The latest EIC Monitor report paints a mixed picture of activity across the global upstream sectors in 3Q 2014, with a large decline in upstream activity.
The global oil and gas industry has followed a gentle downward trajectory of project contracting activity in the last quarter (3Q: Jul-Sept 2014), with 139 contracts placed, a decrease of 7% compared to 149 in Q2 2014, and a significant 22% decrease on the 178 contract awards made in Q3 2013, according to the EIC Monitor quarterly report from the Energy Industries Council (EIC).
Upstream contracting activity in Q3 2014
In 3Q 2014, a total of 40 major contracts (EPC, FEED and Subsea/SURF) were awarded across 35 upstream developments, a significant decline of 41% from 68 awards in 2Q 2014, and a 49% decline on 3Q 2013 figures. The decline reflects the slowdown in global upstream project activity, largely due to rising costs. A total of 22 EPC contracts, 12 FEED contracts and six subsea/SURF contracts were awarded in 3Q 2014.
EPC activity
The Asia Pacific, North Sea and Middle East regions have been hotspots of activity, together accounting for 14 EPC contracts across 11 upstream developments. In the Asia Pacific region, EPC activity has been dominated by Indonesia where a consortium of Bumi Armada and Gema Group secured two awards for work on a FPSO to be deployed on the US$1.2 billion Madura BD, MDA, MBH gas field development; McDermott Int. won an contract to build the BTJT-A Jacket for the $500 million Bukit Tua field; Bakrie & Brothers were appointed to carry out mooring fabrication for the $3 billion Banyu Urip oil field development; and a consortium of Technip and Wijaya Karya landed the EPC work for the $250 million Matindok gas field in Sulawesi.
In nearby Malaysia, Malaysia International Shipping Corp. was appointed to build a marginal mobile production unit for the US$200 million Ophir oil field development.
On the UKCS, Veolia Environment has been awarded a major contract to decommission the 14,000-tonne YME oil platform, and further contracting activity has taken place on the $700 million Bentley heavy oil field development, where Aibel has won a contract to install an Arup Concept Elevating (ACE) platform.
Aibel was also successful in the Norwegian North Sea, securing a contract on Statoil’s $50 million Oseberg C Continuous Drilling project, for which Apply Leirvik was awarded an EPC contract to fabricate the additional living quarters.
In the Middle East, EPC activity has been dominated by projects in Abu Dhabi, where National Petroleum Construction Co. (NPCC) and Hyundai Heavy Industries were both awarded EPC packages on the $3.5 billion Nasr offshore oil field development. A consortium of Technip and NPCC also landed the contract to upgrade gas facilities at the $350 million Umm Shaif Super Complex. In neighboring Saudi Arabia, Essar Group has been appointed to carry out the EPC work for the $54 million Abqaiq Crude Stabilization Plant upgrade in Shaybah.
FEED activity
In 3Q 2014, there was a broad geographic spread of upstream FEED activity although Norway led activity, accounting for a quarter (three) of contracts awarded. Aker Solutions sub-contracted a major FEED award for the $19.4 billion Johan Sverdrup development in the Norwegian North Sea to RBS, a subsidiary of UK-based drilling contractor KCA Deutag. Also in the same waters, Sevan Marine was appointed to conduct the FEED work on the hull and marine systems for the $1.6 billion Bream oil field development.
Further north in the Norwegian Sea, Aibel is to carry out a study to clarify upgrade solutions on an FPSO unit with regard to the possible future connection of existing discoveries as part of a framework agreement between Marathon Oil and Aibel for FEED studies on the $720 million Alvheim & Vilje development.
On the UKCS, IntecSea was awarded the FEED contract for subsea work on the $3 billion Culzean HPHT field in the Central North Sea. In British territories overseas, progress continues on the $5.2 billion Sea Lion Discovery Area development off the coast of the Falklands Islands, where AMEC has been awarded a FEED contract for the topsides on a Tension Leg Platform.
Elsewhere, progress is continuing on the major $46 billion Libra Oil & Gas field development, offshore Brazil, where Wood Group Mustang has been awarded a FEED contract to carry out the topsides engineering for a leased FPSO that will carry out long duration tests (LDTs).
Projects in the MENA region have accounted for a further four FEED contracts: Foster Wheeler secured a five-year contract for the $3 billion Empty Quarter, South Ghawar and Jafurah tight gas development; Tecon Engineering was appointed as FEED contractor for DNO’s $150 million expansion at the Tawke and Khanke oil fields in Iraq; CB&I are to carry out design work for the $1.5 billion Ain Tsila project, onshore Algeria; and a consortium of Foster Wheeler and Taknia Libya Engineering secured a contract for the $900 million Area 47 Ghadames Basin onshore development in north-western Libya.
Subsea/SURF activity
North and South America led subsea/SURF activity in 3Q 2014, accounting for five out of the six such contracts awarded this quarter. Technip won both of the upstream subsea/SURF awards made on projects in the deepwater Mississippi Canyon block in the US Gulf of Mexico. The French contractor also secured a Subsea/SURF contract for work on the $582 million Edradour field development in the West of Shetland area of the UKCS.
In Brazil, Petrobras awarded two subsea/SURF equipment supply contracts for its pre-salt developments. GE Oil & Gas secured a contract to supply eight subsea manifold systems, while FMC Technologies won a contract for the manufacture of over 200 subsea trees and related tools and 16 subsea manifolds.
To the north, in Trinidad & Tobago, BP awarded OneSubsea a contract to manufacture subsea trees for its $2 billion Juniper offshore gas project.