Iraq approves $1.7bn of degassing station deals

26 February 2014

New upstream oil facilities to be built at Zubair oil field by South Korean firms

The Iraqi government has approved a second set of major oil sector construction contracts, signing off $1.7bn worth of engineering, procurement and construction (EPC) work with two South Korean firms.

Samsung Engineering and Hyundai Engineering & Construction were approved for two contracts to build new degassing stations at the Zubair oil field in the south of Iraq in a meeting of the Iraqi cabinet on 25 February.

Samsung will be awarded the larger of the two contracts at $894.4m for the construction of the degassing Station in the north of the field, while Hyundai will be awarded a $818.2m contract for the central degassing station. Construction is expected to take 30 and 28 months respectively.

The Zubair field is operated by Italy’s Eni. MEED reported in mid-January that the Oil Ministry and Eni were close to awarding three degassing station deals having been in talks with bidders since September. The proposals were originally submitted in February 2013 by six companies and once again in May 2013.

The first two deals were finally approved on the recommendation of Iraq’s Energy Committee which is headed by Deputy Prime Minister Hussain al-Shahristani.

However, the cabinet has not approved a final degassing station deal at the field, which bidders had expected to be given to a third Korean firm, Daewoo Engineering & Construction.

The approval of the two degassing deals follows Iraq’s signing of a $6bn contract in early January with a South Korean consortium led by Hyundai Engineering & Construction to build a 140,000 b/d refinery near the southern city of Karbala. A ground breaking ceremony was held at the site on 24 February. 

The deals take Iraq’s total oil and gas EPC project awards to almost $8bn after only two months, twice the value of contracts signed in 2013. 

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