Wood Group seals land­mark deal to build Is­raeli gas power sta­tion

£563m en­ergy plant ex­pected to be fin­ished in three years

The Herald - - Business - MARK SMITH

WOOD Group, the Scot­tish oil and en­ergy ser­vices gi­ant, has struckan $875 mil­lion (£563.3m) deal – one of the com­pany’s largest to date – to build a nat­u­ral gas power sta­tion in Is­rael, a project that also marks the pos­si­ble eas­ing of po­lit­i­cal ten­sion be­tween Is­rael and Turkey.

The Aberdeen-based group yes­ter­day said it had reached an agree­ment with Do­rad En­ergy to build the 800-megawatt, nat­u­ral gas-fired power plant, which will pro­vide around 8% of Is­rael’s to­tal in­stalled power gen­er­a­tion ca­pac­ity.

Mark Pap­worth, the chief ex­ec­u­tive of Wood Group’s Gas Tur­bine Ser­vices (GTS) di­vi­sion, de­scribed the project as a “land­mark”.

The new Do­rad Power Plant, near the Is­raeli town of Ashkelon, is ex­pected to be on­line within 36 months and is also 25% owned by Zorlu En­erji, the Turk­ish elec­tric­ity pro­ducer.

Zorlu’s part in the gi­ant project has been part-fi­nanced by loans from Tel Aviv-based Bank Hapoalim and Clal Fi­nance, and marks the largest busi­ness deal be­tween Turkey and Is­rael since re­la­tions be­tween the two long-time al­lies crum­bled in the wake of the Is­raeli raid on the Gaza-bound Turk­ish flotilla in May.

At the time, Turkey said it would sus­pend state-spon­sored joint projects with Is­rael, in­clud­ing en­ergy and wa­ter pipe­lines.

Is­tan­bul-based Zorlu En­erji last month said it may sell its in­ter­ests in Is­rael un­less there was an eas­ing of the po­lit­i­cal ten­sion be­tween the coun­tries.

For Wood Group, the con­tract is note­wor­thy by virtue of its size alone and also be­cause it marks one of the com­pany’s largest ever deals out­side its core oil ser­vices di­vi­sion.

Un­der the terms of the agree­ment, Wood Group GTS has full turnkey re­spon­si­bil­ity for the com­bined-cy­cle plant – from de­sign, pro­cure­ment and con­struc­tion through to com­mis­sion­ing and han­dover.

The com­bined-cy­cle power plant will use 12 nat­u­ral gas­fired tur­bines con­nected to a heat-re­cov­ery steam generator to pro­vide suf­fi­cient steam to run two tur­bines.

The com­pany said its com­bined cy­cle gas tur­bine technology would of­fer sig­nif­i­cantly im­proved emis­sions as com­pared to coal-fired technology.

Mr Pap­worth said: “The land-- mark Do­rad Power Plant will be one of the first ma­jor op­er­a­tional in­de­pen­dent power pro­duc­ers fol­low­ing Is­rael’s dereg­u­la­tion of elec­tric­ity mar­kets.”

He added: “As the global econ­omy re­cov­ers and an in­crease in power gen­er­a­tion is re­quired, we ex­pect a ro­bust mar­ket op­por­tu­nity for ad­di­tional gas-fired power gen­er­a­tion ca­pac­ity.

“We in­tend to con­tinue to de­velop our EPC (en­gi­neer­ing, pro­cure­ment and con­struc­tion) ac­tiv­i­ties, sup­port­ing our clients’ new power plant re­quire­ments both in the Amer­i­cas and the East­ern Hemi­sphere.”

Shares in Wood Group climbed al­most 3% in early trad­ing on news of the con­tract win yes­ter­day, but later slipped back to end the ses­sion down 0.7% to 469.3p.

STEP FOR­WARD: Wood Group’s com­bined cy­cle gas tur­bine technology will of­fer im­proved emis­sions com­pared to coal-fired technology.

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