Fluor Corporation announced Thursday that it has agreed with Offshore Oil Engineering Co., Ltd. (COOEC), a subsidiary of China National Offshore Oil Corporation (CNOOC), to form a new joint venture, COOEC Fluor Heavy Industries Co., Ltd. (CFHI), through which the two companies will own, operate and manage the Zhuhai Fabrication Yard in China’s Guangdong province.
Located near Hong Kong in the Zhuhai Gaolan Port Economic Development Zone, the Zhuhai Fabrication Yard is a world-class, state-of-the-art facility, which is already establishing a reputation for serving fabrication needs in the Asia-Pacific region. At 21.523 million square feet (2 million square meters), the yard can accommodate fabrication modules weighing more than 50,000 tons. The yard has delivered a number of significant structures to date and has a backlog of projects in the Asia-Pacific market.
“COOEC Fluor Heavy Industries is an important strategic alliance, as it positions Fluor to develop a more powerful presence in the global construction and fabrication market, and enhances our abilities to serve and grow our current client base in Asia-Pacific and around the world. Our customers are enthusiastic about this venture’s ability to deliver very large cost-efficient structures,” said Fluor Chairman and CEO David Seaton.
“With this partnership, we are building on Fluor’s 30-year presence in China and a 15-year relationship with COOEC, a partner we know well and respect,” Seaton continued. “This joint venture is fully consistent with our strategy to establish a leadership position as an integrated solutions provider.”
The new venture adds complementary strengths for both companies. Fluor brings its 100-year history of building the largest and most complex projects around the world. COOEC brings its cost-competitive fabrication capabilities and strong client relationships in Asia-Pacific and worldwide.
COOEC Fluor Heavy Industries provides Fluor with the capability to produce cost-effective, very large modules for onshore projects and gives the company access to the long-term strategic capacity to deliver offshore fabrication services for clients globally. The new venture, which is geographically well positioned, increases Fluor’s fabrication presence to four locations around the world.
As part of the joint venture, Fluor will make two stages of investments: an initial cash investment of $350 million after all regulatory approvals are received, which is targeted for late 2015, and a $139 million investment in the third quarter of 2016. Fluor will hold 49 percent ownership in the joint venture, with COOEC holding 51 percent.
Fluor’s investment in the joint venture does not impact the company’s $1 billion share repurchase program, which the company expects to complete as planned by the end of 2015.
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