Doha Launches Stalled Energy Schemes

Qatar Petroleum is to invite contractors to bid for US$10 billion worth of work on Al-Shaheen and Barzan projects. State-owned energy company Qatar Petroleum (QP) is breaking a six-month moratorium on the development of new energy facilities by relaunching two of its largest oil and gas projects, which together are worth more than US$10 billion. QP will approach contractors for its US$6-US$8 billion Al-Shaheen refinery by the end of July, and a new engineering study has started on the US$5 billion Barzan gas development in the North field. Both projects were frozen while QP waited for construction costs across the energy sector to fall significantly. In December 2008, QP delayed the tendering of key construction contracts on the Al-Shaheen refinery by six months as part of a review of engineering, procurement and construction (EPC) costs. The state-run firm and its joint venture partner on the Barzan project, the US ExxonMobil Corporation, also delayed construction contract bids on the scheme in March by up to 12 months to assess how the drop in EPC prices would affect the local market . Two sources close to QP say the company wants to return to the market because other national oil companies in the region have achieved cost reductions of 20%-30% on similar oil and gas projects.
"It has been probably the most cautious company in the region in terms of re-entering the market, but now the dust has settled, it is ready to move again," says a Doha-based executive at one bidder.
QP held a series of meetings in the fourth week of June with French consulting firm Beicip-Franlab and the UK's Jacobs Consultancy in Paris to discuss the structure of the 250,000 bpd Al-Shaheen refinery. A second Doha-based contracting source says QP will split the refinery into two phases.
The first phase comprises three separate packages, including a crude distillation unit, a hydrocracker facility, and offsites and utilities work. QP expects to invite interest for these three packages by the end of July.
The second phase will include a fluid catalytic cracker along with the expansion of the existing offsite and utility units.
Under QP's new plan, construction of the second phase will only proceed once the contractors have finished work on the first phase.
"By splitting it into two phases, QP can start some output after the first phase and then add the second phase later," says the bidding source.
QP, together with ExxonMobil, is also moving ahead with development of the Barzan gas field.
Japan's Chiyoda Corporation is carrying out a front-end engineering and design (FEED) contract after the joint venture paused the original Feed contract in March.
The joint venture partners anticipated a fall in construction costs and also investigated sourcing gas for the project from a new structure in the North field.
QP will invite contractors to bid for the main EPC contracts by January 2010, according to the Doha bidding source.
The state-owned energy giant, which controls all the state's energy assets, and ExxonMobil launched the Barzan project in February 2007 after the US firm pulled out of a major gas-to-liquids project with QP at Ras Laffan because of spiralling costs. Barzan is part of the gas development scheme for the North field. QP will use Barzan to meet the natural gas requirements of the growing local market for electricity generation, desalination and industrial activity.- MEED