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Iraq Awards Oil Export Facility Expansion and Subsea Pipeline Contract to Saipem

22 August 2011

Reuters reported that Iraq has awarded USD 471 million contract for an oil export facility expansion and sub sea pipeline to Italian group Saipem.

Iraqi oil sources said that Saipem will build a single point mooring buoy with an export capacity of 900,000 barrels per day and construct 50 kilometer pipeline to transport crude from storage depots in Iraq’s southern Faw peninsula to the new floating terminal.

Saipem should complete engineering, procurements and construction work within 24 months. The order is the second phase in a wider expansion project announced last year.

Tender documents show that three other companies submitted bids for the contract, including Leighton Offshore Private Limited, National Petroleum Construction Company and J Ray McDermott, a part of US based engineering and construction company McDermott International Inc.

The whole expansion project for which Foster Wheeler AG is handling the project management consultancy services, involves building two marine pipelines and one onshore pipeline and installing four single point moorings for loading oil tankers at a total cost of about USD 1.3 billion.

In the first stage, Australian construction contractor Leighton Holdings last year had signed USD 733 million contracts with Iraq’s South Oil Company to install moorings and pipelines in the Gulf, off Iraq’s coast.

Iraq has awarded a series of massive oilfield development contracts to majors such as Shell and BP with the ambitious target of expanding its oil production capacity to 12 million bpd by 2017. Most analysts see 6 million to 7 million barrel per day is more realistic.

Current export infrastructure is out dated and lacks the capacity to handle Iraq’s future expected output raise. Iraq is currently exporting an average of 2.2 million barrels per day and expects to export 2.5 million barrel per day in 2012.

After completing the export facility expansion project, Iraq would start renovating two existing oil terminals in south Basra with a plan to build a strategic pipeline from the southern Basra fields through Syria and Turkey.