ROD DEAN'S 2006 REVIEW

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E & C Hydrocarbon Review - The Global view from Europe. Looking back on 2006 & ahead to 2007.

Lummus has first rate technology (Olefins, Propylene, Refining and Petrochemicals and a state of the art Technology Centre in Bloomfield New Jersey). This would be a very good fit for a number of companies - Ethylene, Propane Dehydrogenation, Ethyl Benzene Styrene, Butadiene, Polypropylene and a number of Refining Technologies - a number of interested parties are rumoured to be sniffing around but ‘white’ smoke is in short supply. Should Bloomfield go there would be not much left of this once famous company dating back to the first decade of the century.

CEO’s have come and gone, some clearly well out of their depth, but the generally high level of activity in Ethylene, Refining and their strong technology portfolio has kept them going. Samir Brikho the former Chairman of Lummus has turned up as CEO at the sprawling, erstwhile aspirant AMEC - we shall meet him in the next paragraph. What is clear in the current climate (maybe it has always been the case) is that the wounded limp on and survive to fight again another day. Brikho has however already grasped the nettle in his new role and seems certain to carve out a reputation for himself whether that is positive or negative remains to be seen.

Our old UK friends AMEC have had another uncertain year culminating with a profits warning, a number of offers from break up specialists and finally a major management shake up with a number of ‘senior men’ departing and the arrival of Samir Brikho amid massive fanfares and ‘wall to wall ‘ articles in the major business newspapers. It is very interesting to read some of the accounts of Brikho’s prowess at Lummus - as we say it’s all about timing! Let’s say there miracles and miracles. But these are the facts as presented - ABB’s downstream oil and gas business Lummus Global, where he is reported in turning a $300m loss into a $40m profit in 18 months. Very interesting figures eh!

The first half of the year was taken up with the restructuring of the company into two divisions and the sale of Spie, its French based subsidiary. The sale of Spie yielded £85 m more than expected, but the real problem was clearly the Construction Division and there were another rift of exceptional charges in the middle of the year.

It’s not all bad news however and with the future nuclear programme where potential acquisition of BNG places AMEC in a strong position for preferment. Those old soldiers Brian Wilson and Neville Chamberlain are still in their roles as Non Executive Directors - AMEC has always been aware of the usefulness of having friends in high places in the UK.

I reported last year that 1995 was in fact the end of another UK Company's dream to become a major international player. Davy was once the pretender (even a member for a time) and after that John Brown Davy - both failed due to market volatility and contract losses, the former more so than the latter, but sadly the door is finally shut ‘the Brits will never join the Pantheon that contains the E & C Titans’, these will forever remain in the hands of the USA, Japan and now the French.

After a glorious decade at the helm of Britain's leading construction empire, Sir Peter Mason has left a company suddenly engulfed by a £140m after-tax hit and a severe identity crisis.

Sir Peter Mason's final year at Amec should have put the finishing touches to a glorious career, and the cherry on top was to have been a grand farewell and hearty thanks for taking the company's share price from less than one pound to more than three during his decade at the helm. For much of those 10 years, Amec was the golden boy of British construction.

It had the biggest turnover, and its mix of contracting and services work brought in attractive margins. As a result, Amec was one of the few construction sector firms that the City cared about. Instead, the past 12 months have been characterized by losses, contract disputes and the carve-up of the most powerful empire in UK construction.

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