Leighton and Saipem expected to win Iraq offshore deals

18 July 2011

Pipelines and platform to be built at Basra

Australia’s Leighton Offshore is expected to win its second major offshore construction deal in Iraq after submitting the lowest bid for the third and final phase of the Iraq Crude Oil Export Expansion Project at Basra.

The firm has now been recommended by state-owned South Oil Company (SOC) to the Finance Ministry for approval before an estimated $550m contract will be signed, according to a source close to the project.  

SOC received bids opened engineering, procurement and construction (EPC) bids on 6 June from four international engineering groups:

  • Leighton Offshore with Lamprell (UAE)
  • Punj Lloyd (India) with Swiber (Singapore)
  • Marubeni (Japan), with Van Oord (Netherlands) and McDermott (US)
  • Boskalis (Netherlands)

The project will include the installation of a 45-kilometre trunk line and a 10km onshore pipeline, both with a diameter of 48 inches connecting inland oil storage and offshore shipping terminals. It will also include the installation of a single-point mooring stations (SPM) and pipeline-end manifold supplied by the Netherlands’ SBM Offshore.

If successful, Leighton would add to the $733m contract it won in September last year for phase one of the expansion. This includes the installation of two new onshore and offshore pipelines, along with three SPM, a central manifold and metering platform.

Italy’s Saipem also bid for the Japanese-funded scheme deal, but has been ruled out of the scheme, says the source.

Saipem is the frontrunner for phase two, the construction of an offshore platform. EPC bids were opened on 18 April (MEED 10:6:11).

“Saipem is at the point of almost signing for phase two, however for one reason or another, the client keeps postponing. But they expect the signature to be imminent,” says one source close to the scheme.

Iraq’s oil terminals at Basra and Khor Alamya in the Gulf form the majority of Iraq’s crude shipments. Record production and export levels are pushing Iraq’s aging infrastructure to its limits. The Basra subsea pipeline is only able to handle 1.8 million barrels a day (b/d) currently.

Iraq plans to lift capacity to 4.5 million b/d from the current 1.8 million b/d.  According to the US’ Special Inspector General for Iraq Reconstruction, the first of the three offshore SPMs, is scheduled for completion before the end of 2011 and should ease the export bottleneck. The two remaining SPMs are scheduled for completion by March 2012. Phase two is scheduled for completion between 2013 and 2015.

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