Final bids in on major packages for $10bn Shah gas scheme

21 March 2010

Contractors see commercial bid submissions as a sign project is moving ahead

International engineering firms have submitted their final bids for three big construction deals on the $10bn-plus Shah gas development in Abu Dhabi, in what contractors see as a positive sign that the project is moving ahead after months of delays.

The firms handed in commercial proposals for the engineering, procurement and construction (EPC) deals to Abu Dhabi Gas Industries Company (Gasco) on 21 March. They cover a gas processing plant and a sulphur recovery unit at the Shah field, in the south of the emirate, and the supporting infrastructure for the entire project, known as the offsites and utilities.

Bids for a fourth deal, to build gas gathering facilities at the field, were also due in on 21 March, but have been pushed back by a week to 28 March.

Gasco is tendering the deals on behalf of the joint venture partners behind the scheme, state energy firm Abu Dhabi National Oil Company (Adnoc) and the US’ ConocoPhillips.

The companies want 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 delays in the past. In early January, ConocoPhillips and Adnoc delayed the final deadlines for the four 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, but the local Union Railway Company was asked in October to look at the feasibility of building a 264 kilometres railway line instead, which would be used to transport granulated sulphur. A decision is due by the end of March.

Executives bidding on the deals had expressed concern over the delays on the scheme in early 2010, with some believing that a deteriorating relationship between the project sponsors was responsible. Now bids have gone in on three of the four main deals, they are more confident that the project is moving ahead.

“This is a very positive development,” says the business development manager at one bidding firm. “Hopefully they will be able to start construction soon.”

Bids for a $1bn gas pipelines construction package went in on 16 March (MEED 18:3:10).

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