So, the platforms for the Nexen-operated Golden Eagle project have gone to the Middle East, or more correctly the UAE-domiciled but London-listed group Lamprell.
I’d say that was predictable; not even Dragados of Spain could compete with cheap Indian sub-continent labour drafted into the UAE to carry out such work.
In the grand scheme of the $3.3billion development, the just north of $200million contract doesn’t seem much, until one considers how valuable such work would be to the UK’s somewhat underfed but still quite substantial offshore fabrication sector (DECC published a useful summary of capabilities this year), even if the superior among us regard this simply as metal bashing as opposed to high value engineering, which it in fact is.
In Scotland the current capability basically means BiFab in Fife and, following the deal just struck, Global’s yard at Nigg on the Cromarty Firth. But, no matter how aggressively such companies might bid, were they ever going to get Golden Eagle? And how successful are they destined to be bidding other UKCS oil and gas projects in the development pipeline?
One understands that John Robertson, BiFab’s boss, is very keen indeed to secure the five or six platforms package for the upcoming Cygnus gas development in the Southern North Sea, but that this too might be gobbled up by a Middle East competitor.
To be fair on Nexen, the company has said that some two thirds of the Golden Eagle capex spend will be made in the UK, which is not far off the 70% target that the long ago Offshore Supplies Office aimed for.
However, this then begs the question as to where this money will really go. I’ll warrant it will mostly flow into the coffers of the many foreign brands that populate the industrial estates and smart avenues of Aberdeen and its environs. Real UK content will turn out to be a lot less than two thirds.
Not that one can take Nexen to task; the company is investing more than $3billion and creating/sustaining hundreds of jobs in arguably the most important strategic sector that the UK has … upstream oil and gas. And that has to be good.
Nonetheless, news that what is basically a manufacturing contract has gone overseas is deeply disappointing, especially since, according to the latest Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI), Britain’s manufacturing sector contracted at its fastest pace in more than two years in October as new orders plummeted, adding further to the worry that we may slide back into recession.