Jacobs Engineering Group Inc. (JEC) recently announced winning of two strategic contracts – one from Sadara Chemical Company and another from Shell Downstream Distribution.
Sadara Chemical Company, a joint venture under formation between affiliates of The Dow Chemical Company (DOW) and Saudi Arabian Oil Company (Saudi Aramco) awarded engineering, procurement and construction management (EPCM) contract to Jacobs for the Chemicals 1 Envelope of Sadara. The operations will take place at Jacobs' offices in Manchester, UK; Mumbai, India and Al Khobar, Saudi Arabia.
This award is part of the chemical project in Jubail Industrial City in Saudi Arabia, the construction work of which has already started and is scheduled to be completed by early 2015. Production from the first units of this world class chemical project is expected to begin in the second half of 2015. The fully integrated complex is designed to comprise 26 chemical manufacturing units and be one of the largest of its kind in the world.
Under the terms of the contact, Jacobs is providing front end engineering design, detailed engineering services, procurement, inspection, and delivery of equipment and bulk materials, along with the overall construction management for the project. The terms of the agreement, however, has not been disclosed.
The contract from Shell Downstream Distribution entails offering of project management and engineering services for Shell's European Program, encompassing program assets in Austria, the Netherlands, Germany, Luxemburg, Turkey, Italy, Denmark, Norway and the United Kingdom.
The contract value has not yet been disclosed and it has been noted that the three-year framework agreement has an option of a two-year extension. The program will be led by Jacobs' office in Ghent, Belgium in close association with the company’s other offices in Cologne, Germany; Milan, Italy; Stenungsund, Sweden; Glasgow, Scotland; and Mumbai, India.
According to the contract, Jacobs will be supporting Shell in managing its Regional Capital Program through the engineering procurement and construction management (EPCM) model for identified projects. Moreover, the company will be managing Shell's asset or project information and documents for all terminal facilities across the region.
Jacobs recently reported buying of KlingStubbins, a Philadelphia based architectural firm which provides professional services in planning, architecture, engineering and interiors. Thus the company’s recent venture along with its prospective list of contracts will prove encouraging for the company and eventually strengthen Jacobs’ position in the infrastructure market worldwide.
Jacobs Engineering Group Inc. provides services to a variety of industrial, commercial and government clients across a global network. The company directly competes with its peers, such as Fluor Corporation (FLR) and Foster Wheeler AG (FWLT).
We currently hold a Neutral recommendation on the stock. Jacobs has a Zacks #3 Rank, implying a short-term (1-3 months) Hold rating.
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