Petrofac bids low for onshore field work

22 August 2008

UAE-based firm’s offer for Abu Dhabi upstream project estimated to be $100m lower than next best bid.

UAE-based Petrofac International is the lowest bidder, with a price of about $4.5bn, for the full-field development of the onshore Sahil, Asab and Shah (SAS) fields in Abu Dhabi, following the submission of commercial bids on 18 August.

According to unofficial and unpublished bid opening results, Petrofac’s offer is understood to be about $100m lower than the next best bid submitted by a group of Spain’s TR and Athens-based Consolidated Contractors International (CCC).

The two other prequalified contracting groups of Paris-based Technip with Dubai-based Dodsal and Italy’s Snamprogetti/Saipem with India’s Punj Lloyd also submitted bids. But both are understood to be in excess of $7bn.

The client, Abu Dhabi Company for Onshore Oil Operations (Adco), has already evaluated and aligned technical bids. As a result, sources close to the massive upstream project say that an award on the lump-sum engineering, procurement and construction (EPC) contract is expected soon (MEED 7:8:08).

Aligning the bids effectively neutralises the difference between their technical proposals, allowing Adco to compare more easily the merits of the commercial offers.

Adco also invited the four contracting groups to price the work in two split packages, and it may decide to split the work. However, with Petrofac due to form a joint venture company with Abu Dhabi state-linked Mubadala, it is conceivable it could be awarded the work in its entirety (MEED 7:8:08).

It also remains to be seen whether the client will be prepared to accept such a high price for the scheme. Earlier budget estimates had put the cost of the project at about $3.5bn, but soaring EPC prices, especially in the cost of materials, have meant that contractors have had to shield themselves from future uncertainty, especially when bidding for lump-sum deals.

The scheme is one of the largest upstream hydrocarbons projects in the region this year. It involves the increase of oil production capacity through an extensive facilities upgrade programme that will increase total output from the fields by 60,000 barrels a day (b/d). This includes a 30,000 b/d increase at the Asab field, 20,000 b/d at Sahil and 10,000 b/d at Shah.

The US’ Foster Wheeler is the front-end engineering and design contractor on the scheme. Canada’s Veco is the project management consultant.

The SAS project is part of Adco’s plan to increase its production capacity by more than 450,000 b/d. The largest element is the so-called ‘1.8 million project’, which aims to increase output by 400,000 b/d to 1.8 million b/d from the Qusahwira, Bida al-Qemzam, Ruwais and Bab onshore fields.

Adco has invited international contractors to submit prequalification applications by 26 August for the main two packages on the development (MEED 24:8:07).

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