Isfahan PQs out as NIORDC rolls out plan

24 March 2006
International and local contractors have been invited to prequalify for the Isfahan refinery upgrade project, expected to be worth more than $1,500 million. The invitation comes as National Iranian Oil Refining & Distribution Company (NIORDC) is preparing to invest $15,000 million in refining expansions. NIORDC is proposing to revamp every refinery in the country, with incremental capacity increases in five of them, as well as build three new grassroots refineries (MEED 10:3:06).

The Isfahan project will involve the revamp of existing crackers at the refinery, bringing the products up to Euro 2005 quality specifications. Without increasing feedstock input, the project will also raise output at the facility, which now produces 375,000 barrels a day (b/d). NIORDC is expected to issue the engineering, procurement and construction (EPC) tender in the second or third quarter. Paris-based Technip carried out the front-end engineering and design (FEED).

NIORDC managing director Mohammed Reza Nematzadeh in March told MEED that his plans call for three new grassroots refineries to be built during the fourth five-year development plan, which came into effect a year ago. The first will be the 320,000-b/d Bandar Abbas condensates refinery, for which contractors have already been asked to submit expressions of interest. Nematzadeh said an EPC tender would be launched in April for the project, which will use feedstock from the South Pars gas field. The FEED was carried out by the local Oil Design & Construction Company, in partnership with Engineers India (EIL).

The other two grassroots projects will be situated in Bandar Abbas and Khouzestan. Each will have capacity of 180,000 b/d, with possible expansion for a second phase of the same size. They will use heavy crude feedstock from several fields including Azadegan, Yadavaran and Soroush/Nowrooz. Nematzadeh said FEED contracts would go out for bid in the third quarter.

However, the difficulties facing two tenders already in the market highlight the problems new projects could face. With tight workbooks elsewhere in the Gulf and a perceived increasing political risk hanging over Iran, international contractors have proved unwilling to bid for the Abadan and Arak refinery projects, which are both facing delays as a result. There are also questions over how much financing can be secured for new projects if the government is not willing to offer them on a cash basis.

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