Nine prequalify for new Kharg NGL tender

26 May 2006
Nine contractors have been prequalified for the new engineering, procurement and construction (EPC) contract on the Kharg natural gas liquids (NGL) project. Only two of the nine groups are foreign, with other international contractors understood to have been reluctant to bid on a project that also includes revising an old front-end engineering and design (FEED) package and providing finance. The client is the Oil Ministry subsidiary Iran Offshore Oil Company (IOOC MEED 21:4:06).

The two international prequalifers are UAE-based Petrofac International and Australia's WorleyParsons, which has formed a consortium with the local Pideco. The other seven prequalifiers, all local, are Petrochemical Industries Design & Engineering Company (PIDEC), Sazeh Consult, Oil Industries Engineering & Construction (OIEC), Iran International Engineering Company (Iritec), Jahanpars Engineering & Construction and Khatam ul-Anbia (Ghorb).

Several previous bidders, including Paris-based Technip, which was in contract negotiations to carry out the project in mid-2005, declined to bid for the project. The invitation to bid package is expected to be issued on 27 May, setting a bid closing date of 22 July. The contract will involve the construction of two gas gathering stations and two identical gas processing units with a total capacity to process 600 million cubic feet a day (cf/d) of natural gas. An award is planned for September.

Contractors say the request to bring finance to the project ruled out most foreign companies, which view Iran as a poor investment risk now. When the project was tendered in 2003, the eventual low bid came in at some $1,260 million. Given the rapid increase in procurement costs since then, the figure is expected to rise significantly. IOOC is understood to be seeking some new funds from the government for the project.

Kharg NGL was originally intended to provide feedstock to an ethane cracker awarded to Technip. However, the cracker has now been relocated to Assaluyeh. Other downstream units planned by the private sector including a methanol plant for which an award was made last year will now take the NGL feedstock.

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