Oil, gas contract levels in steady decline in Q4

Published February 10th, 2015 - 06:53 GMT
In the fourth quarter of 2014, a total of 64 major contracts EPC, Feed and Subsea/SURF were awarded across 53 upstream developments
In the fourth quarter of 2014, a total of 64 major contracts EPC, Feed and Subsea/SURF were awarded across 53 upstream developments

The number of major contract awards across the global oil and gas industry has steadily declined during the last quarter of 2014, dropping to 117 contract awards, a 22 per cent decrease compared to 150 in Q3 2014, but on par with the 118 contracts awarded in Q4 2013, a report said.

In the fourth quarter (Q4) of 2014, a total of 64 major contracts (EPC (Engineering, Procurement & Construction), Feed (Front End Engineering Design) and Subsea/SURF (Subsea, Umbilicals, Risers & Flowlines) were awarded across 53 upstream developments, rising 42 per cent from 45 awards in Q3 2014 and compared to 40 awards in Q4 2013, according to the EIC Monitor quarterly report from the Energy Industries Council (EIC), a leading trade association.

A total of 33 EPC contracts, 6 Feed contracts and 25 Subsea/SURF contracts were awarded.

EPC activity

The Mena region and Asia Pacific (including Australia) dominated activity this quarter, along with the US, with both regions accounting for 63 per cent of midstream EPC contracting activity in Q4 2014.

In the Mena region, five midstream EPC contracts were awarded across developments in Saudi Arabia, the UAE, Iraq, Egypt and Tunisia. Of note, Hoegh LNG has been contracted to charter a FSRU (Floating, Storage and Regasification Unit) for Egyptian Natural Gas Holding Company’s Egypt Floating LNG Terminal, which will be utilised as an LNG import terminal in the port of Ain Sokhna on Egypt’s Red Sea coast.

Another significant award is Petrojet’s contract to restore 800 km worth of infrastructure at Basra Gas Company’s Basra Gas Gathering Project in Iraq, which is part of Iraq’s Gas Master Plan.

In Australia, Keppel Offshore & Marine secured a contract to build a barge for Chevron’s Wheatstone LNG Plant, off the Pilbara coast of Western Australia, while a consortium of Spiecapag and Lucas Group has been appointed to carry out EPC work on APA Group’s Eastern Goldfields Pipeline, also in Western Australia.

Elsewhere in the Asia Pacific region, two midstream EPC contracts have been awarded in Indonesia: one on Pertamina’s Cirebon-Semarang-Gresik Gas Pipeline project and the other on the Gresik-Lombok Marine CNG Pilot Project, which is being carried out by Perusahaan Listrik Negara (PLN).

A further two contracts were awarded in Japan, both on LNG import terminal developments, and in Malaysia, Petronas continued to award contracts for its Refinery and Petrochemicals Integrated Development (RAPID) project in Johor, where Samsung C&T has been appointed to carry out EPC work for the Pengerang LNG Terminal.
Feed Activity

In Q4 2014, West African countries dominated Feed activity, accounting for three contract awards, followed by the UK and Malaysia. In West Africa, Doris Engineering has been appointed to carry out detailed design and procurement for Total’s Dalia Debottlenecking Development in Angola; Wood Group Mustang has been awarded a Feed contract for a new platform at the Tchibala, Ebouri, Avouma, Etame Offshore Oil Field (Etame Block) development in Gabon; and KBR has been awarded a Feed contract for Chevron’s offshore Nsiko Oil & Gas Field (OPL 249) development.

Chevron also accounts for both contracts awarded in the UK in Q4 2014, appointing Wood Group Kenny (subsea) and AMEC Foster Wheeler (topsides) as Feed contractors for the Captain Field - Enhanced Oil Recovery (EOR) project in the Outer Moray Firth.

In Malaysia, Petronas has awarded Ranhill Worley a contract to revise the design for the Bokor Phase III Field Development, offshore Sarawak.

In Q4 2014, a total of 27 major contracts (EPC, Feed and Pre-Feed) were awarded across 27 midstream developments, decreasing 46 per cent from 50 awards in Q3 2014, and 23 per cent from 35 contract awards in Q4 2013. A total of 22 EPC contracts and 5 Feed contracts were awarded.

In Q4 2014, three midstream Feed contracts were awarded on LNG projects and two contracts were awarded on pipeline projects. In China, GTT has been appointed as Feed contractor for Xinao Gas Holding’s Zhejiang Zhoushan LNG Terminal project; in Mozambique, a joint venture between Daewoo Shipbuilding & Marine Engineering and KBR has been awarded a contract for Eni’s Mozambique Floating LNG Project; and in the US, AMEC Samsung Oil & Gas will conduct the Feed for Texas LNG’s Liquefaction and Export Plant in Brownsville.

For the pipeline projects, WorleyParsons has been appointed to carry out the Feed studies for Arrow Energy’s Arrow Bowen Pipeline in Queensland, Australia, and Toyota Tsusho Corporation will carry out similar work for the Kenyan Government’s Hoima Export Pipeline in Uganda.

In Q4 2014, a total of 26 major contracts (EPC, Feed and PMC (Project Management Contract)) were awarded across 23 downstream developments, decreasing nearly 53 per cent from 55 awards in Q3 2014, and 39 per cent from 43 contract awards in Q4 2013. A total of 20 EPC contracts, five Feed contracts and one PMC contracts were awarded.

Indonesia and the US have been key focal points of downstream activity in Q4 2014, accounting for 12 EPC contracts across 10 downstream developments. In Indonesia, state-run operator Pertamina has awarded the region’s top oil refiners, Saudi Aramco, Sinopec and JX Nippon Oil and Energy, a total of five contracts to upgrade a series of refineries as the country looks to increase capacity and reduce reliance on oil imports.

Saudi Aramco has been awarded three contracts to upgrade the Balongan Refinery, Cilacap Residual Fluid Catalytic Cracking (RFCC) Refinery and Dumai Refinery, all on the island of Java, while Sinopec will revamp the Plaju Refinery Revamp in South Sumatra and JX Nippon Oil and Energy will upgrade the Balikpapan Refinery in East Kalimantan. 

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