The UAE’s Dolphin Energy is likely to award only part of the retendered $480m Taweelah-to-Fujairah pipeline work to a new contractor to avoid a dispute with its current main contractor, says one source close to the bidding.

Russia’s Stroytransgaz won the main construction contract for the project in July 2008. But in early April, firms in the UAE told MEED that Dolphin was retendering the work because it feared that the contractor would miss the project’s first major deadline in August (MEED 3:4:09).

Contractors submitting bids for the retendered deal on 15 April were invited to provide prices for the scheme as a whole, and for specific packages of work.

The retender is a back-up plan in case work falls significantly behind schedule, sources close to the deal tell MEED, and one Dolphin is likely to use.

“Unless [Stroytransgaz] greatly improves its progress, Dolphin will probably go ahead with the retender in some form,” says one contractor whose firm is bidding for the work.

The source close to the bidding says a full termination of Stroytransgaz’s contract would prove complicated, but that Dolphin could award a new contractor part of the project, allowing the Russian firm to retain its position with a reduced workload.

“It is difficult to justify a full termination,” says the source. “But they can terminate a specific portion of the work more easily.”

Contractors expect Dolphin to clarify its position within the next fortnight.

A spokesman for Stroytransgaz says the company is still working on the project, but refused to be drawn further.

However, one source close to the Russian firm says he expect its position on the project will not change. “Stroytransgaz will remain the main contractor on the project,” says the source. “It knows that Dolphin has asked for estimates on portions of the project, but they [Dolphin] cannot remove the main contractor.”

The project was the first major energy scheme in the UAE to use a Russian contractor.

Completion of an Abu Dhabi Water & Electricity Authority (Adwea) plant at Fujairah is scheduled for the third quarter of 2010, and contractors say that Dolphin considers the completion of the pipeline by then to be vital.

When completed, the 244 kilometre pipeline will run from Dolphin’s gas-receiving facility at Taweelah on the country’s west coast, to the Adwea independent water and power production complex at Fujairah on the east coast.

The planned pipeline crosses the Hajar mountain range in Fujairah, a technically demanding section of the scheme, where it will tie in with the existing Al-Ain-to-Fujairah pipeline.

Dolphin Energy would not comment on the probable outcome of the retender.