China Petroleum Pipeline Bureau (CPPB) has emerged as the frontrunner for another deal in Iraq after submitting the lowest bid for a contract to build a crude oil export pipeline at the Gharraf field. CPPB is a subsidiary of China National Petroleum Corporation.
CPPB submitted a price of between $65m-70m for the contract, the lowest of at least eight bids, according to sources close to the project.
Technical and commercial proposals were submitted on 10 July. Malaysia’s Petronas, the developer of the Gharraf field, opened the bids on 9 August, says the source.
The company’s low bid follows another in late July, for a retendered deal to build an 18-inch, 105-kilometre pipeline for state-owned South Oil Company (SOC), from the Zubair field to the Al-Fao storage facility. A contract is yet to be awarded for the pipeline project, which has been retendered numerous times since it was first launched in February 2011.
The 28-inch pipeline is the first phase of the planned Gharraf Light Oil Transport System (LOTS), running 92km from the Gharraf-Badra tie-in area (GBTA) to the Nassiriyah storage depot. It will be a continuation of a 165km, 24-inch pipeline from Badra, which will be built by Russia’s Gazprom. The crude will be stored before being sent to the Al-Fao to be pumped to Iraq’s southern oil export terminals.
The second phase of the LOTS pipeline involves the construction of a 13km pipeline from Gharraf to the GBTA, which will be tendered at a later date.
The pipelines will cater for both Badra crude production of 204,000 barrels a day (b/d) and Gharraf production of 80,000 b/d, a total of 284,000 b/d. When construction is completed, the pipeline will use a common operator for both the Badra and Garraf light oil pipelines.
The 1-billion-barrel Gharraf field, located in the Dhi-Qar governate in southern Iraq, was awarded to Petronas and Japan’s Japex as part of Iraq’s second oil field licensing round in December 2009.