Chevron has awarded a $1billion contract to Malaysia’s Kencana HL Sdn Bhd to fabricate and assemble a liquefied natural gas (LNG) processing plant for its Western Australian Wheatstone project.
Premier Colin Barnett has foreshadowed he will introduce a State Agreement for Wheatstone into Parliament that will include tough new local content provisions. However, this fabrication contract is the latest of a number of engineering, design and fabrication contracts to go offshore while this legislation is pending.
This new contract has been awarded to an offshore fabrication yard while a number of WA fabricators are operating below capacity and youth unemployment around the Kwinana strip remains high. The contract represents lost business opportunities, as well as fewer skilled jobs and apprenticeships for Western Australians.
It is poignant that the work has gone to Malaysia given that in Malaysia the entire upstream oil and gas industry is controlled by Petroleum Nasional Berhad (Petronas), who are the sole entity with legal title to Malaysian crude oil and gas deposits. Foreign investment can only occur through production sharing agreements in which Non-Malaysian firms are only permitted to participate in oil services either in partnership with local firms or as contractors and they are restricted to a 30% equity stake if they are incorporated locally. Malaysians know how to develop wealth from their own resources, while Premier Barnett seems happy to give it away for nothing.
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