Petrofac and Daewoo win Upper Zakum job

Winners: Zadco has awarded partners Petrofac and Daewoo the contract for the expansion of Upper Zakum off Abu Dhabi

A partnership of Petrofac and Daewoo Shipbuilding & Marine Engineering has been awarded one of the biggest single engineering and construction contracts in the Persian Gulf, the $3.9 billion expansion of Abu Dhabi’s Upper Zakum oilfield.

The selection follows recon­sideration of a tender round that initially saw a partnership of ­Hyundai Heavy Industries and KBR putting in the lowest bid, with Petrofac-Daewoo submitting one of the higher price offers.

The client, Upper Zakum Development Company (Zadco), is expected to announce the contract award in February, say sources.

The selection of Petrofac-­Daewoo as low bidder was made after Zadco effectively re-ran the September price tender favouring Hyundai-KBR, a source said.

The reason or reasons for Zadco opposing the Hyundai-KBR bid are not known.

The second-lowest bid in September was from NPCC-Technip, with Samsung Engineering putting in the third lowest price.

The Petrofac-Daewoo price offer in September was the fourth lowest.

All the prices at the time were very close to each other, near the $3.9 billion mark.

The Upper Zakum project is known as UZ 750, and aims to raise production at the offshore field to 750,000 barrels per day from about 520,000 bpd.

The Upper Zakum field is more than 80 kilometres off the coast of Abu Dhabi.

The project involves four production islands, with processing facilities at the central island complex.

The front-end engineering and design study was carried out by Technip.

Zadco opted for the four artificial islands as drilling and processing centres as a more efficient and less costly alternative to installing an additional 25 wellhead platform towers and hundreds of kilometres of new flow lines, according to the company.

The offshore portion of the UZ 750 development was awarded to National Petroleum Construction Company and its French partner Technip in early 2012 under an $800 million contract.

Hyundai officials could not be contacted for comment on the running of the tender, which saw the eventual elimination of the low bidder.

One source told Upstream in November that some critics within Zadco alleged potential technical deficiencies involving another existing scheme — Hyundai’s three-year-old $1 billion contract from Abu Dhabi Gas Liquefaction Company to build an integrated gas development plant on Das Island.

The Das Island project is behind schedule. However, some sources said that the potential for delays had been highlighted early on by both client and contractor because of the effects of weather conditions on the reclamation of land and construction of an artificial island.

Zadco is an Abu Dhabi National Oil Company subsidiary that includes US supermajor ExxonMobil as a leading shareholder, as well as Japan Oil Development Company.

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