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Foster Wheeler Arm Wins Mexico Refinery Deal from PEMEX

Zacks Equity Research

Foster Wheeler AG’s (FWLT) Global Engineering and Construction Group (E&C) was recently awarded an engineering, procurement and construction (:EPC) contract by PEMEX REFINACIÓN for it Salina Cruz refinery. The financial details pertaining to the contract were not disclosed. The initial phase of the work will be included in the company’s third-quarter bookings. Foster Wheeler aims to complete the work by 2018, as the balance work is expected to be released by 2015.

The scope of the contract requires Foster to carry out the start-up and testing, apart from the engineering, procurement and construction work at the ultra-low sulfur diesel (:ULSD) project. Notably, Foster Wheeler is working on the project in collaboration with Arendal of Mexico.

The ULSD project requires an upgrade which involves refurbishment of four diesel hydrodesulphurization units, installation of new units for hydrogen production, sulfur recovery and sour water stripping along with significant improvement to the utilities and offsite facilities.

Based in Oaxaca, Mexico, Salina Cruz refinery is part of PEMEX REFINACIÓN’s clean fuel program adopted under the country’s recently passed energy reform. The program primarily aims to drastically reduce the sulfur content in diesel produced from 500 to 15 parts per million. Notably, PEMEX is investing more than $500 million in the upgrade and improvement of the Salina Cruz facility.

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In the recent past, Foster Wheeler’s E&C group won many major EPC contracts from renowned companies such as Africa-based Sasol Petroleum Temane Limitada, part of Sasol Ltd (SSL). Separately, the company signed a collaborative agreement with ZeoGas LLC (for an undisclosed sum) whereby Foster Wheeler is entailed to help ZeoGas with site selection and project planning for the installation of the latter’s first fuel plant.

Foster Wheeler’s E&C group offers a wide range of project management and project control services for overseeing engineering, procurement and construction activities. With such significant contracts, the company’s third-quarter bookings for the segment seem to be quite strong.

Foster Wheeler currently holds a Zacks #3 (Hold). Some better-ranked stocks in the engineering & diversified sector include Pernix Group (PRXG) and Quanta Services Inc. (PWR). Both of the stocks carry a Zacks Rank #2 (Buy).

Read the Full Research Report on FWLT
Read the Full Research Report on PWR
Read the Full Research Report on SSL
Read the Full Research Report on PRXG


Zacks Investment Research