Bids in for phases 6-8, Statoil close to signing up

27 September 2002

Three consortia submitted bids by the revised 22 September deadline for the contract to build the onshore facilities for phases 6-8 of the South Pars gas development scheme. The estimated $1,200 million contract is the largest of three packages to be tendered on the three-phase project, which is being carried out by the local Petropars. The development comes amid indications that Petropars is close to concluding negotiations with Norway's Statoilabout the acquisition of a 40 per cent stake in the offshore section of the project (MEED 6:9:02).

Akbar Torkan, chairman and president of Petropars, told MEED on 23 September that talks with Statoil about buying into phases 6-8 could be concluded by the end of September. 'Negotiations have reached a final stage,' Torkan says. 'The partnership agreement with Statoil will be for a 40 per cent share in the offshore development and for assuming the role as offshore operator.'

A Statoil representative on 23 September confirmed that talks with Petropars had progressed, saying that there was a possibility of reaching an agreement by the end of the month. It is understood that Statoil is hoping to complete the deal before subcontracting works have progressed too far on the offshore section, where both packages have already been awarded to the local Sadra and a team of Iran Shipbuilding & Offshore Industries Company (ISOICO)and the UK's SLP Engineering(MEED 16:8:02; 21:6:02).

Torkan says that a settlement deal is set to be signed with the Royal Dutch/Shell Groupto relinquish the stake it acquired in the project earlier this year through the takeover of the UK's Enterprise Oil. The comment follows a statement by Oil Minister Bijan Namdar Zanganeh on 22 September on the sidelines of the International Energy Forum in Osaka, saying that 'Shell, on behalf of Enterprise, is about to sign a friendly separation with Petropars'. A Shell official commented: 'Shell and Petropars are finalising discussions over the Enterprise stake in South Pars 6,7 and 8, and hope to reach an agreement to the satisfaction of both parties.'

Torkan says that it is uncertain whether France's TotalFinaElfwill assume a role in the project. The oil major emerged as a potential partner for Petropars in view of Shell's anticipated withdrawal, but has not followed up on preliminary negotiations held two months ago.

Petropars has received three final proposals, backed by financing schemes, for the engineering, procurement and construction (EPC) contract to set up onshore facilities related to phases 6-8. The contract was initially planned to be awarded in September, but bid evaluation was delayed following several extensions of the submission deadline for technical clarifications. Torkan says that the evaluation of the technical proposals is expected to be completed within one month and will be followed by the opening of the commercial bids.

The bidders are: Japan's Toyo Engineering Corporationwith the local Industrial Development & Renovation Organisationwith financing support from Japanese trading house Mitsui & Company; Japan's Chiyoda Corporationwith the local Tehran Jenoub, backed by Mitsubishi Corporation; and South Korea's Samsung Corporation with the local Al-Azaraband the backing of the Export-Import Bank of Korea.

The three-phase project will produce 80 million cubic metres a day of sour gas, to be reinjected into the onshore Aghajari oil field, and 120,000 barrels a day of condensate, allocated to provide feedstock to the National Petrochemical Company.

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