ENGINEERING group Amec's Darlington division has won a £54m contract to design and deliver a gas storage facility.

Yesterday, the group announced record annual profits of £118.1m and said it was looking to expand its operations in Iraq.

But the company, one of Darlington's largest employers, also revealed that it is to build the facility at Aldbrough, near Hornsea, in East Yorkshire, for Scottish and Southern Energy and its partner, Statoil.

Amec, which also has 200 engineering staff in Wallsend, Tyneside, has been planning to expand in the gas storage area, which is seen as a growth market in the UK as North Sea gas stocks dwindle.

The company, which is helping to restore the infrastructure of war-torn Iraq, also said it was exploring opportunities in the country and the region as it posted a five per cent rise in pre-tax profits.

It said its contracts in Iraq, where some North-East employees have been working, made a small contribution to its profits for last year but would have a bigger impact in 2005.

Amec is working in Iraq on a number of contracts to restore damaged infrastructure, including power generation and water supply.

The group said orders under the contracts had taken time to come through and that safety and security remained paramount.

It said its joint venture with US construction group Fluor had won about £379m-worth of orders and the final value could be much higher.

Amec said it had also received orders worth an extra £67.5m.

The company said it was difficult to predict rates of progress on specific tasks in Iraq and that conditions remained volatile.

Amec supplies design, project delivery and maintenance support services to the oil and gas, transport, industrial and infrastructure industries.

The group, which is based in Northwich, Cheshire, and employs about 45,000 people in the UK and 40 countries worldwide, has been switching its focus from traditional construction to engineering services.

It said its three main businesses - engineering and technical services, oil and gas and project solutions - all made progress this year.

Operating profits in the services business, which contributes 47 per cent of Amec's turnover and includes the Iraq operations, rose by 7.9 per cent. The oil and gas division won contracts worldwide. It said it believed the division, which accounts for a third of group profits, would be an important growth area.

Group bottom line pre-tax profits came in at £65.7m against £95.7m last time.