A STATE parliamentary committee has confirmed the engineering sector’s worst fears about the state’s failure to capitalise on the booming LNG sector and become a global centre for high-level LNG engineering design.
A STATE parliamentary committee has confirmed the engineering sector’s worst fears about the state’s failure to capitalise on the booming LNG sector and become a global centre for high-level LNG engineering design.
In a detailed report tabled in parliament last week, the Economics and Industry Committee said despite the boom in LNG development, WA’s share of high-end engineering work had steadily declined since Woodside completed its Train Four expansion at the North West Shelf in 2003.
The report, based on information from a range of industry participants, said Train Four represented the high point in local engineering content, with 72 per cent of the design work undertaken in Perth.
But, as of April last year, 90 to 95 per cent of all engineering and design work on planned LNG plants in WA would be performed offshore, mostly in the world’s three main design hubs of Reading (UK), Yokohama (Japan) and Houston (US).
overall, Woodside’s $13 billion Pluto LNG project was expected to achieve 50 per cent local content, while the local content level for Chevron’s $43 billion Gorgon project had been scaled back from 66 per cent to 50 per cent.
The report found that, while WA had the capacity to provide the necessary engineers to undertake such work, and was considered cost-competitive, location was more likely to be influenced by the preference of the multinational energy companies responsible for developing big LNG projects.
Critically, it said it had been suggested that these major companies “do not favour the development of another LNG design hub and have the ability to block new entrants”.
“Project owners appear not to have supported the concept of Perth as a centre of LNG design excellence and seem to support the maintenance of the status quo,” the report said.
Furthermore, LNG processing technology tended to be owned by specialist technology providers, which also limited the number of firms able to undertake design work.
One possible solution suggested by the report was for the WA government to mandate a set level of engineering work be undertaken in the state, as Norway had done to support its own engineering design industry.
The report was also critical of governments’ general focus on creating blue-collar job opportunities when talking about local content, rather than higher value engineering work.
The Association of Professional Engineers, Scientists and Managers backed the report, saying last week that current legislation was not sufficiently prescriptive to protect Australian engineering jobs.
“The government has failed to ensure local projects are designed by local engineers,” APESMA chief executive officer Chris Walton said.
