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Chevron and Eni re-qualify contractors for Gendalo-Gehem FPO

Gendalo-Gehem bidders to include Indonesia partners

The US major company Chevron and the Italian national oil company (NOC) Eni are reviewing the qualification of the contractors in competition for the floating production and offloading (FPO) vessels required for the development of the Gendalo and Gehem liquids-rich gas fields in the Makassar Strait offshore the East Kalimantan Province of Indonesia.

This re-qualification process comes after the decision made in 2013 by Chevron and Eni to declare “failed bid” the call for tender issued for the engineering, procurement and construction (EPC) contract of the FPOs to be installed on the Gendalo and Gehem gas fields.

Located in the Strait of Makassar, the Gendalo and Gehem gas fields  are 120 kilometers distant from each other and lying by 1,829 meters of water depth.

Located at the foot of the Indonesia Continental Shelf in the Kutal Basin, the Gendalo – Gehem project will be the deepest project of that size achieved in Indonesia.

Chevron_Eni_Gendalo-Gehem_FPO_MapWith the development of the Gendalo and Gehem FPO project, Chevron and Eni intend to develop Maha and Gendang gas fields neighboring Gendalo.

The Maha and Gendang gas fields should be tied-back to the Gendalo FPO, so that together with Gehem, Chevron and Eni could access recoverable reserves estimated to 4 trillion cubic feet (tcf) of natural gas.

In this Gendalo -Gehem project, the working interets are shared in such a way that:

 – Chevron 80% is the operator

 – Eni 20%

 – Indonesia Government holds 10% provision share that it can exercise at any time through the national company Pertamina.

In 2012 Technip and WorleyParsons completed the front end engineering and design (FEED) of the Gendalo – Gehem project where:

 – Technip was in charge of the Gendalo and Gehem FPOs

 – WorleyParsons took care of the subsea, umbilicals, risers and flowlines (SURF) package

New competition in Chevron Gendalo-Gehem FPOs

Chevron and Eni selected the FPO concept to develop Gendalo-Gehem because of their location 150 kilometers and 90 kilometers respectively from the onshore Santan Storage Terminal and Bontang LNG Terminal.

In this configuration, Gendalo and Gehem FPO will treat the raw gas and export the natural gas by subsea pipelines to the Santan Terminal.

Chevron_Eni_Gendalo-Gehem_FPO_ProjectGathering the gas and condensate through 80 kilometers of umbilicals,

 – Gendalo FPO will have a treatment capacity of 420 million cubic feet per day (cf/d) of gas and 30,000 barrels per day (b/d) of condensate.

 – Gehem FPO will be slightly different with 700 million cf/d of gas and 25, b/d of condensate.

In this context, three teams of engineering, procurement and construction (EPC) companies were qualified for the call for tender organized in 2013 for the Gendalo Gehem FPOs:

 – McDermott with Samsung Heavy Industries, STX Offshore and the local Singgar Mulia

 – Petrofac with Daewoo Shipbuilding and Engineering (DSME), RNZ and the local Inti Karya Persada Technik

 – Saipem with Hyundai Heavy Industries, SMOE and the local Tripatra Engineering and Construction (Tripatra) and Gunanusa.

Unfortunately the lowest bidder, McDermott and its partners, submitted an offer 20% above Chevron and Eni estimates allowing to declare the tendering process “failed bid”.

In addition to the pricing issue, questions came up regrading the compulsory share of local content proposed by some bidders in respect with the Indonesia regulation.

For the re-tender of the Gendalo and Gehem FPOs, Petrofac team should not participate, instead Chevron and Eni qualified a new team led by the Japanese Toyo Engineering Company (Toyo or TEC) and supported by Cosco Shipyard from China and the local Meindo Elang Indah.

In calling for this second round tender of the EPC contract in 2014, Chevron and Eni expect now the Gendalo and Gehem FPOs to load first gas and condensate shipments by second half 2017.

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