The latest EIC Monitor report shows a significant decline in the levels of contracting activity across the global midstream and downstream sectors in Q4 2014, with overall figures showing the number of major contract awards made since the last quarter contracting by almost a quarter. While promising to see an increase in the number of awards in the Upstream sector, actually fewer awards are expected in the coming year against a backdrop of lower oil prices.
The number of major contract awards across the global oil and gas industry has steadily declined during the last quarter (Q4: Oct-Dec 2014), dropping to 117 contract awards, a 22% decrease compared to 150 in Q3 2014, but on par with the 118 contracts awarded in Q4 2013, according to the EIC Monitor quarterly report from the Energy Industries Council (EIC).
Upstream Contracting Activity in Q4 2014
In Q4 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% from 45 awards in Q3 2014 and compared to 40 awards in Q4 2013. A total of 33 EPC contracts, 6 FEED contracts and 25 Subsea/SURF contracts were awarded.
The UK and Malaysia have been hotspots of activity, accounting for 10 EPC contracts across 10 different upstream developments. In the UK, Heerema secured two EPC contracts, one to build the wellhead platform for Maersk Oil’s Culzean HP/HT development in the Central North Sea, which is set to benefit from the new ultra High Pressure, High Temperature cluster area allowance announced by the UK Government in December 2014. The other contract is to carry out the Murchison Field Decommissioning work in the East of Shetland Basin. Also in the East of Shetland Basin, Aker Solutions and Technip were appointed to carry out EPC work on the Mariner and Kraken Heavy Oil Fields respectively.
In Malaysia, state-owned oil company Petronas has awarded two contracts to Malaysia Marine & Heavy Engineering (MMHE) to build wellhead platforms and jackets for both the Bergading Gas and the Besar Gas Field developments, located offshore Terengganu. Petronas also awarded EPC contracts to SapuraKencana Petroleum for fabrication of topsides on the Angsi CEOR project in the South China Sea, and for two wellhead platforms on the Tukau Timur Gas Field, offshore Sarawak.
A further two contracts were awarded for EPC work on Ophir Production’s Ophir Oil Field, offshore Terengganu, and EnQuest’s Tanjong Baram Oil Field, offshore Sarawak.
The remaining upstream EPC contracts were awarded over a broad geographical spread of developments globally. Of note, EMAS was appointed to carry out EPC work on both the Dantzler and Big Bend Subsea Tiebacks, which make up part of the Rio Grande complex in the US Gulf of Mexico; while in Brazil, Jurong Shipyard was awarded an EPC contract to convert a VLCC into a FPSO hull for Long Duration Tests (LDT) on the giant Libra field.
Eni’s major Block 15/06: Eastern Hub (Cabaça Norte & Cabaça Southeast Discoveries) project, located offshore Angola, is also progressing with the contract for an FPSO conversion awarded to Singapore’s Keppel FELS.
In Q4 2014, West African countries dominated FEED activity, accounting for three contract awards, followed by the UK (2) 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.
The US, Norway and the UK have been key areas of activity for subsea/SURF contracts, accounting for such contracts across 12 upstream developments. Of the seven Subsea/SURF contracts awarded in the US, four awards were made by LLOG Exploration: Technip received a double award to lay flowlines for both the Son of Bluto 2 and Marmalard subsea tiebacks, while Ocean Installer won two contracts for the installation of umbilicals on the Delta House FPS and the Son of Bluto 2 tieback. The latter award is in a consortium with Oceaneering International.
In Norway, Maersk Oil awarded a trio of Subsea/SURF contracts for its Flyndre and Cawdor Oil & Gas Field development, which straddles the UK and Norway in the North Sea. GE Oil & Gas, Isleburn and Technip secured contracts for subsea trees, manifolds and subsea pipelines respectively. Technip has also been awarded a contract for pipelay and subsea installation on Statoil’s Gullfaks Rimfaksdalen project, located off the coast of Bergen in the Norwegian North Sea. FMC Technologies has been appointed to deliver a subsea production system for Wintershall’s Maria Oil Field in the same region.
Q4 2014 saw numerous awards for FMC Technologies, who led subsea activity in the UK, securing two contracts to supply subsea production systems to Total, one for the Edradour Gas and Condensate Field development, located north-west of Shetland, and the other for the Glenlivet & Laxford Gas Field project, west of Shetland.
Finally, FMC Technologies secured a further contract to supply a subsea production system for Eni’s Block 15/06: Eastern Hub (Cabaça Norte & Cabaça Southeast Discoveries) development, offshore Angola.
Midstream Contracting Activity in Q4 2014
In Q4 2014, a total of 27 major contracts (EPC, FEED and Pre-FEED) were awarded across 27 midstream developments, decreasing 46% from 50 awards in Q3 2014, and 23% from 35 contract awards in Q4 2013. A total of 22 EPC contracts and 5 FEED contracts were awarded.
The Asia Pacific (including Australia) and MENA regions dominated activity this quarter, along with the US, with both regions accounting for 63% of midstream EPC contracting activity in Q4 2014. 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.
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 the US, PennTex Midstream Partners has awarded Honeywell UOP two contracts to carry out EPC work at its Lincoln Parish 2 and Mount Olive gas processing plants in Northern Louisiana. Also in Louisiana, SK Engineering & Construction has been awarded a contract to build Trains 1 and 2 at the Magnolia LNG Export Terminal - the most significant award in the midstream sector over the last quarter. The entire project comprises an 8 mtpa LNG facility on a 115-acre site on an established LNG shipping channel in the Lake Charles District of Louisiana.
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.
Downstream Contracting Activity in Q4 2014
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% from 55 awards in Q3 2014, and 39% from 43 contract awards in Q4 2013. A total of 20 EPC contracts, 5 FEED contracts and 1 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.
Also in Indonesia, PLN has awarded a consortium of Timas Suplindo and Odira Energy Persada a contract to carry out EPC work for the Central Kalimantan CNG Plant.
In the US, six contracts have been awarded for EPC work on a series of petrochemical plants. Sasol has awarded three contracts for work on its Lake Charles Ethane Cracker and Derivatives plant in Louisiana, which will produce an anticipated 1.5 mtpa (metric tonnes per annum) of ethylene on completion. Sasol has awarded a joint venture between Fluor and Technip the major EPC contract for the plant; Toyo Engineering a contract to build the LLDPE plant; and Technip a contract for eight Ultra Selective Conversion® furnaces. At the same location, Westlake Chemicals has awarded Technip a contract to carry out EPC work for its Lake Charles Ethylene Plant Expansion.
In neighbouring Texas, Magellan Midstream Partners has appointed Leidos Holdings to carry out EPC work for its Corpus Christi Condensate Splitter, while further north in Kansas, Coffeyville Resources has appointed CB&I as EPC contractor for its Coffeyville Refinery Hydrogen Plant.
Across the Atlantic in Europe, there has been activity in Antwerp, Belgium, where Amec Foster Wheeler has been awarded a contract to carry out EPC work on a residual unit and the revamp of offsite facilities for ExxonMobil’s Antwerp Refinery Delayed Coker Unit.
US-based contractor KBR dominated downstream FEED contracting activity, securing three of the five FEED contracts awarded in Q4 2014. In this quarter, KBR has been awarded the license and engineering contract for Mosaic’s proposed expansion of its St. James Ammonia Plant in Louisiana, US; a contract for FEED work at SABIC’s Petrokemya - Butadiene Extraction Plant Debottlenecking and Expansion Project in Saudi Arabia; and a contract to supply its catalytic olefins technology for Lotte Chemical Corporation’s Johar Steam Cracker Plant Expansion in Malaysia.
Also in Malaysia, Evonik Industries has appointed Yokogawa Electric Corporation to carry out design studies for a production control system and safety instrumentation at the Pengerang RAPID project in Johor.
In China, CB&I secured a contract for the license and engineering design of Shenhua Ningxia Coal Industry Group’s Lingwu Polypropylene Unit to be built in the Ningxia Province, where CB&I’s proprietary Novolen® technology will be used to produce 600 000 mtpa of polypropylene.
Data is sourced from the EICDataStream online project database, which tracks nearly 10 000 projects proposed or under development in the global energy industry.
Edited from source by Joe Green