Petrofac-led consortium awarded $1.2bn Khazzan contract

11 February 2014

BP hires contractors to build central processing facility at Oman tight gas field

UK-based energy group BP has awarded the first major construction contract on its Khazzan tight gas development in Oman after getting the green light for the $16bn project at the end of last year.

A consortium of the UK’s Petrofac and the Athens-based Consolidated Contractors Company (CCC) has been awarded a $1.2bn engineering, procurement and construction (EPC) deal on the project’s central processing facility (CPF), according to sources close to the bidding process.

The CPF, which will be built at Block 61 in west-central Oman, will have the capacity to produce 1 billion cubic feet a day (cf/d) of sales gas sourced from the Khazzan field.

Consortium leader Petrofac won about $900m of the EPC work on the facility, with its bidding partner CCC taking $300m, sources says.

The Petrofac-CCC bid was selected ahead of four other proposals led respectively by US groups Bechtel and CB&I, South Korea-based Hyundai Engineering & Construction and France’s Technip.

The EPC contract is expected to be officially signed and announced on 15 February. The first gas is due to be produced from the CPF in 2017, with gas production ramping up to full capacity in 2018.

BP is expected to award several more major EPC packages later this year, including: gas production well site facilities; a gas gathering pipeline system; a gas export pipeline; a condensate export pipeline; water disposal facilities; and the operating base and residential complex.

Earlier in February, BP awarded a $220m contract to UK-based KCA Deutag for the construction and operation of three new fast-moving land rigs at the onshore project.

The government of Oman gave the final go-ahead for BP to develop the Khazzan tight gas field in December 2013 following months of negotiations.

The full field development will involve a drilling programme of about 300 wells over 15 years, with target production equal to a third of the sultanate’s current gas production.

BP, which has a 60 per cent stake in the project, estimated the total investment required for the development at $16bn, which includes investments made to date in the appraisal of the resource.

Oman’s state-owned Oman Oil Company (OOC) was planning to acquire a 40 per cent stake in the development, Oman’s Oil & Gas Minister Mohammed bin Hamed al-Rumhy was quoted as saying in October, but this has still to be confirmed.

Khazzan is one of the world’s first greenfield tight gas projects. The reserves are trapped at 4.5-5km below the surface and, because the gas does not flow to the surface naturally, BP will have to hydraulically fracture the formations to release the gas.

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