New Kharg NGL extension

16 September 2005
The deadline to bid for the $1,200 million Kharg natural gas liquids (NGL) plant has been pushed back by two months to December, as a result of several new consortia entering the race. The tendering has suffered more extensive delays than almost any other major project in the country and is now running so late that associated downstream facilities will be deprived of feedstock for months or even years, wasting hundreds of millions of dollars (MEED 24:6:05).

Prospective new bidders include: Paris-based Technip, with South Korea's Daewoo Engineering & Constructionand the local Nargan; Switzerland's Man, with Iran Oil Engineering Company; UAE-based PetrofacInternational, with Iran Industrial Development Company, Iran Marine Industries Company (Sadra)and the local Sazeh Consult; Europe's ABB, with Belgium's Tractebeland the local Kayson Group; Australia's Hatch, with Petrochemical Industries Design & Engineering Company (PIDEC)and Great Engineering Technology, both local; and Parsons UK, with the local Pideco.

The $1,350 million engineering, procurement, construction and commissioning (EPCC) contract will involve the development of gas-gathering stations, two identical gas plants, pipelines, liquefied petroleum gas (LPG) storage, seawater intakes and outfalls, and an export jetty. The international partner is required to lead each consortium with a share of at least 25 per cent. Contractors have also been asked to do some work on the front-end engineering and design (FEED) package, using Shell technology.

The extension is the latest twist in the project's tendering. Bids were first submitted for the project in late 2002 in a drawn-out tender process eventually won by a consortium headed by Japan's JGC Corporationin early 2004. However, JGC subsequently withdrew from the scheme, prompting the client, Iran Offshore Oil Company (IOOC), to enter into direct negotiations with Technip. These were unsuccessful and the project was retendered in April. However, as a result of only two consortia bidding, it was again put out to tender in June.

A major ethylene cracker, which will use feedstock from the NGL plant, is under construction by Technip and will be completed long before feedstock is available from the NGL complex. National Petrochemical Company, the Oil Ministry subsidiary responsible for the Kharg ethylene project, has lobbied unsuccessfully to take charge of the NGL plant to ensure the feedstock is supplied as soon as possible.

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