Eni delays bid opening for Iraq oil facility deal

30 June 2013

Production targets reduced at Zubair oil field

Italy’s Eni has delayed the opening of bids for a major oil processing facility, following an agreement with the Oil Ministry to slash its production target at the 4-billion-barrel Zubair oil field in the south of Iraq.

The decision to reduce the plateau production level has had an impact on Eni’s need for new production facilities at the field, sources close to the company tell MEED.

Engineering, procurement and construction (EPC) bids were submitted in February 2012 for a major greenfield oil processing facility, but in May, the contractors were asked to resubmit their bids with revised technical and commercial offers, following major changes in the scope.  Under the original scope, the scheme was understood to be worth more than $1bn.

The closing date was set for 14 June, but so far the new proposals have not been opened.

Bidding firms include:

  • Hyundai Engineering & Construction (South Korea)
  • JGC Corporation (Japan)
  • Petrofac (UK)
  • Saipem (Italy)
  • Samsung Engineering (South Korea)

Saipem is carrying out the front-end engineering and design (feed) for the contract.

US oil field services firm, Weatherford International won a $843m contract in June 2012 to build six trains of early production facilities at the field by the end of 2016.

Eni and its partners, the US’ Occidental Petroleum, South Korea’s Korea Gas Corporation and state-owned Missan Oil Company reached an agreement with the Oil Ministry at the end of May to cut its final production target by almost a third to 850,000 barrels a day (b/d) from 1.25 million b/d.

The group is just one of a dozen oil firms, which were awarded technical services agreements by the Oil Ministry in Iraq’s first and second oil field licensing rounds back in 2010. At that point, Iraq had ambitions of increasing its oil production to more than 12 million b/d by 2017, from less than 3 million b/d.

The government is now considering significantly lower levels of production, but is not expected to make a decision on its final target until 2015. In the meantime, several international oil companies are in talks with the Oil Ministry to cut back their own targets. Russia’s Lukoil has already agreed reduce the target for West Qurna Phase-2 oil field to 1.2 million b/d from 1.8 million b/d. UK oil major BP is also in talks for the Rumaila oil field, as is the UK/Dutch Shell Group for the Majnoon field.

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