Monday, July 22

Three parties prequalified for Kasawari CPP contract

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KUCHING: Three parties have likely been pre-qualified by Petronas for the US$1.5 billion Kasawari central processing platform (CPP) contract.

AmResearch Sdn Bhd (AmResearch) noted that the three parties are South Korea’s Hyundai Heavy Industries Co Ltd, a joint venture between Italy’s Saipem SpA and SapuraKencana Petroleum Bhd, and a partnership between France’s Technip SA and Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE).

“We understand the bidding is in progress and is currently being evaluated.

“The contract could be awarded sometime in April. Berlian McDermott, a joint venture between TH Heavy Engineering Bhd and Houston-based McDermott International Inc, did not progress beyond the prequalifying stage of this contest,” said AmResearch.

Upstream had earlier indicated that the Kasawari field development is a 30,000-tonne CPP that includes 19,000 tonnes of topsides.

The development also includes a nine-slot wellhead platform, a bridge link, a flare tower, and possibly a central collection platform weighing more than 7,000 tonnes.

AmResearch explained that Kasawari is a major natural gas discovery with over three trillion cubic feet of gas in reserves. First gas is targeted for late 2018 or early 2019, while production is projected at between 500 million cubic feet per day (MMcfd) and 750 MMcfd of gas.

Gas produced from this field will be transported to the ninth train at Petronas’ Liquefied Natural Gas complex in Bintulu, Sarawak.

“This development is the fourth CPP contract to be awarded by Petronas. We expect this to be a very close race, as one of Petronas’ main criteria is pricing.

“This would be especially vital, amid the national oil company’s focus at improving cost efficiency and the group’s recent announcement that it would cut its capex by 15 per cent-20 per cent,” said the research house.

It added that local yards ‘have recently lost out on major fabrication jobs’ due to increased competition from foreign yards. Hyundai Heavy Industries managed to secure the US$1 billion Bergading CPP from US independent Hess, while the US$1 billion Bardegg 2-Baronia CPP for the EOR project from Petronas is also said to have been secured by the group.

This contract would be especially important to MMHE, as its order book has been dwindling due to lack of jobs secured.

MMHE’s order book stood at RM1.7 billion as at September 2014, with only RM323 million contract wins in FY14.

“We understand that the group has embarked on cost cutting measures and has offered its staff severance packages. The last major job won by MMHE was the SK316 CPP awarded in October 2013.”