Questions surface on LNG benefits to WA economy

THE Western Australian Liberal opposition leader Mike Nahan has called on the Labor premier Mark McGowan to ensure oil and gas engineering and fabrication work is conducted by WA businesses with local workers.
Questions surface on LNG benefits to WA economy Questions surface on LNG benefits to WA economy Questions surface on LNG benefits to WA economy Questions surface on LNG benefits to WA economy Questions surface on LNG benefits to WA economy

WA opposition leader Mike Nahan

Paul Hunt

Senior Journalist: Energy & Commodities

Paul Hunt

In the WA parliament during estimates this week, Nahan raised concerns over the government's commitment to local jobs in the oil and gas sectors, warning that future job prosperity in the state required new policies to be introduced immediately. 

 "The premier indicated that he will put a priority on local fabrication [in the oil and gas sector], how and when is he going to do it?" Nahan said.

"If the premier is to achieve these policies, they will have to be put in place soon."

The opposition also took aim at Woodside Petroleum's choice to award FEED contracts to international firms instead of local WA companies.  

 "Woodside has put out Scarborough FEED contracts with McDermott, a global firm, and Subsea Integration Alliance," Nahan said.

"It has already let the feed contract for Scarborough with an indication that if it goes ahead, they have the contract to build. All those firms have indicated that they will source globally."

This afternoon Nahan doubled down on his remarks in parliament.

"The Liberal Opposition is concerned that engineering works of a type that have historically been done in Western Australia by WA workers are now being outsourced to overseas companies," Nahan later told Energy News via email. 

"A number of WA firms successfully bid for design work on both the Ichthys and North West Shelf projects and then further secured flow-on construction work."

Concerns around Woodside's choice to award engineering contracts to overseas firms have been raised previously, after the company announced in October last year that Bechtel would provide concept definition for the Pluto LNG expansion to process gas from Scarborough.

In January Woodside awarded FEED work to American multinational McDermott, Italy's Saipem Australia, Worley Parsons subsidiary Intecsea and Subsea Integration Alliance, and then this month Canadian firm SNC Lavalin was awarded two Scarborough contracts for FEED support.

This week McDermott released four tenders of its own for construction of Scarborough's floating production unit. It is not yet known whether this contract will be allocated to local firms. 

Premier McGowan defended Woodside's decision saying the engineering work was "obviously highly specialised" and required some of the "brightest people on the plant" to work on projects like Scarborough.

"[Developers] often engage engineering companies from around the world to work on them. I hope that WA companies receive a considerable amount of that work," McGowan said. 

The premier told parliament that he hoped WA companies received a "considerable amount" of work from Scarborough and the LNG sector more broadly but that would require on competitive tender processes which wouldn't guarantee local companies won contracts.

"One of the roles of the LNG task force is to secure the establishment of some of those companies to a greater degree in Perth," McGowan said.

McGowan's comments fell on deaf ears yesterday and today opposition leader Nahan took aim at his comments calling them "alarming" and offensive to local industry.

"The premier seems more interested in ensuring low-value less specialised work for construction unions rather than high-value design work with the potential for flow-on construction work," Nahan told Energy News.

"There is a significant opportunity for WA firms to build on their expertise and be world leaders in LNG engineering and design, however that opportunity could be lost unless the premier shows some leadership and ensures this work stays in WA."

This time last year Woodside CEO Peter Coleman said the company would choose a "dream team" of contractors.