JV partners - Petrofac (as consortium leader), Saipem & Samsung. Total cost - US$ 4 billion, Petrofac share - US$ 1.4billion (35%) Petrofac responsible for the very complicated and complex brownfield scope of the project. Saipem and Samsung both responsible for the relatively easier greenfield scopes. The main contribution to the overall project cost overruns and the delayed completion will likely be due to the PFC scope. Project was due for completion in October 2022. They might have got some extension due to COVID impact. However Petrofac will probably be hit hardest with extra costs. Hence the discussions with both the client on the one hand and the JV partners on the other to try to mitigate cost impact. Always a risk executing complex projects in new geographical locations. PFC faced a similar situation with the Sullom Voe gas plant project in the Shetlands for Total Energies in 2015! Incurred massive cost overruns and Liquidated Damages.
They announced the US$200 million Algeria contract just before the results presentation in August. If similar announcements are not forthcoming before the upcoming TU, the CEO will have to defend or justify his optimism regarding contract awards during H2 of 2022! Not only the TU next week, he will also be responsible for presenting the full year results next Feb or Mar since the new CEO takes charge only from 1st April 2023.
11th August 2022 Press release - "Opportunities scheduled for the 2nd half of 2022 are expected to be awarded evenly over the period"
Haven't seen much of that happening yet! Perhaps some new contract wins will be announced just before or during the Trading Update next week.