Qatar Petroleum pushes for lower prices on Dukhan and Mesaieed upgrades

24 January 2010

Four bidders in talks for the estimated $1bn contract

Qatar Petroleum (QP) has entered into direct talks with contractors over a $1bn construction contract to upgrade the company’s gas facilities at Dukhan and Mesaieed in an attempt to push contractors’ prices down.

Bids for the engineering, procurement and construction (EPC) contract were submitted on 22 November 2009. MEED reported in December that Paris-based Technip was the frontrunner to win the deal after submitting the lowest bid for the deal (MEED 2:12:2009).

QP has now entered into direct talks with the four companies that submitted prices in December, senior executives at the bidding firms say.

One contractor held direct talks with QP executives on 14-16 January, an executive close to the project says. A second bidder was called for a discussion of prices on 17 January. 

Contractors have been asked to provide new prices by the middle of February, one executive says. QP will carry out a final cost evaluation before making a decision on the deal in March, he adds.

QP had planned to award the deal by the end of 2009, but the state energy giant most recently told contractors not to expect an award until early April.

Firms bidding on the deal include France’s Technip, Italy’s Saipem, the UK’s Petrofac and a group of Athens-based Consolidated Contractors Company with the US’ Black & Veatch.

QP delayed the deadline for commercial bids twice in 2009 as it sought to give its in-house team time to finalise the front-end engineering and design (FEED) phase of the project. FEED was originally carried out by Australia’s WorleyParsons.

The winning contractor will build an acid-gas removal unit and an amine sweetening plant at Mesaieed as part of the deal.  The 750-million-cubic-feet-a-day (cf/d) plant will provide gas supplies to Qatar’s petrochemicals and power plants.

The acid-gas removal unit at the onshore Dukhan field, with a capacity to process 450 cf/d of gas from the Khuff reservoir.

This is not the first time that Qatar has entered into direct talks with contractors in a bid to reduce construction costs. MEED reported earlier in January that Qatar Liquefied Gas Company would enter into direct talks over its plateau maintenance project to maintain output at its Qatargas I complex in a similar move to cut prices (MEED 22:1:2009).

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