Contractors asked to take over on Kharg NGL

17 September 2004
Several major international contracting companies were asked to confirm by mid-September whether they are interested in taking over the JGC Corporationpackage on the Kharg island natural gas liquids (NGL) project. JGC pulled out of the $1,200 million project it won in March, citing increased steel prices (MEED 13:8:04).

Companies approached include Germany's Linde, Paris-based Technip, Italy's Snamprogetti, Canada's SNC Lavalin, Oslo-based Aker Kvaerner, a European office of Foster Wheelerand South Korea's Hyundai Engineering & Construction. The client, Iran Offshore Oil Company (IOOC), will seek to persuade an incoming contractor to take over the JGC portion as it stands, at the same price and with the same liabilities. The front-end engineering and design (FEED) package is being carried out by a European office of John Brownand is understood to be nearly complete.

JGC's fellow consortium members, South Korea's Daewoo Engineering & Constructionand Iran Marines Industries Company (Sadra)and Sazeh Consult- both local, are in talks with IOOC to push the project forward. It is already running late. Technip last year started work on an ethane cracker downstream of the NGL facility. The eventual project award followed months of delay caused by budgetary problems. Now National Petrochemical Companyis rumoured to be lobbying to take over the NGL project to ensure its completion in time to supply the cracker.

JGC's withdrawal from the project led National Iranian Oil Company (NIOC)to advise all its subsidiaries that they should bear the Japenese company's actions in mind if it bid for other local projects. However, with a reduced field of major international contractors operating in Iran, it will be difficult to punish companies by shutting them out of future project competitions.

Another possible consequence is that NIOC will insist more strenuously on the payment of bid bonds. In the past, the bonds have been seen as something of a formality and have been waived for bidding competitions.

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