Saipem disqualified from $1.5bn Umm al-Lulu contract

16 April 2013

Italian group frozen out after submitting lowest bid; Samsung and Technip asked to resubmit

Saipem has been disqualified from an offshore oil development deal in Abu Dhabi after submitting the lowest bid for the main contract, according to sources close to the bidding process.

The Italian group submitted a bid of about $1.5bn for the second engineering, procurement and construction (EPC) package on the Umm al-Lulu full field development, MEED reported in early February.

However, Saipem has now been removed from the bidding process after project owner Abu Dhabi Marine Operating Company (Adma-Opco) had issues with the proposal.

When commercial bids were submitted, one contractor noted that Saipem’s bid was unrealistically low, with other bids valued significantly higher.

Adma-Opco has asked South Korea-based Samsung and a consortium of UAE’s National Petroleum Construction Company (NPCC) and France’s Technip – the second and third lowest bidders for the contract – to resubmit their bids.

The remaining companies, South Korean groups Hyundai Heavy Industries (HHI) and Daewoo Shipbuilding & Marine Engineering (DSME), have been frozen out from re-bidding. 

Major Abu Dhabi offshore EPC contracts in 2013
OwnerField/PackageContractorValue ($m)
Adma-OpcoSarb/4Hyundai E&C1,880
ZadcoUpper Zakum/EPC2Petrofac/DSME3,700
Adma-OpcoUmm al-Lulu/1tbctbc
Adma-Opco Umm al-Lulu/2tbctbc
EPC=Engineering, procurement and construction; tbc=To be confirmed. Source: MEED 

The contract covers the construction of gas-processing and oil separation platforms, utilities, accommodation and associated facilities at the Umm al-Lulu field, located 30 kilometres northwest of Abu Dhabi.

Meanwhile, Abu Dhabi-based National Petroleum Construction Company (NPCC) submitted the lowest bid of about $800m for the first package of the Umm al-Lulu full field development.

Package one, which contractors submitted bids for on 6 November 2012, covers the construction of wellhead towers, platforms and associated facilities.

HHI, Australia’s Leighton Offshore, US’ McDermott, UK-based Petrofac, Saipem, Samsung Engineering and Technip also submitted commercial proposals on the deal.

The project forms part of Adma-Opco’s plan to add 300,000 barrels a day (b/d) of production capacity from four new offshore fields, with about 100,000 b/d coming from both Umm al-Lulu and Satah al-Razboot (Sarb).

Adma-Opco is majority-owned by Abu Dhabi National Oil Company (Adnoc), with minority stakes held by the UK’s BP, France’s Total and Japan Oil Development Company (Jodco).

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