The signing is imminent for the much-anticipated engineering, procurement and construction (EPC) contract to upgrade the country’s second largest refinery at Azzawiya.

Negotiations between the client, Azzawiya Refinery Company (ARC), and Germany’s Uhdehave been ongoing since the start of the year. ‘We hope that the contract will be finalised by the end of August or the beginning of September,’ says a source close to the project (MEED 16:1:04).

Tripoli has given verbal approval to ARC to go ahead with the estimated $280 million deal, which calls for the installation of a new continuous catalytic reformer (CCR) unit, naphtha and gas/oil hydrotreaters and an isomerisation unit at the 120,000-barrel-a-day plant. But a proposed second phase of expansion, which calls for a new residual catalytic cracker unit, methyl tertiary butyl ether (MTBE) facilities and an additional sulphur treatment plant, has been postponed indefinitely due to a lack of funds.

Uhde was one of eight bidders when ARC first tendered the contract in 2001. Paris-based Technipwas awarded a letter of intent in February 2002, but later declined to submit revised prices and the contract was awarded to the only other prequalified bidder, LGEngineering& Construction of South Korea. In a further twist, the Korean firm then terminated its contract in May 2003, forcing ARC to reissue the tender late last year (MEED 16:5:03; 8:3:02).

Libya operates five ageing refineries, only two of which have a capacity greater than 20,000 b/d. The Azzawiya expansion is an important step if Tripoli is to increase its export capacity and meet its ambitious target of doubling oil production within 15 years (see Special Report, pages 30-32).