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Foster Inks Tripartite Agreement

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Recently, Foster Wheeler AG (FWLT) has teamed up with Clariant International and Wison Engineering to build a pilot plant in China to demonstrate its Vesta substitute natural gas (:SNG) technology.

 It is a long-term cooperation agreement between Foster’s Global Engineering and Construction Group and the two companies. The sole objective of the deal is to equip a pilot plant for demonstration of Foster Wheeler's VESTA substitute natural gas (:SNG) technology with catalysts of Clariant, which operates in the specialty chemicals industry. Wison Engineering, China's leading private chemical contractor will also be responsible for the efficient functioning of the plant that is expected to go on-stream during 2013.

Foster’s SNG technology aims at providing optimized solutions to secure clean energy in China, which is also believed to be the world’s largest SNG market. This technology also has minimal operational and implementation cost. Management at Foster believes that this project will prove to be the company’s first stepping stone towards its success in the global market.

However, the current agreement also talks about a provision for another future contract among the three parties. It will be an additional long-term contract, with Foster licensing the same technology, Clariant supplying the catalyst and Wison providing the engineering and construction services.

Foster’s basic operations are focused on the energy sector. Under the current global scenario, demand for energy is expected to grow exponentially over the long term with its clients steadily investing in new and upgraded capacity to meet the demand. Along with the CFB technology, SNG is a new addition to the company’s portfolio which is expected to attract more contracts in the future, especially in the Middle East, where Foster is an undisputed market leader.

Besides Foster, other stocks in the Construction sector that are currently performing well include Michael Baker Corporation (BKR) with a Zacks Rank #1 (Strong Buy), while Harris & Harris Group, Inc. (TINY) and Willdan Group, Inc.(WLDN) have a Zacks Rank #2 (Buy) each.

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