Oman Oil considers retendering Musandam gas work

08 December 2009

South Korea’s low bid of $450m is double the project’s budget

Oman Oil Company may retender its planned $450m oil and gas processing plant at Musandam in northern Oman, after the lowest bid for the contract amounted to almost double the project’s budget.

Three international engineering firms bid for the contract in October and executives at the bidding firms had hoped the state-run oil company would award a contract before the end of 2009 (MEED 11:10:09).

According to three senior sources close to the tendering process, South Korea’s Hyundai Heavy Industries submitted the lowest bid for the engineering, procurement and construction (EPC) contract, but the company’s $450m price was almost double Oman Oil’s budget.

The engineering firms’ bids far exceeded the budget because the national oil company failed to set out what the contract entailed, according to two engineering executives who considered bidding on the scheme, but decided not to.

“The problems they are having now can probably be attributed to the poor quality of the Feed [front-end engineering and design] studies they did on the plant,” says one of the executives. “It made it really hard to know what the job was exactly and taking it on would have been a big risk.”

The state-run oil company is holding talks with contractors over what to do next, and is considering a retender.

The other bidders for the contract were Hungary’s OTF Contracting and China’s Sinopec.

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