Companies gear up for Kharg

03 May 2002

Companies are preparing to bid by the revised mid-May deadline for the third package on the Kharg island gas-gathering and natural gas liquids (NGL) recovery project. The tender comes as National Iranian Oil Company (NIOC)continues with efforts to raise equity and loan financing for the estimated $800 million-1,000 million scheme (MEED 8:3:02).

It is understood that at least five international companies asked for a deadline extension on the third package. The project covers the construction of onshore facilities including gas-gathering stations, two NGL recovery plants, pipelines and storage and export facilities.

Bids have already been submitted for the two offshore packages, but no award has been made due to the uncertainty surrounding the financing of the project (MEED 28:12:01; 30:11:01).

Negotiations are continuing between NIOC, which is acting on behalf of its subsidiary, Iranian Offshore Oil Company- the client on the Kharg project - and potential investors. Japanese investors have expressed strong interest in becoming involved in the project. They include Mitsui & Company, which signed a memorandum of understanding with NIOC earlier this year. It is understood that trading houses Mitsubishi Corporationand Tomen Corporationare also interested (MEED 18:1:01).

A source close to the project says that NIOC has also started talks with major international banks to tap additional funds.

The Kharg gas-gathering network, which will have a total capacity of about 600 million cubic feet a day, is set to provide feedstock to a number of new projects to be carried out on Kharg island by the local National Petrochemical Company (see Petrochemicals).

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