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International Firms Vie for OGCís Duqm Gas Pipeline Contract

Source: 7/11/2012, Location: Middle East

International and local firms are lining up to bid for a contract to supply pipes for a major pipeline project that will channel natural gas as fuel and feedstock for future consumers at the Special Economic Zone (SEZ) of Duqm. The state-owned Oman Gas Company (OGC) is overseeing the design and implementation of the 230-kilometre-long pipeline project on behalf of the Ministry of Oil and Gas. The 36-inch diameter pipeline will run from Saih Nihayda in central Oman to Duqm on the Wusta coast.

Around 25 mainly international pipeline manufacturers and suppliers have collected bid documents signalling their desire to participate in a contract to supply thousands of carbon steel pipes for the project. The bidding line-up at this juncture includes OHI Petroleum & Energy, Saudi Steel Pipe, Arabian Pipe Company, China Petroleum Pipeline Bureau, Marubeni Itochu Steel, Jindal SAW, Welspun Corp, Ilva SA, MetInvest International, Wuxi Seamless Oil Pipe, Sepco Korea, and Dong Yang Steel Pipe Co.

According to an official of the SEZ Authority of Duqm, a corridor for the construction of the pipeline, linking the Saih Nihayda gasfield with Duqm, has already been delineated. Part of the roughly 25 million cubic metres (m3) per day capacity of the pipeline will be earmarked for a proposed Independent Power Plant, while some volumes will also be potentially used by a major refinery and petrochemicals complex planned at Duqm. Initial requirements of the Duqm SEZ are estimated at 12 million m3/day of gas. This includes an allocation of around 7 million m3/day of gas for electricity generation. Oman Power and Water Procurement Company (OPWP), which oversees the procurement of all new power generation and related water desalination capacity, has appointed a consultant to evaluate the size of a gas-based power project based on the SEZís estimated long-term energy demand.

The successful bidder will be required to supply pipes with a design life of around 25 years and suitable for the transportation of dry natural gas. The pipes will be delivered either at the Port of Sohar of Port of Duqm for onward transportation by trailers to site. Significantly, the Duqm gas pipeline is expected to be one of OGCís largest investments to date. It will also be the single largest pipeline by capacity to be built by the government-run gas transportation utility. The pipeline is expected to come into operation during 2015-2016, well ahead of the completion of any large utility or industry that will offtake natural gas from the project.

Once operational, the new Duqm pipeline will add to OGCís burgeoning gas network. The company oversees and operates the countryís 2,500-kilometre-long Government Gas System ó a critical lifeline that supplies fuel and feedstock to the nationís industries and power plants, among other consumers. The pipeline network, together with ancillary facilities, is spread across the length and breadth of the country, extending from Fahud, Sohar and Muscat in the north, and from Saih Rawl to Salalah in the south.

The network serves a total of around 37 major gas consumers, including power plants, water desalination schemes, industrial parks, petrochemical projects, hospitals and other customers. The company also operates a number of compression stations and more than dozen Gas Supply Stations. OGC is a closed joint stock company between the Government of Oman, represented by the Ministry of Oil & Gas, holding 80 per cent of the shares and Oman Oil Company holding the remaining 20 per cent.

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