The latest EIC Monitor report once again shows a significant decline in the levels of contracting activity across the global upstream sector in Q1 2015. Despite the overall number of contracts being awarded dropping, the value of some is substantial. But while long-term investment plans and new discoveries hold promise for the long term, these could take a long time to come to fruition for industry players.
Upstream Contracting Activity in 1Q 2015
In 1Q 2015, a total of 39 major contracts - EPC (engineering, procurement and construction), FEED (front end engineering design) and subsea/SURF (subsea, umbilicals, risers and flowlines) - were awarded across 30 upstream developments, falling 65% from 66 awards in 4Q 2014 and compared to 55 awards in 1Q 2014. A total of 21 EPC contracts, six FEED contracts and 12 subsea/SURF contracts were awarded.
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Upstream: number of major contracts awarded. From EIC. |
EPC Activity
The US, Ghana, Malaysia and Norway have seen significant activity, accounting for 11 EPC contracts across six different upstream developments. In the US, there were two EPC contracts for the Stampede oil field, with Kiewit securing a contract to carry out the topsides fabrication and Samsung Heavy Industries the hull fabrication.
There has been significant activity on the Cape Three Points Block (OCTP) – Sankofa and Gye Name Discoveries in Ghana with four separate contracts being awarded. PetroVietnam Technical Services Co. (PTSC) and Kanfa Group are each supplying four topsides modules for the FPSO, GE Oil & Gas is providing three gas turbines and four centrifugal compressors, and Yinson Holdings the FPSO, with a value of over US$2.5 billion making it one of the larger contracts in the quarter.
In Malaysia, state-owned oil company Petronas awarded Hyundai Heavy Industries an EPC contract for the central processing platform (CPP) on the Baram Delta Gas Gathering Project, and Hess Corp. awarded E.A. Technique a contract to supply a floating storage and offloading (FSO) unit for Block PM301 (North Malay basin development).
The North Sea off Norway has seen two EPC contracts for the Johan Sverdrup Development (Avaldsnes and Aldous Major South Oil Discoveries), both awarded by Statoil. ABB won a contract for land-based power supply for phase 1 of the development and Aibel was awarded a contract worth over $1 billion for drilling platform topsides. In the Gina Krog oil and gas field, IKM Ocean Design was awarded an EPC contract by Statoil to supply the Zeepipe IIA Gooseneck Spool and retrofit hot tap tee. Injection gas to the field will be supplied through a 16in pipeline connected to the 40in Zeepipe IIA pipeline via a 12in spool. The connection will be accomplished by hot-tapping and tie-in to a 40in by 12in retrofit tee.
Petrofac is leading a consortium with Greece based Consolidated Contractors Co.(CCC) awarded a $4.3 billion contract by Kuwait Oil Co. (KOC) for the Lower Fars heavy oil field development in Kuwait. The companies are providing EPC, start-up and operations and maintenance work for the main central processing facility (CPF) and associated infrastructure as well as the production support complex.
In Kazakhstan, North Caspian Sea Operating Co. (NCSOC) awarded Saipem a contract worth $1.8 billion to build two 95km pipelines. The significant value of these contracts demonstrates that while the overall number of awards has reduced, the value of those being made is still substantial.
FEED Activity
In 1Q 2015, six upstream FEED contracts were awarded, of which two were in the US, both awarded to IntecSea by Chevron for providing engineering and long-lead procurement services on subsea-tie backs for the Buckskin and Moccasin offshore oil fields. In Brazil, CFPS Engenharia e Projetos was awarded a contract by Parnaíba Gás Natural (PGN) for the Block BT-PN-8 - Gavião Branco Gas Field.
In the UK, Ramboll was awarded the detailed design contract by Maersk Oil for two jackets for a central processing facilities platform and utilities/living quarters platform in the Culzean HPHT gas and condensate field.
Tecnomare secured a contract with Eni for the Nene-Loango Development Project in Congo, and Wood Group Kenny is to provide FEED work for the flowline system, including engineering and procurement support, for North West Shelf Venture offshore Australia.
Subsea/SURF Activity
Ghana and the US have dominated subsea/SURF contracts, accounting for three deals each across six separate projects. In Ghana, a joint venture of GE Oil & Gas and Oceaneering International is supplying a subsea production system for Eni Ghana E&P in the Cape Three Points Block. DeepOcean was awarded two contracts by Tullow Ghana to provide inspection, survey and subsea construction services on the Deepwater Tano Block and Jubilee field.
First quarter 2015 saw Oceaneering International awarded three subsea/SURF contracts in the US; one to provide umbilical installation tiebacks in Marmalard North and Marmalard South, another to supply subsea production umbilicals for the odd job offshore oil field, and a third to provide umbilicals and umbilical distribution hardware at the Stampede oil field.
Elsewhere, Technip won two subsea/SURF contracts; one to supply 200km of flexible lines and related equipment for the Lula Alto field's production system in Brazil, and another to carry out the fabrication and installation of pipeline and umbilicals for the UK’s Glenlivet and Laxford gas fields.
Subsea 7 won a deal for fabrication and subsea installation on the Persephone Gas Field, part of Australia’s North West Shelf Project. Also in Australia, Ezra Holdings secured a deal for umbilicals, manifolds, flying leads and jumpers in the Julimar Gas Field.
In Norway, Nexans is supplying standardized umbilical cables for the Visund Nord oil and gas field, and finally in Denmark, VBMS is carrying out the installation of 18.5km of control umbilicals at the Ravn oil field.
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