Consortium bids low for $475m Shah gas gathering deal

01 April 2010

Contract is part of $10bn sour gas scheme being developed by ConocoPhillips and Adnoc

Contractors have named a consortium of Spain’s Tecnicas Reunidas and India’s Punj Lloyd as the low bidders on a contract to build an estimated $470m gas gathering system at the Shah gas field in the south of Abu Dhabi.

The engineering, procurement and construction (EPC) contract is one of a series of deals being tendered on the $10bn Shah gas scheme being developed by Abu Dhabi National Oil Company (Adnoc) and the US’ ConocoPhillips.

The consortium’s bid of around $475m beat bids of $480m from Italy’s Saipem and $488m from India’s Dodsal, sources close the bidding process tell MEED. The winning bidder will build a series of gas gathering facilities and pipelines at the field capable of producing 1 billion cubic feet a day of natural gas.

To date, the consortium partners have tendered a total of five deals on the project: the gas gathering system, a gas processing plant, a sulphur recovery unit, the offsites and utilities for the scheme, and a series of product pipelines.

Italy’s Saipem submitted the lowest bids for the gas process plant with a bid of around $1.4bn followed by a consortium of Japan’s Chiyoda and South Korea’s Samsung with a price of $1.7bn and another Japanese/South Korean consortium, of JGC Corporation and Hyundai Engineering & Construction, which submitted a bid of $2.2bn.

Saipem also submitted the lowest bid for the sulphur recovery unit, worth an estimated $1.2bn, and the product pipelines deal, with a bid of close to $200m.

Contractors initially believed that the offsites and utilities deal was being contested by Tecnicas Reunidas and France’s Technip, but sources close to another bidder, South Korea’s Samsung Engineering, now say the firm is the frontrunner to win the deal after submitting a price of around $1.4bn.

Abu Dhabi wants to produce 1 billion cubic feet a day of sour, or sulphur-rich, gas from the Shah field, before separating the sulphur from the natural gas and transporting both to processing and distribution facilities at Habshan and Ruwais.

The project has suffered numerous delays. In early January, ConocoPhillips and Adnoc delayed the final deadlines for the five main construction deals on the scheme until late March, as they reviewed the overall design of the project (MEED 12:1:10).

They originally planned to use a pipeline to transport the sulphur to Habshan and Ruwais, but the local Union Railway Company was asked in October to look at the feasibility of building a 264-kilometre railway line instead, which would be used to transport granulated sulphur.

A decision is due by the end of March, with Union Railway said to be aggressively pursuing its proposal. The company says it will launch the tender for construction deals on the Shah-Ruwais railway in the second quarter of the year.

Thre US engineering firms, Bechtel, Veco and Fluor, are waiting for news from the partners on two project management consultancies to oversee the construction of the project, which are expected to be awarded in April (MEED 17:3:2010).

Contracts to build sulphur handling facilities at Ruwais along with a sulphur granulation plant at either Ruwais or Shah and the sulphur pipelnie deal are all on hold until the partners make a decision on which transport scheme to use, although contractors belive that the sulphur handling contract will be tendered by the end of April.

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