M&R appointed as a Snowy 2.0 contractor

Deal extends oil and gas platform’s service

CONSTRUCTION and engineering group Murray & Roberts (M&R), in a joint venture, has been appointed as a contractor for the multi-billion Australian dollar civil works packages for the Snowy 2.0 project, the group announced on Friday.

M&R is part of the Clough Salini Joint Venture, which will undertake an estimated AU$4 billion (R40bn) in civil works packages for the Snowy 2.0 project.

M&R’s share price rose strongly by up to 5.58 percent to R14.19 per share on Friday, after the contract award was announced. It closed at R14.01.

Clough is a wholly owned subsidiary of M&R and has a 35 percent shareholding in the joint venture. The value of Clough’s share of the scope of the work is valued at about R18.1bn over an estimated period of five years.

The contract is part of a strategy by M&R to extend its oil and gas platform’s service offering to complementary markets.

“Active investment programmes are of critical importance, considering the current lack of project opportunities in the Australasian LNG sector,” the group said in a statement.

Salini and its US affiliate Lane are world leaders in hydro power developments which, combined with Clough, would create a joint venture capability that will deliver the project for the benefit of the Australian community, M&R directors said. The Snowy 2.0 project involves linking two existing Snowy Scheme dams in Australia, Tantangara and Talbingo, through underground tunnels to depths of up to a kilometre, and an underground power station with pumping capabilities, according to a website by power group Snowy Hydro, which details the project.

It will also involve several surface locations including at the intake-outlet structure, surge shaft, cable and ventilation portal sites. Establishing or upgrading tracks and roads and electricity connections to the construction site will also be required.

The project will also boost the Snowy Scheme’s existing hydro-electric generation and large-scale storage capacity, adding 2 000 megawatts and provide 175 hours of storage for Australia’s National Electrical Market (NEM). It should produce enough power to ensure the reliability of more intermittent renewable energy sources such as wind and solar that come online, when coal fired power stations retire, Snowy Hydro said.

Hydro power will be generated by falling water spinning big reversible turbines, which can also pump water in the opposite direction. The water is recycled between the upper and lower dam in much the same way as the Ingula pumped storage scheme works for Eskom in KwaZulu-Natal.

The contract will be a boost M&R’s oil and gas platform.

According to the interim results for the six months to December 31, 2018, the platform made a R94 million operating loss due to a much later than expected commissioning of the CTF East Filter Press.

Nevertheless the oil and gas platform’s order book was at R4.4bn at the end of the interim period, up from R3.8bn in December 2018.

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