South Korean firm frontrunner for Iraq pipeline deal

23 July 2012

Oil Pipelines Company plans to replace gas pipelines in north of Iraq

Korea Gas Corporation (Kogas) is expected to be awarded an estimated $127m deal to build two pipelines in the north of Iraq.

State-owned Oil Pipelines Company (OPC) issued a tender in December 2011, for the replacement of two existing 120-kilometre pipelines running from a gas processing plant at the Kirkuk field to the Salah al-Din refinery near Baiji. One pipeline will be 18-inch in diameter, carrying liquid petroleum gas (LPG), while the other is a 16-inch dry gas pipeline.

Bids were submitted in late-January this year by fourteen firms, according to a source close to the project. These include:

  • Bonatti (Italy)
  • Dodsal (Dubai-based)
  • Kalpa Taru (India)
  • Kogas
  • Petrojet (Egypt)
  • Saipem (Italy)

Eight of these were shortlisted to submit commercial offers in early July, says the source with Kogas emerging as the frontrunner to win the deal. It is unclear when the deal will be awarded, but contracts are “under preparation”.

OPC is a subsidiary of the Oil Ministry responsible for the operation and maintenance of Iraq’s countrywide oil, gas and product pipelines and storage facilities. It was merged with Oil Products Distribution Company, another Oil Ministry subsidiary in 1991, but was reformed under the US’ Coalition Provisional Authority in 2004.

Despite its enormous oil and gas reserves, Iraq lacks the oil transport infrastructure to get its product to international markets, as well as internally to refineries and power plants. Its pipeline network is extensive, totalling more than 7,000 kilometres.

According to the MEED Insight Iraq Oil & Gas 2012 Projects Market Report, the cost of replacing Iraq’s entire oil and gas pipeline network will come to at least $12bn. This figure does not include the rehabilitation or construction of new pumping stations and storage facilities.

The company also plans to build two new crude oil pipelines. The first is a 26-inch, 110-kilometre pipeline connecting the Strategic pipeline, which runs from Basra to Haditha, to the Daura Refinery near Baghdad. The second is a 24-inch, 200-kilometre pipeline from the K-2 pumping station near Baiji to the Daura Refinery. Tenders have not been released for these yet.

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