Contractors express interest in $1.7bn Barzan gas scheme

18 December 2009

At least 10 international firms compete to build facilities in the North field

At least 10 international contractors have expressed interest in the $1.7bn contract to build facilities to develop the Barzan gas structure in Qatar’s giant North field.

The project sponsor, also called Barzan, is a joint venture of state-run energy firm Qatar Petroleum (QP) and the US’ Exxon-Mobil Corporation. In November, Barzan approached contractors to gauge interest in the engineering, procurement and construction (EPC) contract.

Barzan expects to prequalify contractors by the end of March 2010 and to receive commercial bids by the end of June. It will award the contract in the fourth quarter of 2010.

Chiyoda carried out the front-end engineering and design study on the Barzan gas structure in the first half of 2009.

Contractors expect Barzan to develop the structure in three phases. The winning bidder for the first phase will build two onshore gas-processing trains by the end of 2013, with a combined capacity of 1.7 billion cubic feet a day (cf/d).

The second phase will deliver a further 2 billion cf/d of gas, and the third phase another 2.5 billion cf/d.

Sources close to the bidding process say the companies expressing interest by the 30 November deadline include the US’ Foster Wheeler in a consortium with Spain’s TR; South Korea’s Samsung Engineering with Japan’s Chiyoda Corporation; South Korea’s Hyundai Engineering & Construction with Japan’s Toyo Engineering Corporation; Japan’s Daelim Industrial Company; Japan’s JGC Corporation; Italy’s Saipem and France’s Technip.

The Barzan joint venture aims to meet the natural gas requirements of Qatar’s power and water generating companies by developing the structure.

The launch of the EPC contract follows the joint venture’s decision in mid November to award the mandate to raise the $8bn of debt needed to finance the development to the UK’s Royal Bank of Scotland (RBS).

RBS will raise part of the debt through a bond and the rest through bank loans. However, Barzan has yet to decide how much will be raised through each route.

The bank beat the UK’s HSBC and France’s BNP Paribas to win the mandate. The three banks pitched for the work in mid September.

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