Peter Bennett – CEO, Clough, Australia
Peter Bennett details his strategic priorities since taking over as Clough CEO in February 2016, explains his focus on expanding the scope of the company’s services and reputation to embody a truly integrated EPC approach in project lifecycles. He details the benefits that Clough provided various LNG projects during Australia’s construction boom, while also prospecting future domestic and international growth opportunities—particularly in markets like the US and Africa.
In terms of strategic objectives and priorities, what’s at the top of your agenda?
For the Clough organization, what we really need to do is be much clearer about who we are and what our strategy is. The company is 97 years old and has evolved throughout its history. It was fully acquired back in 2013 by the South African Murray & Roberts group which aims to position Clough as the group’s worldwide oil and gas platform.
Through that evolution, Clough has been adding capability and shifting focus. We haven’t been able to reach our clients as well as we want to—especially in terms of defining who we are, what we do, and how we do it. We’re very well known in the infrastructure industry, which has been pivotal in Western Australia’s own growth and development. Perth’s Narrows Bridge, for example, is one of the landmark monuments that Clough constructed back in the 50s. We’re certainly very well known in the engineering space, but the scope of our capabilities and project services extends far beyond that.
In terms of defining Clough today, we are a full lifecycle service provider covering areas such as conceptual engineering, engineering studies, FEED, EPC, PMC, brownfields, and commissioning. We do everything through to the long-term maintenance and operation of facilities. It’s a very diverse offering, but focused on the oil and gas market. We still have our historical infrastructure capability, but it’s predominantly Australia-, and more specifically Western Australia-, focused. We will pursue some of the large infrastructure projects on a selective basis where it suits our offering and business model.
However, from an oil and gas perspective, as the market shifts from the greenfields focus of recent years, we’re well poised to continue to deliver our brownfields and maintenance capabilities. I see that as one of our core business platforms in Australia. There will be capital projects, but much smaller in nature than what we’ve seen in the last decade—and we will also pursue those. But our growth markets will be found internationally—taking the Clough execution model into foreign markets.
How does this direction feed into and enable Clough’s Vision 2020 strategy?
Essentially, by 2020 Clough aims to become a global business providing integrated EPC solutions across our clients’ asset lifecycle, generating sustainably strong growth.
The pillars of this strategy are focused on the oil and gas industry, leveraging the Clough culture and execution model, and delivering it on a more global basis.
Vision2020 is underpinned by our international growth agenda. Following the money, we’ve set our sights on developing our presence in the US, Africa and South East Asia, where the industry is still investing in oil and gas projects, albeit at reduced levels.
The landscape has been changing quite rapidly over the last four to five years. But certainly the ultimate vision has stayed intact. Some of the tactics along that path will vary slightly, but at the end of the day they just need to be focused and supportive of our overall strategy.
Against the backdrop of constant volatility and cyclical market fluctuations, how would you evaluate Australia’s continued appeal as a growing technology hub and as an overall destination for domestic and international investment in oil and gas?
Australia has always been attractive for oil and gas investment for numerous reasons. Firstly, it’s got a wealth of natural resources both in oil and gas and minerals and mining, which not many countries have access to. The nation also has a stable government and established political regime that creates an added layer of stability from an investment standpoint. Australia’s human resources and workforce capabilities are also very well-known and one of the nation’s key exports.
The challenge, however, is the relatively high costs associated with Australia’s operating landscape. This is one of the areas that, especially in the current climate, will always warrant concern when it comes to project development. But, despite this fact, we’ve seen Australia concurrently establish an unprecedented pipeline of major LNG projects in the last decade. To successfully pull off that range projects on that scale has never been done before anywhere else in the world. That’s a testament to the strength of the Australian industry, the capabilities of the market, and the stability of the government to allow those projects to develop without the sort of challenges that you might see elsewhere in the world.
Overall, from an investment standpoint, Australia still has the fundamentals and will remain attractive. Will we see this level of investment at any point in the future though? Probably not.
As the globe is struggling with oil prices, contractors will go through a flat stage over the next few years and will see some challenging times. But we will rebound because our industry is cyclical in nature. We might have had a higher peak, and will probably have a more sustained trough than normal, but the market will recover. International investors will always have an eye on the Australian market. When prices stabilize and there’s been rationalization in the industry, I’m confident investments will return to Australia.
In terms of domestic investments, there has always been an underpinning base load of local projects and we will always pursue these developments, such as local infrastructure. From an oil and gas perspective though, it will be some years before LNG expansions materialize. I see debottlenecking and efficiency improvement projects as near term opportunities.
The most salient developments in Australia have all revolved around the country’s massive investments in LNG projects—many of which Clough has taken a pivotal role in servicing. How would you summarize Clough’s approach in tackling such large-scale projects?
Our USP is derived from our broad range of service offerings, spanning engineering, project management, hook-up, commissioning, maintenance, and brownfields. So, we’re really able to pursue a fairly comprehensive range of activities—specifically among the LNG market as it developed in Australia. Of these projects, all had very unique ways of contracting and structuring from an execution standpoint. As Clough, we were able to pursue the projects and the opportunities in the way that our clients wanted to bring them to market, and we’ve been successful in a number of different areas.
On the Gorgon project, for example, we were part of the Kellogg Joint Venture Group (KJVG), the joint venture company in charge of EPCM services for Chevron’s downstream LNG facility on Barrow Island. We provided both engineering and project management services and we’re now participating in the commissioning phase. We continue to support the Chevron organization in their other endeavors today. For Wheatstone, we designed and constructed the jetty as a turnkey solution, and we’re currently conducting hook-up and commissioning services for their offshore platform.
Additionally, our project work has also extended to many of the other major projects in Australia such as INPEX’s Ichthys, where we are currently delivering the hook-up and commissioning, and Santos’ Gladstone LNG project, where we constructed over 400km of gas and water transmission pipelines, compression facilities, camps and associated infrastructure.
Right now, the construction phase is unwinding, and as such, we’re heavily involved in the commissioning phases of Gorgon, Wheatstone, and Ichthys—which will then roll over into brownfield and maintenance work. That’s the next phase of the project lifecycle that we’ll be focusing on.
Given Clough’s increasingly global interests, what international markets will serve as key drivers of growth moving forward?
We see the US as one of the markets where there are still large levels of investment—especially in shale gas developments. LNG facilities aside, there are also downstream ethylene plants and other gas processing facilities. However, at the moment, the American company that we acquired, CH-IV, is a niche player that is predominantly involved in LNG projects. It is relatively small in scale, but serves as a great entryway into the US, coupled with the fact that the clients we have worked with in Australia and Papau New Guinea on LNG developments are actually the ones moving these projects forward in the US. We have some owners’ engineer roles on some of the liquefaction facilities over there, and we’re looking to expand that product offering from an owners’ engineer, pre-FEED type project into a greater role across the board.
Some aspects of our strategy will consist of organic growth and deploying resources from Australia to the US. However, we will also partner with key delivery contractors in the US to deliver a true EPC solution, which is what the market is looking for. This can be achieved through joint ventures or acquisitions; we still have a relatively open mind when it comes to M&A. If the right opportunity presents itself and fits with our strategy, then we’ll pursue it.
Africa is another strategic market where we see a lot of potential. There has been a lot talk about LNG developments in Mozambique, which are gradually starting to come on stream. Tanzania is a number of years behind, but also has great gas reserves that need development. Additionally, there’s always been a long history of work in places like South Africa and Equatorial Guinea. Our parent company, Murray & Roberts, allow us access to skilled labor pools and management in this region, which is quite frankly, an aspect that might terrify most companies from a risk standpoint. But it’s been in Murray & Roberts’ legacy for many years, whether as a sub-contractor or EPC contractor. That being said, however, our oil and gas footprint is still relatively small in scale, so our goal and strategy is to move up the food chain in Africa, take bigger roles in projects, and continue to grow that revenue base.
Just a few weeks ago, through our subsidiary CMR Marine, we signed a USD 20 million contract in South Africa for Sunrise Energy’s Saldanha Import Terminal project. That is good recognition of the success of that strategy and acts as a launching pad for our business to cultivate further growth in the region.
Especially as an engineering driven organization, the most vital asset and pivotal component of the company’s continued success is its people. How will Clough go about attracting and retaining the best talent available given the current state of the industry?
One of the most appealing characteristics of Clough is its culture. There are some people here that have been working in the company for more than 30 years. We have some great programs and affiliations with the local universities, which cover internships, scholarship programs, and an internal project management academy. We’ve been bringing talent into the organization at a young age, and investing a significant amount of resources to help develop them along their journeys. That’s the culture that has and will make us successful. Although we enter foreign markets like the US and South Africa, at the end of the day it’s Clough people that go there—allowing us to successfully execute the Clough delivery model wherever we go.
We have the Clough systems, the Clough tools, and the Clough way of doing things. That’s everything from our approach to the health and safety of our employees through the way we handle logistics and execute projects. We think this has proved successful for both us and the markets that we pursue.
Given the company’s almost century-long history in Australia, what would you consider the most critical success factors that have allowed the company to maintain such longstanding and productive relationships?
Performance. You’re only as good as your last project. But performance is what we deliver, and what our clients have come to expect and appreciate. Our international clients know us well from this region and as we pursue an expanded geography, they will know what to expect from us.
We need to continue to provide the performance. Our goals, strategies, and growth models will have us taking on bigger projects in different locations. As we do that, we need to maintain, if not exceed, the standards of delivery and level of execution that have gotten us to where we are today. When we go into these new market segments, we’re going to be strategic and methodical in the way we operate by first recognizing our capabilities and limitations. In achieving our ambitions, we will be stretching the company and its people, but it’s a challenge that I believe everyone at Clough is looking forward to tackling.
Before joining the company, I had always admired Clough from the outside, with over 26 years of experience in the oil and gas contracting industry. But certainly, talking to clients before I joined and since I’ve been here, they’ve all perceived our superior performance and unrelenting drive for excellence as our strengths.
What are the most fundamental goals that you will have wanted to accomplish as Clough’s CEO in the upcoming years?
To establish ourselves internationally with the reputation as a full project lifecycle delivery company—going beyond the singular capabilities of engineering or construction and into a truly integrated EPC service offering. By the time I complete my tenure with Clough and our reputation develops to the status of a widely acknowledged international EPC company, then I will have considered myself successful.