Annual Report 2019

Our future

Our customers’ confidence and spending has been growing. The consumption, and therefore demand, of energy, chemicals and resources continues to increase. Across all our markets, we see opportunity arising from the rapidly changing energy mix and climate adaption challenge and the flow on effects in our other sectors. However, as we move into FY2020 the level of macroeconomic uncertainty is rising including the trade wars between China and the US, the uncertainty of Brexit and Iran. We continue to monitor the potential impact that this may have on the sectors we serve.

Energy

Upstream & Midstream Hydrocarbons

Global macro trends such as population increase and growth in underdeveloped nations continue to drive world energy demand. While long term energy forecasts differ slightly between our major customers, energy agencies and industry bodies, all outlooks forecast growth in the Upstream oil and gas markets to 2040.

Gas production volumes continue to grow as countries seek a midterm clean fuel source to fill an expected resource gap caused by the reduced acceptance of coal. Whilst selected intercountry pipelines have been sanctioned, it is the LNG industry that is the primary enabler for the global gas economy. Predicted supply side shortages in the early 2020s have driven investment back into the LNG industry for both greenfield developments and major expansions within the heritage LNG centres. We elevated the LNG subsector to our strategic focus areas in FY2019 and expect it to remain a key area of investment in the coming years.

Power & New Energy

The Power market is continuing to evolve as the world moves toward increased electrification, driving a shift in power related investment opportunities. Renewables such as solar, wind and nuclear power will play a major role in future global energy demands. Grids, including micro-grids and storage will also occupy a significant share in spend as a means to integrate these technologies.

Given this outlook, our Power and New Energy business is deliberately focusing in growth technologies of high complexity, and low risk for commoditization. Specifically, we are looking to enhance our portfolio in offshore wind, expand our offerings around distributed energy solutions, position ourselves as leaders in the emerging hydrogen technology space, and globalize our power operations and maintenance capability platform.
Our strong advisory capabilities will continue to provide a platform from which to build a full value chain offering that includes project delivery and ongoing operations and maintenance.

Chemicals

Refining

Given the increased competition from new energy forms, combined with transportation fuel demand reaching its peak, there is the expectation of a longer-term decline in traditional refining markets. Asia and Middle-East are expected to see growth in demand for refining investments close to mid points of forecast demand growth. These two regions are estimated to contribute 80% of capital spending through to 2050. A refining and petrochemicals integration trend is emerging as customers look to safeguard profitability, tie-up supply chain and optimize Downstream facilities for their Upstream crude production. Areas of investment growth include renewable diesel (Canada and Europe), the integration of refining and petrochemical plants (Asia and the Middle-East), as well as the expectation of increased short-term projects as refiners adapt to the new business reality of the 2020 IMO regulations and continued implementation of clean fuel globally.

Petrochemicals

Historically, petrochemicals capital expenditure growth has tended to exceed GDP growth and that forecast is set to continue with demand growth across all major products expected. This is matched with a growth in the crude oil-chemical market which is being led by large projects across Asia and the Middle-East (particularly Saudi Arabia). Asia and the Middle-East are also expected to lead the way for demand and expenditure growth for plastics, despite challenges associated with single use plastic waste and recycling. Key growth markets include grass root ethylene complexes, and Western investments into China.

Chemicals

Global megatrends such as urbanization, population growth and sustainability continue to drive long-term demand growth within the chemicals market. While the overall trend is positive, a constant balancing equation between feedstock and market dynamics continues. For this reason, Asia, the Middle East and North America are the current hotspots for chemicals capital expenditure in the coming years. With our expanded capabilities in chemicals from ECR, further expansion into the inorganic and speciality chemicals markets is planned.
Regulatory changes on foreign ownership is stimulating investment into China. This, combined with out extensive delivery capabilities in this region, will enable both local market and large scale global project execution.

Resources

Mining, Minerals & Metals

Miners’ strong balance sheets are resulting in increasing project development pipelines. The trend towards accelerated sustaining capital investment is evident as miners seek to extend the life of mines, improve productivity and maintain market share. This is true for growth commodities including iron ore, copper, gold and fertilizers. As significant, near surface deposits become depleted the need to exploit deeper, more complex orebodies at the lowest cost will increasingly drive the mining industry. Underground mining is where proportionally higher capital will be spent in the future of mining. It is capital intensive and requires close and collaborative relationships to develop successful solutions. Our customers are increasingly pursuing a technology enabled, automated, data driven and efficient operation. We continue to focus on innovation in project delivery with the concept of a digital mine seen as a way to increase both capital and operational efficiency. Our immediate strategic focus is being driven by investment in phosphates in North Africa and Middle East, iron ore in Australia as well as copper and gold across all key mining markets.

Resource Infrastructure

In line with our corporate strategy, our resource infrastructure business continues to be focused on growth opportunities within the energy and resource sectors. We have well established global businesses servicing the front end and delivery phases of projects and these service lines include transport, environmental and water, and advisory services. From a regional perspective, we remain focused on the regions where we see projected growth in our core business sectors pursuing the significant infrastructure needs of these projects.