Qatargas has delayed the award of the $1bn gas recovery project at Ras Laffan Industrial City until the end of March.

A source close to the project tells MEED that a decision on whether to implement the project is still pending. 

“There have been a number of queries that we have answered for the client. They are still to decide on the funding for the project which is not 100 per cent granted”.

According to the source, Qatargas is currently in the process of making a final decision on whether to implement the project.

“The problem with the project is the feasibility. The return is marginal, but the investment is significant,” the source says. “The chances of it proceeding are 80 per cent in my opinion.”

The project has been seen as a race between two US firms; Foster Wheeler and Flour Corporation, with Foster Wheeler considered the frontrunner to win the deal.

Qatargas was expected to award the delayed engineering, procurement and construction (EPC) contract in January.

The state-controlled liquefied natural gas (LNG) producer delayed the project several in 2009. In December 2009, the company delayed the award after postponing an internal board meeting to approve the deal (MEED 30:12:09).

Earlier in the second quarter of 2009, Qatargas retendered the contract as it sought to benefit from falling construction costs across the Gulf.

Other companies which bid for the deal include Fluor, KBR and Stone & Webster, all of the US; France’s Technip; and Italy’s Tecnimont. Japan’s Chiyoda was prequalified but declined to bid for the project.

Flour completed the front-end engineering and design (Feed) contract for the project in the first half of 2009.

When awarded, the winning contractor will provide compressors and supporting utilities. The facility will collect the gas vapours, known as ‘jetty boil-off gas’, created in the production of LNG, reducing the practice of flaring. The jetty boil-off project will produce an estimated 800,000 t/y of gas.