McDermott, Encona ink Chevron EPC deal

EPC deal: John Watson-led Chevron awards Indonesia contract to McDermott and Encona

US contractor McDermott has confirmed the award, along with a local player, of an engineering, procurement and construction contract for Chevron’s Gendalo Gehem gas and condensate project off Indonesia.

The two-party consortium had been tipped for the award for two floating production units for the projects off East Kalimantan, the largest contract on offer in Indonesia this year.

Confirming the award along with Encona Inti Industri on Friday, McDermott gave away no details of the deal.

Upstream reported in its newspaper edition on Friday that Chevron had sought regulatory approval for the award after reaching a compromise with McDermott on the price for the FPU pair.

McDermott lowered its joint commercial bid with Encona for the delivery of the two FPUs to within 10% above Chevron’s owner estimate of $2.6 billion, sources told Upstream.

Project watchers have said that, along with the EPC award, Chevron plans to conclude, by around mid-July, a second deal covering the subsea umbilicals, risers and flowlines package, for which the leading bid was submitted by a partnership of Subsea 7 and Timas Suplindo.

Chevron has sought an extension to the validity of the Subsea 7-Timas Suplindo joint bid of $1.9 billion to give it more time to reach a decision after calling for a retender for the FPU contract.

A third contract for the development’s subsea production system was awarded to GE.

Upstream reported in mid-April that McDermott and Encona were in pole position for the award after being the sole commercial bidders.

Chevron had qualified one other bid consortia led by Italy’s Saipem for the re-tender. However, Saipem and its partners, South Korea’s Hyundai Heavy Industries and Indonesia’s Tripatra, did not put in a commercial proposal.

A final investment decision on the project will rest on regulatory approvals of an extension of the production sharing contract and an upward revision of the project budget.

The multi-billion Indonesia Deepwater Development (IDD) encompasses up to four fields — Gendalo, Gehem, Maha and Gandang.

The larger of the two newbuild FPUs is designed to process 700 million cubic feet per day of gas and 25,000 barrels per day of condensate from Gehem. The second floater will process up to 420 MMcfd of gas and 30,000 bpd of condensate from Gendalo, Maha and Gandang.

The project also calls for the procurement and installation of 630 kilometres of pipelines, 80 kilometres of umbilicals and up to 120 subsea flowline connections in water depths of up to 6000 feet.

Output from Gendalo Gehem is projected to hit 1.1 billion cubic feet per day of gas and 31,000 barrels per day of condensate.

Gas from the IDD, which includes the Gendalo-Gehem quartet plus the Bangka field in the Kutei basin, will be fed to the Bontang liquefied natural gas plant.


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