Iraq Awards $471.7 Mln Contract to Saipem

Source: Reuters 8/17/2011, Location: Middle East

Iraq has awarded a $471.7 million contract for an oil export facility expansion and sub-sea pipeline to Italian group Saipem, Iraqi oil sources told Reuters. Saipem will build a single point mooring buoy (SPM) with an export capacity of 900,000 barrels per day and construct a 50-kilometre pipeline to transport crude from storage depots in Iraq's southern Faw peninsula to the new floating terminal, according to the sources and to documents obtained by Reuters.

Saipem should complete engineering, procurements and construction work within 24 months. The order is the second phase in a wider expansion project announced last year.

Tender documents show that three other companies submitted bids for the contract, including Leighton Offshore Private Ltd, National Petroleum Construction Co. (NPCC) and J. Ray McDermott, a part of U.S.-based engineering and construction company McDermott International Inc. The whole expansion project, for which Foster Wheeler AG is handling the project management consultancy services, involves building two marine pipelines and one onshore pipeline and installing four single point moorings for loading oil tankers at a total cost of about $1.3 billion.

In the first stage, Australian construction contractor Leighton Holdings last year had signed a $733 million contract with Iraq's South Oil Company to install moorings and pipelines in the Gulf, off Iraq's coast. Iraq has awarded a series of massive oilfield development contracts to majors such as Shell and BP with the ambitious target of expanding its oil production capacity to 12 million bpd by 2017. Most analysts see 6-7 million bpd is more realistic.

Current export infrastructure is out-dated and lacks the capacity to handle Iraq's future expected output raise. Iraq is currently exporting an average of 2.2 million barrels per day and expects to export 2.5-mln bpd in 2012. After completing the export facility expansion project, Iraq would start renovating two existing oil terminals in south Basra with a plan to build a strategic pipeline from the southern Basra fields through Syria and Turkey.

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