China Petroleum & Chemical Corporation (Sinopec) attempted to break into the UAE’s oil and gas contracting market this year, by submitting the lowest bid for the Hamriyah tank farm project in Sharjah.
Its attempts had already suffered a setback last year when Abu Dhabi National Oil Company (Adnoc) delegated responsibility of the project to its subsidiary Abu Dhabi Oil Refining Company (Takreer). This meant Sinopec had to start afresh with a new client.
The firm’s efforts were frustrated further by a prolonged tender evaluation period that has now culminated in the cancellation of Sinopec’s letter of award. Sinopec’s competitors say the delays come from doubts over the company’s ability to deliver at the stated price. They are more than happy to admit that they have, like Sinopec, bid aggressively in the past in an attempt to win work in new markets.
Another cause of the delays could be internal UAE politics. Recent fuel supply shortages at petrol pumps in the northern emirates have led some to suggest that Abu Dhabi is not keen to invest in fuel infrastructure in Sharjah.
This, however, seems unlikely. The award of the main works package has been delayed, but the project is likely to go ahead after Takreer tendered a marine works package in mid-June.
Whatever the cause of the delays, Sinopec has learnt valuable lessons for the future. Delays and client changes are all part of doing business in the region.