Sonatrach withdraws offer to Petrofac for Arzew plant

24 July 2008

The UAE/Indonesian group of Petrofac International and IKPT has been disqualified from the contract to build the liquefied petroleum gas (LNG) plant at Arzew just days after the client, state energy company Sonatrach, selected it for the $3.9bn contract.

The group was low bidder for the massive lump-sum engineering, procurement and construction contract to build a 4.3-million-tonne-a-year LNG plant when bids were opened publicly on 12 July ( 13:7:08).

However, after reviewing the bids Sonatrach now says it has withdrawn its offer from the group and started negotiations with the second-ranked grouping of Italy’s Snamprogetti and Japan’s Chiyoda Corporation.

Sonatrach says that discrepancies in the pricing and equipment supply were the main reasons behind the decision.

Petrofac says it is seeking further clarifications from Sonatrach.

“Petrofac further notes that the prescribed bidding process called for contractors to submit a price for a minimum of a 4 million metric tonnes per annum LNG plant and that bidders were to be evaluated on the basis of a price-per-tonne of guaranteed LNG in the storage tank,” it said in a statement. “Petrofac believes it submitted a fully compliant bid and was the lowest bidder on the prescribed cost-per-tonne basis.”

Sonatrach is likely to make a final decision on the matter by the end of July.

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