At least four leading international offshore contractors or consortia are said to be battling it out to land a prized contract tied to the Hai Long offshore wind project in Taiwan.
This contest emphasises the serious efforts that global engineering, procurement and construction contractors (EPC) are making to break into the fast-growing offshore wind sector as their core oil and gas market declines.
Canada-based Northland Power’s Hai Long development aims to build 1.044 gigawatts of installed offshore wind capacity in the Taiwan Strait. That is a massive undertaking, given that the entire planet's current installed offshore capacity is roughly 35GW.
Hai Long is part of a huge global buildout of sea-based wind capacity that will reduce reliance on fossil fuels in key energy-consuming regions such as Asia.
"We are forecasting total global offshore wind capacity to expand from the current 35 gigawatts to over 200GW by 2030, so there is massive growth potential for EPC players globally, especially in US, Europe, and Asia," Robert Liew, a principal analyst with Wood Mackenzie, told Upstream. Large projects like Hai Long will be critical to Taiwan’s wind ambitions as it will showcase whether offshore wind can be commercially viable despite the higher costs of the technology, he said.
The traditional oil and gas EPC players are drawing on synergies from their existing work profile as they expand into the potentially lucrative offshore wind market.
The EPC contract for the Hai Long project is for two offshore wind substations, project watchers told Upstream. Those believed to have submitted a second round of bids last month to the operator for the coveted EPC job included a grouping of Vietnam’s Petrovietnam Technical Services Corporation with Denmark-headquartered Semco Maritime, another consortium of Malaysia’s Sapura Energy and Danish player Ramboll, Singapore’s Keppel Offshore & Marine, and US-based McDermott International, project observers said.
The EPC job is widely thought to be valued between $200 million to $250 million, and the offshore facilities are comparable to an offshore riser platform, which is commonly used for oil and gas infrastructure development, one person said.
“We have just submitted the second round of bids and the operator is expected to award the EPC contract by middle of this year,” another person said.
South Korean player Daewoo Shipbuilding & Marine Engineering is also believed to be among the interested players, but its participation could not be confirmed.
The Hai Long project owners include independent power producer Northland Power with a 60% stake, with Asian-based Yushan Energy and Mitsui, each on 20%.
The workscope of the most recent Hai Long tender involves the EPC of topsides and jackets comprising the two substations meant for the Hai Long 2 & 3 development, but the scope does not involve the installation, a second person said.
"The development of Hai Long 2 & 3 is progressing well," a Northland Power spokesperson said in an email reply to Upstream queries. "Project commissioning is expected by the end of 2025 and 2026 with (final investment decision) in the course of 2022."
In addition to the ongoing development of Hai Long, Northland is continuing to develop other offshore wind projects including the Chiba project in Japan and the Dado Ocean project in South Korea, and it has announced early stage works for Round 3 projects in Taiwan, Northland said.
"We continue to look at new opportunities across the region, but for now our focus is on these activities," the spokesperson said.
As multiple engineering giants seek to diversify, they are now banking on new offshore wind projects to boost their order books, which have dwindled due to reduced contracting activity in the oil and gas markets.
As well as those still vying for the Hai Long EPC prize, other contractors are said to have shown initial interest in the project, but did not progress to the next stage, Upstream understands.
UK’s Petrofac, Italy’s Saipem and Singapore-based Sembcorp Marine were thought to be among the interested players at the initial stage, but they are unlikely to remain in the fray.
(Upstream's Americas bureau chief Jennifer Presley in Houston contributed to this article.)