May 22 (UPI) -- Scottish energy services company Wood Group said Monday it secured a contract with Russia to help advance Far East liquefied natural gas development.
Wood Group started action immediately on its five-year contract to help advance a liquefied natural gas project on Sakhalin Island in the Pacific Ocean. For Wood Group, it builds on a partnership for Sakhalin that reaches back to the late 2000s.
"This is an exciting and strategically important relationship for the future and one which underlines our ongoing commitment to Russian national content and development," Dave Stewart, chief executive officer for Wood Group's eastern region, said in a statement.
Russian energy company Gazprom said last year that Sakhalin could help diversify its portfolio with LNG opportunities in Asia. Expanding Sakhalin, Russia's only LNG facility, was considered a "high priority" for a country that satisfies about 20 percent of the European energy demand.
An agreement on strategic cooperation between Gazprom and Royal Dutch Shell extended to the LNG sector via possible extensions to the existing LNG plant on Sakhalin Island. In February, Shell said in an annual review that LNG demand is on pace to grow at twice the rate of conventional gas, or between 4 and 5 percent per year through 2030.
Wood Group's agreement on LNG comes about two months after it made an all-share offer to acquire its rival, Amec Foster Wheeler. The tie-up followed a trend in the industry marked by last year's mega-merger between Royal Dutch Shell and BG Group, and smaller deals like General Electric's majority hold over oilfield services company Baker Hughes.
Wood Group cut about 35 percent of its payroll and drew down overhead costs by $96 million last year.