Italy’s Saipem has confirmed the awards of a $1.7 billion offshore contract from Qatargas for work on the first key engineering, procurement, construction and installation package at its North Field Sustainability project, located offshore of the north-east coast of the Qatar peninsula.

Confirmation from the company comes after Upstream exclusively reported last week that Saipem was due to land a pair of significant deals at the offshore development in what could be among the largest offshore deals to be awarded anywhere in the world this year.

Saipem confirmed the EPCI award on Monday and said its workscope involves “various offshore facilities (meant) for the extraction and transportation of natural gas, including platforms, supporting and connecting structures, subsea cables and anticorrosion internally cladded pipelines".

In addition, the project includes “decommissioning of a pipeline and other significant modifications to existing offshore facilities", it added.

Additional award

The Italian contractor also confirmed that it has “received from Qatargas a letter of intent for the contractual package regarding offshore export pipelines and related onshore works", meant for the North Field Production Sustainability Pipelines project.

“The award of this additional package is subject to the definition of contractual details and the client’s final approval,” the company said.

However, Saipem did not reveal the valuation for the additional pipeline package.

The two awards confirm a recent report by Upstream highlighting that Saipem was poised to win the two EPCI contracts, which together are said to be worth upwards of $3 billion.

Saipem said that pipe-laying and lifting operations for the first package will be executed by the DE HE vessel in water depths of approximately 65 metres.

The project aims at increasing the early gas field production capacity to 110 million tonnes per annum of liquefied natural gas, it added.

This new contract award will be included in the company’s 31 December backlog for last year, Saipem said.

The Italian contractor is already executing the WHP12N jacket project, awarded in July last year, which is part of the North Field Production Sustainability Offshore project, it added.

Crucial projects

The two deals are a crucial element of Qatar's ambitious plan to significantly boost its LNG output capacity by around two-thirds well before the end of this decade.

Qatar is a leading producer and exporter of LNG, with current output of 77 million tpa.

Qatargas and parent Qatar Petroleum are working on the mega expansion project at the North Field that envisages ramping up the nation’s liquefaction capacity in two stages to 126 million tpa — an increase of 49 million tpa from current levels.

Workscope on offer

Upstream understands the workscope for first offshore package includes at least four wellhead platforms and one additional jacket, nine riser platforms, one bridge-supported platform, bridges to connect riser platforms, clad subsea pipelines and subsea power cables, project watchers said.

In addition, the second EPCI job involves the laying of up to 270 kilometres of subsea pipelines.

This is likely to comprise work on about 170 kilometres of 32-inch subsea pipelines and 100 kilometres of 38-inch subsea pipelines.

North field plans

Qatar has been on a spending spree this year despite the challenging market conditions and state-controlled giant QP recently announced a final investment decision for its first expansion phase of its North Field that is likely to cost almost $29 billion.

The North Field Sustainability and North Field Expansion projects were among the first to be initiated by Qatar following the removal in 2017 of a 12-year self-imposed moratorium on further development of the field.

The second phase of the sustainability project is a crucial element of Qatar’s strategy to support gas production from the North Field and aims to sustain the existing gas production from the giant asset for years.

In 2019, McDermott International won a substantial contract — which was thought to be worth between $700 million and $800 million — for work on the previous stage of the sustainability project.

At least two key offshore packages are also said to be up for grabs for the infrastructure required for the first phase of Qatar's North Field Expansion programme.

Field Development

Saipem confirms $1.7bn offshore contract from Qatargas for work on giant North Field