Kuwait refineries deal tipped
A New Zealand oil, gas and petrochemical services firm is confident of securing a deal in Kuwait and the booming Middle East refinery sector.
Contract Resources provides specialised catalyst handling and mechanical services, as well as environmental and industrial services to companies around the world.
The firm was valued at $116 million after an 85 per cent acquisition by Auckland-based investment firm Hellaby Holdings. It bought Wellington investment company Rangatira's 50 per cent stake in Contract Resources late last year.
Contract Resources chief executive Andrew Wells said the company, which does about 90 per cent of its business overseas, was confident of securing a five-year contract with the Kuwait National Petroleum Company, which in 2011 recorded a net profit of about $2.1 billion from revenues of nearly $50b.
Wells said the firm now had a very small market share in the Middle East, but the refineries and petrochemical plants there were of enormous potential.
"New refineries and petrochemical plants in the Middle East [are] nothing new but the scale of them is quite impressive.
"As an example, Kuwait has three refineries; it would be the largest user of catalyst in the world.
"Those three refineries, and if we win that contract that's the largest catalyst handling contract left in the world."
Wells said there were not many companies in the world that offered specialised catalyst handling services, an essential component to refineries.
"You have reactors which are full with catalyst and during the process over time that catalyst becomes spent or used or inactive and it has to be taken out and replaced.
"During the process it becomes contaminated with a whole lot of quite nasty stuff and we have to come up with solutions to be able to handle it," Wells said.
The process was hazardous because catalyst burnt when exposed to oxygen, so work had to be completed in reactors filled with nitrogen.
"It's high hazard but the hazards are very well managed.
"If you take maintenance services, more people are being killed undoing nuts and bolts on a petrochemical plant than they have been getting into nitrogen atmospheres."
Contract Resources is forecast to achieve revenues of $150m this year, which Wells said was comparable to similar overseas companies.
"If you go like-for-like, some would be a bit bigger than us and some would be a bit smaller than us, but we're not talking sheep stations, so there's probably about five of us that are all pretty similar in size."
Hellaby Holdings chief executive John Williamson said Contract Resources, which employed about 600 people, allowed the investment firm to diversify its portfolio to include more overseas revenue earners.
The diversified investment firm is active in the automotive parts, packaging, industrial equipment and footwear markets.
"The attraction of Contract Resources is firstly it's a New Zealand company that's done extremely well overseas, it's one of the larger New Zealand export service providers and it's a business that provides central services in a central sector."
He said the company operated in four key geographies, the largest of which was Australia, as well as New Zealand, the United States and Middle East.