CONRAD PRABHU -
MUSCAT, JULY 27 -
French-based global oil and gas company TechnipFMC has been named as the third contender for a contract to build a major LNG bunkering hub at Sohar Port.
TechnipFMC, along with McDermott of the United States and JGC of Japan, constitute a trio of leading international oilfield and petrochemical engineering players participating in a design competition, the winner of which will secure a contract to build a 1 million tonnes per annum capacity Liquefied Natural Gas (LNG) plant at Sohar Port.
The client is the partnership of Total Oman E&P Development BV and Oman Oil & Orpic Group, with Total designated the operator of the LNG plant and associated bunkering hub when it is operational tentatively during the 2024-25 timeframe.
The bunkering hub will provide low-carbon LNG as bunker fuel for ships in line with new guidelines issued by the International Maritime Organization (IMO) requiring vessels to switch to low-sulphur fuel with effect from 2020.
According to market experts, the Total / Oman Oil & Orpic Group partnership has adopted a fairly novel contracting strategy, which is increasingly popular in the global LNG project development industry, to implement the LNG bunkering hub at Sohar Port.
It centres on a design competition in which multiple engineering contractors are invited to submit a Front End Engineering Design (FEED) for the project. The submission found most cost-competitive in terms of capex and optimised for superior performance, will then win the client’s green-light to proceed with the implementation of the project on an Engineering-Procurement-Contracting (EPC) basis. The unsuccessful players are expected to receive a modest-size fee for their efforts under this contracting strategy.
The design competition approach is known to help in the delivery of speedier and cost-competitive LNG projects. It is understood that McDermott, JGC and TechnipFMC — selected to participate in this Triple FEED Competition — have until March 2020 to submit their FEED designs. EPC costing details from the trio are expected by April 2020.
Importantly, the LNG bunkering hub at Sohar Port represents only one component of an ambitious Integrated Gas Development initiated by Oman’s Ministry of Oil and Gas with an investment value estimated at $19 billion.
The integrated gas development, centring on the monetisation of gas resources in Greater Barik (part of the Block 6 concession of Petroleum Development Oman PDO), involves the participation of a number of leading international and local energy firms, notably Shell, Total, PDO and Oman Oil & Orpic Group.
Under a Memorandum of Understanding signed with the Ministry last year, Shell and Total have broadly committed to participating in upstream gas exploration and development, a Gas-to-Liquids (GTL) scheme, and a terminal at Sohar Port that will provide LNG as fuel for shipping.
Total and Shell as operators will develop several natural gas discoveries located in the Greater Barik area onshore Block 6, with respective shares of 25 per cent and 75 per cent, as per the agreement between both companies and before possible State back-in. The objective is to achieve an initial gas production of around 500 million cubic feet per day (MMcfd) and a potential to reach 1 billion cubic feet per day (bcf/d) at a later stage.
Total, for its part, will use its equity gas entitlement as feedstock to develop a regional hub in Oman for an LNG bunkering service. This entails the establishment of a new small-scale modular liquefaction comprising a 1 million metric tonnes per year train offering the flexibility for expansion as required by the development of the LNG bunkering market.
Earlier this year, the Ministry signed an Interim Upstream Agreement with Shell setting out funding and a work programme for 2019 for the development of gas resources destined for the integrated project. PDO, Oman Oil & Orpic Group and Total were also signatories. It entails the integration of Shell’s and OOC’s share of the upstream project with the development of a Gas-to-Liquids (GTL) project to be developed and operated by Shell in partnership with Oman Oil & Orpic Group. GTL capacity is envisioned at roughly 45,000 barrels per day.
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