abce certificate
LIVE

Search >>  

Friday, 09 January, 2009, 01:10 GMT | more >>

Costs squeeze at Gassi Touil



By Upstream staff 

Repsol YPF's integrated Gassi Touil gas project in Algeria is facing commercial challenges in the tight services market that are affecting costs and timing, the development's boss said today.

The Spanish company, which is working on the project in partnership with Spain's Gas Natural and Algerian state company Sonatrach, is also facing technical challenges in the complex gas field, project chief Carlos Berenguer told an energy conference in the western town of Oran.

Berenguer said issues facing the $3 billion project required close collaboration between the partners to solve. He noted, without elaborating, that penalties were payable if schedules overran.

"This is a very complex and very demanding project. There are many tests for the partners in it... The present market circumstances impact the project in cost and time... Close collaboration between the partners is essential for making such a challenging project a success."

Algeria awarded the contract for Gassi Touil to the Spanish consortium formed by Repsol-YPF and Gas Natural with an exploration, extraction and processing concession of 30 years.

The project, located in the Berkine basin in the Sahara desert, is on a production sharing basis and is scheduled to go on stream in 2009.

As well as exploration and production, the project includes construction of a liquefaction terminal to process 4 million tonnes of liquefied natural gas per year. The venture aims to send LNG to North America.

Repsol operates the Gassi Touil project.

"The scale of the project is massive," Berenguer told Reuters, adding it involved the largest ever seismic survey in Algeria spanning 3500 square kilometres.

He said the main technical challenges involved exploration and production.

"There are very high pressures and there are difficult-to-predict open fractures that complicate the drilling and require special techniques and very good drilling training," he said.

"The combination of new fields and old fields, sweet and high carbon dioxide gas ... complicate the design and add to the challenges of the project. We have to go through a very extensive phase of simulation ... And finally CO2 reinjection is mandatory from the first day. It's one of the key elements of the project."

He said the tightening of the market for services had not been predicted when the contract was first awarded.

"The market is extremely tight in oil and gas and probably in other areas as well. And it makes it very difficult to control schedules and costs and to find adequate resources," he said. "It means we have difficulty to locate quality contractors with the capacity required."

"Delivery times are getting longer and longer and there are many contractors and many suppliers who simply tell you ´We are not going to quote, we are saturated'," he said.

"We are also having a lot of difficulty to recruit the necessary staff in quality and quantity because the market is so hot. It is pulling from the available resources in all directions."

Monday, 27 November, 2006, 12:07 GMT  | last updated: Monday, 27 November, 2006, 12:07 GMT

On the road: in Algeria
 

Related articles

Related companies


Grenland AsIs North America
MarSol
Jim Rohr & Associates
Litre Meter Ltd
TECNA Engineering
view all
live
hardcopy
to top
print article

e-mail this article to a colleague


to email:  from:
comments: