Three line up for Kharg NGL

20 December 2002

Three consortia submitted bids by 30 November for the estimated $600 million onshore package on the Kharg island gas gathering and natural gas liquids (NGL) recovery scheme. Bidding on the project comes amid ongoing negotiations between a Japanese-led consortium and National Iranian Oil Company (NIOC)to arrange financing for the overall scheme, estimated to be worth up to $1,000 million (MEED 15:11:02).

The engineering, procurement and construction (EPC) contract for the onshore package covers gas gathering stations, two NGL recovery plants, pipelines and storage and export facilities. The bidders are: JGC Corporationof Japan, with South Korea's Daewoo Engineering & Construction Companyand the local Sadra; Sharjah-based Petrofac International, with Japan's Kawasaki Heavy Industriesand Jahanparsand Kayson Construction Company, both local; and Japan's Toyo Engineering Corporation, with South Korea's Daelim Engineers & Construction Companyand Petrochemical Industries Design & Engineering Company (PIDEC)and Erection & Construction Company (ECC), both local.

NIOC subsidiary Iranian Offshore Oil Company (IOOC), the client on the project, says financial bids will be opened in March 2003 following the evaluation of technical proposals.

Bids for the project's two offshore packages were submitted in November 2001 but no contract awards have been made due to the uncertainty surrounding the project's financing (MEED 28:12:01; 30:11:01).

Japanese trading house Mitsui & Companyis leading a consortium negotiating with NIOC, which is acting on behalf of IOOC, to arrange financing. A source close to the negotiations says a memorandum of understanding between the two sides is expected to be signed by the end of December. Among the other consortium members are Deutsche Bank, Societe Generaleand Mitsui Bank. Sources close to the project say at least 10 banks will be required for syndication.

The outcome of the negotiations will determine whether the financing arranged by the Mitsui-led group will cover the entire scheme or only the onshore portion, with the remainder being provided by NIOC on a cash basis. Major European export credit agencies and the Japan Bank for International Co-operation are expected to back the deal.

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