Four in race for South Pars job, Shell to withdraw

19 July 2002

Four companies are left in the race for the offshore package for phases 6-8 of the South Pars gas development following the disqualification of three companies by the local Petropars, the client on the scheme. The winning bid for the estimated $400 million, three-phase project is set to be announced before the end of July. The developments come amid indications that Royal Dutch/Shell Groupplans to relinquish the stake it acquired in the project earlier this year through the takeover of the UK's Enterprise Oil(MEED 21:6:02).

Companies bidding for the offshore package are now awaiting the conclusion of the technical evaluation and the opening of financial envelopes in the week beginning 21 July, with the contract to be awarded before the end of the month. Seven companies submitted proposals for the project, which covers laying of pipelines and supply of topsides, but three were disqualified on technical grounds.

The four companies left in the race are: the local Persian Gulf Shipping Company (PGSC), with at least one local partner; the local Sadra; Italy's Saipem, with the local Saff Offshore; and a consortium of the French/Norwegian Stolt Offshoreand a team of Iran Shipbuilding & Offshore Industries Company (ISOICO)and the UK's SLP Engineering.

It is understood that Malaysia's SSEis negotiating to join the PGSC consortium.

The estimated $30 million offshore package to supply three jackets was recently awarded to a partnership of ISOICO and SLP.

Companies bidding for the estimated $1,200 million onshore package have been given a 45-day extension from the initial 4 July deadline to submit their final proposals following the latest round of bid clarification meetings. Four consortia are left bidding for the engineering, procurement and construction (EPC) contract, which covers the construction of treatment facilities.

Petropars is pressing ahead with efforts to bring on board at least one new partner in phases 6-8, on the assumption that Shell will not proceed with the project.

'Shell has informed us verbally that they are not interested and plan to withdraw,' Akbar Torkan, chairman and president of Petropars, told MEED in mid July. 'We now need another partner, especially for the offshore drilling.'

A Shell representative on 15 July said 'no announcement has been made' on the issue and 'a commercial decision' about Enterprise Oil's commitment would be taken by the end of the year.

Petropars is continuing its negotiations with Norway's Statoil, which is understood to be interested in acquiring 40 per cent of the project's offshore development, equivalent to a 15-20 per cent stake in the whole scheme. A Statoil representative told MEED on 15 July that an agreement about the offshore portion of the project might be reached within weeks.

With Shell expected to withdraw from the three-phase scheme, another oil major has emerged as a possible partner for Petropars. Torkan says that initial discussion have opened with France's TotalFinaElfabout participating in the project.

'We have already held first talks with TotalFinaElf,' says Torkan. 'They are now investigating and studying the possibility of becoming a partner in the project.'

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