Olam Fertilizer and Tata Chemicals to revise costs
In April 2011, Olam, Tata and Gabon Government established a joint venture company called Gabon Fertilizer Company (GFC) to support the construction of a large ammonia and urea fertilizer plant.
In September 2011, the Singapore-based Olam International (Olam), the Indian Tata Chemicals (Tata) and the Gabon Government selected Technip from France to perform the front end engineering and design (FEED) of this fertilizer project in Gabon.
In the joint venture Gabon Fertilizer Company, Olam and its partners share the working interests as following:
– Olam 62.9% is the operator.
– Tata 25.10%
– Gabon Government 12%
With this GFC joint venture, Olam and its partners are planning to build a 1.3 million t/y nitrogen-based fertilizer of ammonia and urea in Gabon.
Home based in Singapore, Olam is a global integrated company of the agri-business such as cocoa, coffee, cashew, sesame, rice, cotton, or woods.
With a portfolio of 20 agricultural products and food ingredients, Olam manages the integrated supply chain from the direct sourcing of the products to the processing and catering activities in 65 countries.
Established in 1989, Olam booked in 2011 more than $11.5 billion revenues.
Olam runs operations in Gabon since 1999 with trading and timber businesses, then in 2004 started to import and distribute rice and dairy products across the country.
To support the development of the agriculture and its related industries in Gabon, Olam and the Republic of Gabon created a 70/30 joint venture agreement to established the Gabon Special Economic Zone.
From the success of this first operation Olam and the Republic of Gabon initiated the next step of development of the local agri-industries with this Gabon Fertilizer project.
This project would improve the performances of the local agriculture and generate new industrial activities.
Tata Chemicals joined the team to provide the Gabon Fertilizer project with its expertise.
The Gabon fertilizer project should be constructed in Port Gentil, Gabon and will use local natural gas as feedstock supplied by the Government of Gabon.
Tata Chemicals to provide PMC and operations services
In joining Olam and the Authorities of Gabon in the Fertilizer project, Tata Chemicals will provide:
– Project management consultancy (PMC) during the period of engineering and construction of the plant
– Operations and maintenance services after the commissioning and start up of the facilities.
In compensation for its contribution, Tata Chemicals will benefit from 25% of the production to be exported to India and distributed locally by Tata Chemicals.
Selected as the main contrator, Technip signed a contract with the GFC joint venture covering:
– Technology licenses for the production of ammonia and urea
– front end engineering and design (FEED) work.
This FEED works was expected to take seven months with a construction phase on fast track of 31 months.
According to the actual status of the project, Gabon Fertilizer should run into commercial operations in 2015.
The engineering, procurement and construction (EPC) contract should be awarded on a lump sum turn key basis in respect with the Gabon regulation as long as it matches with the given budget.
This option was also endorsed by the other partners of the joint venture to guaranty the costs control of the project budgeted for$1.3 billion capital expenditure.
While Technip is completing the FEED, all the costs calculation are managed through “open book transparency” monitoring system in order to give Olam, Tata Chemicals and the Gabon Government all the possibilities to identify all the potential savings or extra costs to be integrated in the project before the final investment decision (FID) and moving into execution.
