Fresh delays hit Abu Dhabi's Shah gas scheme

02 March 2010

Bid deadlines pushed back on $10bn Adnoc and ConocoPhillips project

The joint venture partners behind the $10bn-plus Shah gas development in Abu Dhabi have pushed back the final bid deadlines for the main construction packages on the project with contractors anticipating further delays.

Abu Dhabi Gas Industries Company (Gasco) has asked for commercial bids outlining price structures on the four engineering, procurement and construction (EPC) deals by 21 March, more than two weeks after the 3 March date it set in 2009. This deadline in turn marked a postponement of almost two months from the original 25 January cut-off for commercial bids.

The four construction packages cover the gas gathering facilities, a gas processing plant, sulphur recovery facilities, and the supporting infrastructure for all of the process units at the Shah field.

Executives at firms hoping to bid on the deals tell MEED the bid deadline was postponed by Gasco, which is tendering the construction contracts on behalf of state energy firm Abu Dhabi National Oil Company and the US’ ConocoPhillips, the joint venture partners behind the scheme.

“There were no requests for deadline extension,” says one contractor in talks over the deal. “It was on Gasco’s initiation that they were pushed back.”

Sources close to the project attribute the delays to technical issues on the scheme that when completed will produce, process and distribute 1 billion cubic feet-a-day of sour, or sulphur-rich, natural gas from the Shah field, which lies 80 kilometres south of Abu Dhabi.

Gas produced at the field will be stripped of its sulphur, which will then be transported separately for processing and distribution facilities at Habshan and Ruwais. The natural gas will pass along the same route.

Adnoc and Conoco are trying to make a decision on the best way to transport the sulphur from Shah to Habshan and Ruwais. They plan to use either a railway line or technically complex liquid sulphur pipelines (MEED 18:1:2010).

A decision was due to have been made by the end of February but sources close to the project say the partners have given no indication of their plans to date.

Once the decision has been made, they will award two project management consultancy deals to oversee the construction contractors, and once these deals have been awarded, Adnoc and Conoco will be able to move ahead with the EPC deals.

Contractors expect further delays, however, as the partners struggle to cope with the workload.

“It looks like the project will be facing more delays due to lack of manpower and resources inside Adnoc and Conoco,” says one engineering executive in talks over one of the EPC deals.

Gasco has also extended the deadline for a deal to build natural gas pipelines to 7 March from 28 February (MEED 1:3:2010).

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