Adnoc axes plan for Shah sulphur pipeline

05 May 2010

Energy giant will use a railway developed by Union Railway to transport sulphur between Shah and Ruwais

Abu Dhabi National Oil Company (Adnoc) has axed its plans to build a technologically complex sulphur pipeline as part of the $10bn Shah gas development in favour of a rail network to be developed by the UAE federal rail firm Union Railway, sources close to the project tell MEED.

The state energy giant is yet to announce its choice between a specialist pipeline or a rail network to transport the 7 million tonnes a year of sulphur along the estimated 264-kilometre route between the sites. But it has already removed the sulphur pipeline from the project management consultants’ (PMCs) scope, and Australia’s WorleyParsons, which is doing design work on the scheme, has been asked to rework the scope of the sulphur handling terminal.

“It is pretty clear what they are going to do,” says one source close to the scheme. “I think Conoco [US oil company ConocoPhillips – Adnoc’s former partner on the scheme] favoured the pipeline, but the rail network makes more sense strategically for Adnoc.”

As a result of the decision to use the railway, the company will have to build a sulphur granulation plant at the Shah site to prepare it for transport across the emirate, rather than as part of the sulphur handling unit.

Adnoc is yet to tender engineering, procurement, and construction (EPC) deals for the main sulphur transport system linking the Shah field with processing and distribution facilities at Habshan and Ruwais in the north of the country, or for a sulphur handling terminal at Ruwais. Union Railway is expected to tender contractors for the railway in the third quarter of this year.

Adnoc has awarded more than $5.5bn of engineering, procurement and construction contracts to engineering firms on 29 April despite the announcement a day earlier that its partner on the scheme, ConocoPhillips, had pulled out of the scheme (MEED 28:4:10).

Italy’s Saipem was awarded the EPC contracts for a $198m product pipelines package, a $1.9bn gas processing unit, and a $1.45bn sulphur recovery unit.

South Korea’s Samsung Corporation won a $1.5bn deal to build the offsites and utilities for the scheme and a consortium of India’s Punj Lloyd and Spain’s Tecnicas Reunidas won the contract to build gas gathering facilities at the Shah field.

The state energy firm also told US/Canadian Veco and the US’ Fluor that they were due to be awarded the two PMC contracts to oversee the construction work on the scheme, although neither firm has received a formal notice of the award.

Fluor will oversee work on the three EPC packages on the scheme, the gas processing and sulphur processing facilities along with offsites and utilities at Shah.

Veco will oversee dredging works at Ruwais, early works at the Shah site and the construction of non-process buildings along with the gas gathering facilities.

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