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Interview

with Mark Flower, Managing Director, South Africa, Fluor SA Ltd.

20.03.2012 / Energyboardroom

Mr. Flower, in 2008 – a year of considerable turmoil around the world – you came in as new managing director of the South African operations. How did you set your initial priorities?
Fluor South Africa acts as an operating entity on behalf of Fluor’s 5 business groups worldwide. In South Africa, the most well known group in the market is probably Energy & Chemicals, previously known as Oil & Gas. However we also work on behalf of the Mining & Metals Group and the Power Group, as well as others. As we are an operating center, we work with the business groups jointly to set the priorities and strategies combined with our regional knowledge of course.
Fluor has been operating in South Africa for over 50 years and has had a permanent presence in engineering and construction since 1981. Fluor Corporation itself will celebrate 100 years in business in 2012. Our operations are now well established here, and key challenges are specifically related to the projects we undertake.

As you mentioned, the Energy & Chemicals Group is the most well-known division of Fluor here. What can you highlight about Fluor’s track record in this sector?
Going back to the early projects in the 1960s, Fluor has been involved in creating much of South Africa’s oil refining and fuels production capacity. We did the Caltex Refinery in the 60s, the Natref Refinery in the 60s and early 70s, and the Sasol 2 and 3 complex in the 70s and early 80s. Since the completion of the Sasol projects, we have been engaged in ongoing work for all of our Clients in the oil and gas sector.
Through the course of setting up the permanent presence in 1981, we have also done work in various other industries, including Mining and Metals, Power, and others. We have also done other work for refiners and clients within the sub-Saharan African region, for example in Zambia, Mozambique, Angola, and Cote d’Ivoire. The work flow in these locations is not as continuous as in South Africa however. We also have an Operations & Maintenance unit to support small capital projects on a long-term contract basis.

As a leading EPCM, we can imagine that major capital projects are tempting to engage in. Considering that a lot of the infrastructure is already in place in South Africa now, what growth opportunities do you still see here?
From an oil and gas perspective, we are hoping to be participating in Clean Fuels projects that the refineries are developing. We would be looking to participate in those projects over the next 5 years. Further to that, we do not only look at South Africa. Any work in sub-Saharan Africa would be something for us to consider, even though the execution of the larger projects may be managed in conjunction with other offices of the Fluor global network – something we refer to as ‘dispersed execution.’

Fluor already has experience in the 2006 Clean Fuels 1 project. Was this an important experience to now take these opportunities forward?
In the meantime we have not just been involved in the Phase 1 in South Africa, but in various projects around the world. We are therefore not only reliant on the skills that we have in the country, but can build on the global expertise we have developed from becoming engaged in these different projects globally.

Fluor describes itself as a local company with a global reach. How does this compare to the positioning of some of the local engineering giants in South Africa, such as Group Five and Murray & Roberts?
We do not typically compete head-on with established South African infrastructure companies. We occupy a niche when it comes to the petrochemical and refining projects, and we have not participated in infrastructure or World Cup-type projects in South Africa, although we have done so in other parts of the world.
Often, we actually work together with different local contractors when we are involved on projects where they act as constructors. In spite of this, Fluor does also have construction capabilities in South Africa, which is in fact one of the strategic areas we aim to grow, as a means of fully participating in the entire EPC execution of projects.

When our colleagues met your predecessor in 2006, Mr. Watts, he said that doing business outside the South African borders is different, as it is challenging to deal with the various NOCs and governments. Has Fluor progressed on this front?
In the near future, the type of projects we will be looking at in South Africa will be the Clean Fuels work mentioned, while outside our borders we will be looking at opportunities such as oil and gas and pipeline opportunities in the sub-Saharan region, with East Africa emerging. When it comes to the larger projects, we are strong in dealing with the different challenges we encounter in such countries. Fluor prides itself on doing the most challenging projects in the most challenging locations of the world, and are very comfortable in dealing with NOC’s and Governments as we have done in several other places around the world.

Back in South Africa, Fluor has also been appointed by the Department of Energy (DOE) to do the feasibility study for solar power in the Northern Cape. What opportunities do you see in this area?
Through the Power Group, we are looking at bidding on EPC projects that are coming out of the DOE’s renewables program. We are certainly looking at opportunities right from Round 1 through to Rounds 2 and 3 as well. Each of these projects is quite significant, though we are still in the bidding phase of these.

At its Secunda Craft Training Center, Fluor South Africa has successfully assessed and trained over 40,000 people over the years. How significant are these capabilities?
The training center is a legacy from the Sasol 2 and 3 projects. Because this was such a large project at world-scale, Fluor – as well as other participating companies – helped to create the necessary skills. Training was mostly construction craft training, including welding, boiler-making, rigging and so on. We have since continued to run the training capabilities in Secunda.
This is an investment rather than a profit-center for us. Moreover, it is a social investment that creates capacity within the industry rather than within our company alone. Yet, we benefit in such a way that we have been able to justify the ongoing expenditure. We still have capacity that is not being used, and there is an open offer to the wider industry to leverage this facility more in the future.
We are also supporters of the BuildSafe South Africa initiative. Alongside Sasol, and some of our competitors, we are founding members of this initiative which is driven by similar intentions. We want to create a sustainable industry of which safety and skills development are key aspects. The training center is intended also to create safety awareness and engage in skills assessments.

Ideally, what will you achieve by 2017?
Success for us here in South Africa would be to contribute to Fluor’s strategic objectives by significantly growing the business of Fluor in this region. Africa counts for a small proportion of Fluor’s global oil and gas business at the moment, which together with anticipated project developments in the region affords us the opportunity to achieve this.

Do you have a final message for the readers?
We see many opportunities in the sectors we currently service, including those outside of oil and gas. We certainly see ourselves staying and growing in this market in order to provide world-class solutions to our clients. This is a great business to work in.

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