QatarEnergy has awarded a huge engineering, procurement, construction and installation contract to US contractor McDermott International for the offshore facilities destined for its North Field East Expansion project in the Persian Gulf.

The Qatari state-owned giant said in a statement on Monday that it has placed an award to McDermott Middle East, a wholly owned subsidiary of the US-based engineering and fabrication giant McDermott International.

The contract’s scope will includes 13 normally unmanned wellhead platform topsides — eight for North Field East and five for North Field South — in addition to various connecting pipelines and shore approaches for the NFE pipelines, beach valve stations and buildings, the Qatari company said.

“The jackets and the pipelines for the NFS Project will be subject to a separate tender which is expected to be awarded in the first half of 2022,” the statement added.

Boosting LNG capacity

QatarEnergy noted that the NFE and NFS projects will increase Qatar’s liquefied natural gas (LNG) production capacity from 77 million tons per annum (tpa) to 126 million tpa, with first production expected in 2025.

The award for the giant NFE offshore facilities confirms a recent Upstream report that tipped McDermott as the frontrunner for two prized EPCI packages comprising the NFE expansion scheme.

While QatarEnergy did not disclose the value of the two packages, Upstream understands that they are together valued upwards of $3.5 billion.

Timely delivery

Saad Sherida Al Kaabi, the chief executive of QatarEnergy said the award demonstrates the company’s commitment to delivering its “LNG expansion projects on time and to ensure the significant additional global LNG demand is catered for in a timely manner.”

“We are confident that the effective collaboration between QatarEnergy, Qatargas and McDermott will result in the safe and successful delivery of the project according to plan,” Al Kaabi noted.

Qatargas, a subsidiary of state-controlled giant QatarEnergy, is carrying out the tender process for multiple onshore and offshore packages meant for the two development phases of North Field, together touted to be worth up to $50 billion.

While Qatar has announced a final investment decision for the first expansion phase valued at $28.75 billion, a final investment decision for the second development phase is likely to be taken later this year, Upstream understands.

Regional development

The two offshore EPCI NFE packages are among McDermott’s largest awards in the Middle East in the past few years.

In 2020, McDermott emerged from Chapter 11 proceedings after a US court approved its reorganisation plan and the sale of the company's Lummus technology unit, months after filing for bankruptcy protection.

The company’s position took a hit in the Middle East as key state-owned companies such as Saudi Aramco and Qatar Petroleum took a cautious approach to awarding sizeable EPC projects during the amply publicised financial restructuring, which was completed in 2020.

The US contractor's fortunes have improved in recent months, especially in the Middle East.

McDermott has been performing the front-end engineering and design work for the NFE offshore project that involves topsides for offshore platforms and subsea pipelines.

The contractor has already been responsible for work on multiple offshore jackets for the NFE project.

Giant expansion plans

Qatar has a nameplate liquefaction capacity of 77 million tpa, behind world leader Australia’s nearly 88 million tpa.

Under the first phase of the expansion plan, Qatar aims to ramp up its LNG production capacity to 110 million tpa by the middle of this decade, with the project likely to cost $28.75 billion overall.

The second phase — NFS, aims to increase the emirate’s LNG production capacity to 126 million tpa by 2027 and will cost billions more dollars.