Persian LNG awards FEED contract

16 June 2006
A French-Japanese consortium has won the front-end engineering and design (FEED) contract for one of the liquefied natural gas (LNG) projects planned in Iran. Persian LNG is being promoted by the Royal Dutch/Shell Group, Spain's Repsol YPF and National Iranian Gas Export Company (NIGEC), a subsidiary of National Iranian Oil Company (NIOC MEED 14:10:05).

Japan's Chiyoda Corporation and France's Technip were awarded the FEED contract in mid-June after a long competition with another consortium, comprising Spain's Tecnicas Reunidas, Germany's Linde, Italy's Snamprogetti and the local Sazeh Consult. The FEED package is expected to be carried out over the next six-nine months, allowing Persian LNG to issue an engineering, procurement and construction (EPC) tender in early 2007.

Persian LNG will comprise two main liquefaction units with a capacity of about 5 million tonnes a year each. Shell and Repsol are believed to be seeking European markets for the LNG, but have not yet signed any sales and purchase agreements (SPAs). The project also involves upstream development of South Pars phase 13, which will supply the gas feedstock for the liquefaction plant.

Progress is understood to be linked to the nuclear crisis surrounding Tehran, which has made it much more difficult to attract foreign finance. Another difficulty caused by the crisis is that Western companies with business interests in the US fear they will be subjected to economic sanctions for carrying out major projects in Iran, particularly those involving transfer of technology.

Technip is also understood to be negotiating the EPC contract for the Pars LNG project, for which it carried out the FEED last year. Pars will have the same capacity as Persian LNG but is at a more advanced stage. The project is being promoted by a consortium of France's Total, Malaysia's Petronas and NIGEC.

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