Zadco’s Upper Zakum deadline in doubt

18 October 2011

Commercial bid deadline and contract award for offshore package likely to be pushed back further

Zakum Development Company (Zadco) has indicated that the new commercial bid deadline for the offshore portion of the Upper Zakum full field development will be set in the middle of December.

Front-end engineering and design (feed) work has not been progressing as fast as hoped, and Zadco has already delayed commercial submissions at least twice, scrapping deadlines in August and in September. The firm has now drawn up a new timeline.

“They are trying to get the last of the technical bulletins out. They then want the four bidders to do feed verification by end of November. Early December they hope to come out to ask for commercial submission. They are looking at a two- to three-week turnaround, trying to get them in before Christmas,” says a source close to the project.  

Italy’s Saipem, France’s Technip, the US’ J Ray McDermott and local company NPCC have submitted technical bids for the engineering, procurement and construction (EPC) contract, known as EPC1. However, with the feed work not yet complete, contractors have not been able to prepare their commercial bids. Zadco awarded the feed contract to Technip.

“It’s a very complex project, but the real problem is that the tender was floated too early, with the feed study maybe 50-60 per cent complete,” says the source. “No one can do a feed verification until they stop changing the technical scope.”

Asking to submit bids before the feed completion is costly for the contractors, who have to maintain a team focused on the project during the extended bidding process. “This is a prime job, so you’ve got some of your best people working on it, and they are locked in for an awful long time,” says a source at a bidding company. “They were so driven to meet that December award date, they just jumped early,” he adds.

Several sources close to the project believe that the deadline will be pushed back further, putting in doubt the revised award date in March. The above source says that Zadco will not meet the new deadline, as the feed is unlikely to be completed at that time. “The preliminary date will be extended,” says another source.

Further delays to the commercial bids will jeopardise the EPC award date, which Zadco has pushed back to March from the original deadline in December.

EPC1 encompasses the offshore portion of the Upper Zakum full field development, also known as UZ750 because the project will increase the production at the offshore Zakum field from 500,000 barrels a day (b/d) to 750,000 b/d by 2015.

The scope of work for EPC1 includes the construction of five riser platforms, the laying of 227 kilometres of subsea pipelines, ranging from 8 to 42-inch in diameter, and 125 kilometres of cabling.

EPC2 covers the production facilities on four artificial islands that are currently being constructed. In spite of delays to the islands’ completion, Zadco recently issued the ITT for EPC2, calling for technical bids to be submitted late in December, and commercial bids due in April.

Zadco could not be reached for comment.

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