Japanese and French firms renegotiate terms of joint venture as work on liquefied natural gas trains ends
Japan’s Chiyoda Corporation and France’s Technip are renegotiating a joint venture in Qatar that has won billions of dollars-worth of oil and gas work over the past decade.
One executive close to the joint venture says the two companies are trying to renew their memorandum of understanding as
construction work on the state’s liquefied natural gas (LNG) trains comes to an end.
“We are very close to agreeing a new deal and I am sure we will bid for more work again as a joint venture,” says the executive.
The companies formed a joint venture in 2000 to build some of the world’s largest LNG trains, picking up almost $10bn worth of contracts from subsidiaries of Qatar Petroleum. The joint venture has won engineering, procurement and construction (EPC) contracts covering the Qatargas I and II and RasGas 3 LNG trains, as well as work on the Al-Khaleej gas development.
The jump in materials and labour costs in the boom years of 2007 and 2008 threatened the profitability of some of their gas projects.
In January 2008, Technip flagged up the problems it was having making a profit from the Qatari projects in a statement on the French stock exchange, saying it had suffered writedowns of nearly $300m because of delays on its four largest LNG projects in Qatar, including Qatargas II.
Chiyoda also made writedowns due to delays on its Qatari projects.
Despite its problems with Qatargas II, the joint venture remains confident of making strong profits in Qatar once the partners have renegotiated the terms of their joint venture.
“The big EPC deals are now coming to an end, but there will still be important growth in Qatar for many years to come and we want to keep the strong relationship going,” says the executive.