CBI Wins Contract in Middle East - Analyst Blog

Chicago Bridge & Iron Company N.V. (CBI), a Woodlands-based energy infrastructure company, received a $70 million contract in the Middle East from Daewoo Engineering and Construction Co. Ltd.

Chicago Bridge & Iron will be working with Takreer, a refining company based in Abu Dhabi, on the Ruwais Refinery expansion project.

The project aims to increase the per day capacity of the refinery by 400,000 barrels. The company will be providing propylene storage tanks to the refinery. Chicago Bridge & Iron’s role in the project is expected to be completed by 2013.

Among the engineering and construction companies, Chicago Bridge & Iron is seen to be the most focused company on the oil and gas end market, specializing in the construction of storage tanks. Demand for these tanks are expected to be strong in the coming years with a number of refinery construction project running and planned, specially, in the Middle East, Asia, and Africa.

In the past couple of years, investment in the oil and gas industry has increased in folds, providing significant benefit to EPC (engineering, procurement and construction) companies like Chicago Bridge & Iron, ABB Ltd. (ABB), Fluor Corporation (FLR), and Foster Wheeler AG (FWLT).

With employee strength of approximately 16,000 and as a worldwide provider of EPC solutions and proven process technologies, Chicago Bridge & Iron executes more than 600 projects in a year. As of March 31, 2010, over 70% of the company’s total backlog consisted of projects outside the US. Its diverse area of operation includes upstream oil & gas, downstream oil & gas, LNG, power, water & wastewater and metals & mining.

We currently maintain our Neutral recommendation on Chicago Bridge & Iron Company.