New moves on South Pars scheme

13 September 2002

A consortium led by South Korea's LG Engineering & Constructionwas due to sign on 14 September the estimated $1,600 million contract to develop phases 9 and 10 of the South Pars offshore gas field development in an official signing ceremony in Tehran. The award comes two years after bidding started on the landmark project. The client on the scheme is the local Pars Oil & Gas Company, the National Iranian Oil Companysubsidiary in charge of South Pars (MEED 19:7:02).

LG, which has been the low bidder since early 2002, is set to carry out the two-phase engineering, procurement and construction (EPC) contract in co-operation with local consortium partners Iranian Offshore Engineering & Construction Companyand Oil Industries Engineering & Construction. The group won the deal against competition from Paris-based Technip-Coflexip, which was in partnership with a group of local companies known as Sunfire Engineering & Management.

Financing for phases 9-10 will be provided through a multi-source facility, rather than being based on the more prevalent buyback framework. ING Investment Bankingis acting as financial adviser for the LG-led consortium.

Phases 9 and 10 will produce 2,000 million cubic feet a day of gas for domestic use, 80,000 barrels a day of condensate and more than 1 million tonnes a year of liquefied petroleum gas (LPG) for export.

The next award in the South Pars programme will be for phases 11-12, which includes developing a portion of the field for liquefied natural gas (LNG).

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