LONDON: Canadian engineering firm SNC-Lavalin has written down $910 million in oil and gas assets amid continuing uncertainty over trade relations with Saudi Arabia.
The Canadian engineering giant had picked up a string of major contracts in the Kingdom before a diplomatic dispute between the two countries last summer clouded the outlook for future orders.
The firm said on Friday that near-term prospects for the business were worsening in the face of rising trade challenges in the Kingdom.
“We disclosed back in August the potential effects of the Canadian- Saudi issue, and I think that in itself doesn’t affect the work we do today and the backlog we have,” said SNC-Lavalin CEO Neil Bruce in a video presentation accompanying the company’s full year results. “But it does put a lot of uncertainty into the future prospects because Saudi have been pretty clear that they are looking wherever they choose to maybe omit us from bidding things that traditionally we would have bid,” he said.
The writedown contributed to a C$1.6 billion ($1.2 billion) fourth-quarter loss at the contractor. The engineering company also faces headwinds in Latin America, where it reported a
C$346 million loss related to what analysts understand to be Chilean state-run miner Codelco’s Chuquicamata copper mine.
As a result, SNC-Lavalin expects lower annual revenue from its metals and mining business.
Closer to home, the company is also in the middle of a political crisis that has enveloped Canadian Prime Minister Justin Trudeau, leading to the recent resignation of one of his key aides and a minister, Reuters reported.
The crisis follows allegations that Trudeau’s officials pressured a former minister to allow SNC to escape with a fine and avoid a trial over charges of bribing Libyan officials.
Saudi Arabia has been a lucrative market for the Canadian engineering giant.
Last April the contractor was appointed by Saudi Aramco to install additional facilities for a major gas processing facility in the Kingdom’s Eastern Province.
The following month it also bagged a contract for a major district cooling plant in Makkah.