The joint venture partners behind the $10bn Shah gas project in Abu Dhabi will not ask for final bids on key construction contracts for the deal until late in the first quarter of 2010, according to contractors lining up to work on the scheme. Many blame the deteriorating relationship between the two developers.
The scheme is designed to produce 1 billion cubic feet a day of sour, or sulphur rich natural gas, from the southern Shah field, before stripping out the sulphur and transporting it along with the gas to processing and export facilities at Habshan and Ruwais in the north.
Firms had expected to be asked to submit bids on the four main construction deals on the scheme in either late December 2009 or early January 2010.
Executives working on proposals now say the 60:40 partners on the scheme, Abu Dhabi National Oil Company (Adnoc) and the US’ ConocoPhillips will not assess final prices for the four main construction deals until February or March 2010.
Although international engineering firms bidding on the deal had wanted more time to prepare bids, they say that the partners’ willingness to push the bid deadlines back is an increasing concern due to a series of issues which are plaguing the development.
Earlier in December, MEED reported the bidding on a deal to build sulphur export facilities at Ruwais had been put on hold while the partners consider a redesign of the project.
In June, the partners cancelled the tender for a highly complex deal to build a pipeline to transport the sulphur after the work failed to attract enough contractors to stage a competitive bid. They are now considering replacing the pipeline with a railway line.
Tensions between the two management teams working on the project are also adding to delays. Several sources close to the project say that ConocoPhillips is finding it increasingly difficult to work with Adnoc on the scheme.
“The bid schedule of this project has been drastically delayed,” says one senior business development executive hoping to bid on the project. “The client says the delay is due to the vast amount of workload, but many suspect there has been a great discord or disagreements between Adnoc and ConocoPhillips where it reached a point they cannot proceed together anymore.”
Separately, a source at Adnoc confirms there have been difficulties between the two companies, and adds that he does not know what the status of their relationship is.
ConocoPhillips declined to comment on the project, although a senior executive working in Abu Dhabi cannot say whether it is still working on the scheme.