Chinese yard CIMC Raffles has emerged as the front-runner for the provision of a floating production, storage and offloading vessel for Malaysia's MISC that is destined for Petrobras' giant Mero field in the Santos basin pre-salt province offshore Brazil.

At least three sources told Upstream that CIMC Raffles in Yantai city, in northern China's Shandong province, has entered into exclusive discussions with MISC after it offered a very competitive price for the Mero-3 floater, a counter-offer that overturned the bid made by Huangpu Wenchong Shipbuilding Industry in southern China’s Guangdong province.

Project observers said that CIMC Raffles achieved the highest score in both commercial and technical evaluations by MISC.

“The deal is almost finalised, short of contract signing,” said one person familiar with the tender.

He added that MISC is now in the middle of internal procedures to endorse the deal, which is both time consuming and complicated.

The Mero-3 tender had attracted bids from Huangpu Wenchong yard in alliance with Zhuhai Jutal, China Merchants Heavy Industry, Cosco Shipping Heavy Industry and Bomesc Offshore Engineering with Xingang Shipbuilding Industry.

MISC earlier told Upstream: "The selection of a yard as MISC’s subcontractor for the Mero-3 project is undertaken via a tender process in accordance with MISC’s policies and procedures.

"MISC is still in the midst of this process and a decision to award to the successful bidder will be made in due course."

The workscope covers the delivery of the FPSO including hull and topsides. Sources said MISC has also just completed the tender for the floater’s mooring system.

Norway’s Aker Solutions won the contract from MISC to carry out the detailed engineering for the Mero-3 topsides and hull, the latter of which will be converted from Malaysian company AET’s shuttle tankers for the Petrobras job.

Like the Guanabara (Mero-1) and Sepetiba (Mero-2) floaters that are under construction, the Mero-3 FPSO, which will be called Marechal Duque de Caxias, will be able to process up to 180,000 barrels per day of oil and 12 million cubic metres per day of natural gas.

The Mero-3 FPSO will be chartered for a 22.5-year period, entering operations for Petrobras in 2024.

MISC is proposing a hull conversion using a shuttle tanker from its wholly owned affiliate AET. It could take about 18 months for the conversion job to be completed.

Depending on the workscope and whether or not equipment is supplied by MISC, an FPSO conversion will cost just under $100 million.

Petrobras operates Mero with a 40% stake and is partnered by European supermajors Shell and Total on 20% each, with China National Petroleum Corporation and CNOOC Ltd having 10% apiece.

Mero is currently producing about 43,000 bpd of oil from a single well linked to the Pioneiro de Libra FPSO as part of an extended well test.

MISC, headed by chief executive Yee Yang Chien, offered a dayrate close to $700,000 for the floater, contracting sources have said, edging out Netherlands-based rival SBM Offshore.

The Mero-3 project calls for the drilling of 15 development wells — eight oil producers and seven water and gas injectors, which will be linked to the FPSO through a rigid riser-based subsea structure yet to be contracted.

Field Development

Chinese yard in exclusive talks with MISC for Brazil-bound floater