Qatar Petroleum shortlists firms for engineering frame agreements

12 July 2011

Agreements could be signed by end of July

Qatar Petroleum (QP) is close to awarding long-term frame agreements for engineering services, after inviting low-bidding engineering firms to further negotiations.

The frame agreements will specify a certain amount of man hours that will be paid at a set rate over a five-year period, with the option to extend that period by two years. Sources that have bid for the tender say they expect QP to award between two and three contracts. The state oil company is now looking to reduce the price through a round of negotiations.

“Normally what QP does is they call the lowest-bidding companies and send them a letter saying they are shortlisted. Normally [contractors] re-evaluate and give some discount. They call it discussion, but really its negotiation,” says a source that will enter into the talks.

The contractors on the shortlist are the local Black Cat Engineering & Construction, Consolidated Gulf Company, also local, Germany’s Enerco, Denmark’s Ramboll and Spain’s Tecnicas Reunidas.

Revised prices will be submitted on 17 July. The agreements will be signed after a decision has been taken at QP’s General Tenders Committee next meeting.

“They meet once every other Monday. I expect it to be awarded by the end of this month or the beginning of next month,” adds the source.

The agreements will cover front-end engineering and design (feed) and detailed engineering for planned change requests, which are upgrades or changes to existing facilities. Sources say that the frame agreement does not entitle the selected contractors to upcoming contracts. Instead, they have to bid for each individual contract.

This has caused some scepticism among bidders.

“It’s a contract, but its not a job. There’s no promise of any minimum man hours, so at the end of the five years, you can end up with zero man hours,” says a source at one contractor. “Our risk score on this was very high.

“The rates are now fixed for five years and five years is a long time. Who can hold a price for five years?” he adds.

Nevertheless, frame agreements have previously been signed by engineering companies active in Qatar. Australia’s WorleyParsons and France’s Technip have previously worked under such arrangements with QP.

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