Wood Group seals landmark deal to build Israeli gas power station
£563m energy plant expected to be finished in three years
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.