Clough secures smaller Reindeer contract

The turn in global markets has prompted Reindeer gas project owners Apache Energy and Santos to re-tender contracts, with Clough today awarded a substantially smaller contract compared to the $460 million deals it won last year.

Today, Clough said it has secured a $45 million contract that covers the engineering, design works, procurement of all permanent materials and equipment, and assembly of all modules for the onshore facility, Devil Creek.

The new contract comes three months after operator Apache terminated Clough's two contracts for the engineering, procurement and construction of the onshore Devil Creek gas plant and the offshore Reindeer production facilities.

A Clough spokesperson told WA Business News that Apache and Santos plan to re-tender those contracts, with the engineering and construction company to tender for the contracts when it opens.

Its understood that with the softening of the market, Apache and Santos wanted to check the value of the contracts.

Apache government and public affairs manager David Parker would not verify whether contracts were being re-tendered.

Apache has a 55 per cent stake in the Devil Creek project, while Santos own 45 per cent.

In December last year, Apache and Santos announced it will defer development of the $900 million project, saying the decision was made on the back of adverse changes in the global economic outlook.

As a result Clough's contract was terminated, leaving a residual value of $390 million, along with Ausclad's $43 million contract to fabricate the platform at the project.

The project was re-started when Chinese company CITIC Pacific signed an offtake deal in January for the supply of gas to its Sino iron project.

Ausclad is listed on the Singapore stock exchange as Ausgroup.

Today Ausgroup managing director John Sheridan said there had been no discussions with Apache or Santos about reinstating Ausclad's contract for the construction of the Wellhead platform.

He said it was understood that contract will go out to tender to Australian and Asian fabricators, which may make it more difficult for Ausclad depending on how aggressive the Asian yards are.

"We're keen to do it out of our Kwinana facility because we've had some lay offs," said Mr Sheridan.

"This project would probably utilise most of the capacity in the current workforce and probably allow us to increase the workforce."

The company has some 1,200 employees after 100 workers were laid off over the last three months due to the market downturn.

Mr Sheridan added it valued the Wellhead platform contract at around $43 million.