IOOC mulls Kharg gas scheme options

13 August 2004
Iran Offshore Oil Company (IOOC)is close to a decision on how to proceed with the $1,200 million Kharg island gas gathering and natural gas liquids (NGL) scheme. The leader of the nominated engineering, procurement and construction (EPC) consortium - Japan's JGC Corporation- pulled out of the project in June, citing escalations in material and transportation costs (MEED 18:6:04).

Other members of the original JGC-led consortium, including South Korea's Daewoo Engineering & Constructionand local firms Iran Marine Industries Company (Sadra) and Sazeh Consult, have resumed negotiations with the client. However, any award will be contingent on the consortium bringing on board an international contractor to replace JGC. IOOC also has the option of awarding the contract to the consortium comprising Japan's Kawasaki Heavy Industries, Sharjah-based Petrofac International and Kayson Groupand Jahanpars, both local, which submitted a lower price but had a lower technical ranking for the contract.

IOOC has ruled out a retender of the contract. IOOC and a consortium led by Japan's Mitsui & Company, which is mandated to arrange financing for the onshore portion of the Kharg project, is keen to move ahead with the scheme as the project has already been held up by more than a year after bidding and budgetary problems led to repeated delays.

The Kharg project will produce 262 million cubic feet a day of liquefied petroleum gas (LPG), 2,280 tonnes a day (t/d) of ethane, 2,196 t/d of propane, 1,525 t/d of butane, 2,443 barrels a day (b/d) of pentane and 4,811 b/d of condensates. Under the feasibility study prepared by the UK's John Brown, the project will deliver an annual turnover of $436 million. The scheme aims for ethane recovery of 90 per cent and propane recovery of 95 per cent.

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