Carillion says cheap oil may hamper Gulf expansion
Company was awarded $124.6mn contract by BP in July
British construction firm Carillion has said its expansion plans in the Gulf region may be hampered by plunging oil prices.
The company's Omani arm last month announced that it has been awarded a £80 million ($124.6 million) contract by BP but its CEO has admitted that the sultanate may be more exposed to the volatility in the oil market.
In comments published by Bloomberg, Richard Howson said: “I’m watching Oman with interest. It has more exposure to the oil price than perhaps the other countries in which we trade in the Middle East.”
Oil prices have more than halved since last year and Oman is the biggest Middle East producer outside OPEC.
Revenue from the country made up 45 percent of Carillion’s Middle East sales in 2014, Bloomberg reported.
The company has been expanding in the Middle East, winning construction contracts for Dubai’s World Expo in 2020 and a service agreement to manage Royal Dutch Shell’s estate in Qatar.
The region accounted for 14 percent of Carillion’s first-half sales, according to its earnings statement published on Wednesday, up from 5 percent three years ago.
Last month, Carillion Alawi said the BP deal centred on plans to build the operational base and accommodation complex for BP's Khazzan gas project.
The contract involves the construction of accommodation facilities, including an operational base, a residential complex for 250 personnel and other infrastructure buildings in the Khazzan gas field, approximately 350km south west of Muscat.
Work on the contract is expected to start in September 2015 and is scheduled for completion in mid 2017.