ABB Secures $490 Million Infrastructure Contract for Algeria's El Merk Oil and Gas Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--ABB (NYSE:ABB) (Zurich, Switzerland), the multinational conglomerate operating in the areas of power technology and industrial automation, recently secured a pipeline network and services infrastructure contract worth $490 million for the El Merk oil and gas project in Algeria.

The contract was awarded by Groupement Berkine (Hassi Masoud, Algeria), a joint venture between oil and gas exploration and production majors Sonatrach (Hydra, Algeria) and Anadarko Petroleum Corporation (NYSE:APC) (The Woodlands, Texas).

The El Merk project involves processing hydrocarbons in Block 208, an oilfield located about 90 kilometers south of the Hassi Berkine South facility, operated jointly by Sonatrach and Anadarko.

The El Merk project is a joint venture undertaking of Sonatrach, Anadarko, , Maersk Olie Algeriet AS (Kobenhavn, Denmark), Eni SpA (NYSE:E) (Rome, Italy), ConocoPhillips (NYSE:COP) (Houston, Texas), and Talisman Algeria BV (Amsterdam, Netherlands), a subsidiary of Talisman Energy Incorporated (NYSE:TLM) (Calgary, Alberta). The project includes a central processing facility, pipelines infrastructure, a civil works package and two offsite packages. Upon completion, the field will have an initial capacity to produce 98,000 barrels per day (BBL/d) of oil, 31,000 BBL/d of liquefied petroleum gas, 29,000 BBL/d of condensate, and 600 million standard cubic meters per day of natural gas liquids.

Sonatrach and Anadarko, on behalf of the other partners of the joint venture, have awarded four contracts to date. The initial engineering and design contract for the project was awarded to Brown & Root-Condor Algerie (Hydra), a joint venture between Sonatrach and Kellogg Brown & Root UK Limited (Surrey, United Kingdom). In March 2009, the $2.2 billion engineering, procurement and construction contract to develop the central processing facility was won by Petrofac International Limited (Sharjah, United Arab Emirates). Algerian state-owned Entreprise Nationale des Travaux d'Electrification SpA (Medea) has been contracted to construct electricity transmission lines to the facilities at an estimated cost of $99 million.

ABB will lead a consortium of companies for the pipeline network and services infrastructure project, which is valued at more than $673 million. The other companies in the consortium include La Societe Algerienne de Realisation de Projets Industriels (Hydra) and Petrojet (Cairo, Egypt), an affiliate of Egyptian General Petroleum Corporation (Cairo). The oil and gas field development is slated for completion in 2012, following which commercial production will begin.

The project includes pipeline design, engineering and installation services, assembly of flow lines, trunk lines and gas distribution manifolds, and commissioning of water and gas re-injection units. A pipeline network infrastructure with 10 gathering stations will be set up to connect the oil and gas wells to the processing plant. Facilities to inject gas and water into the reservoir wells will also be provided in order to increase the hydrocarbon output.

This is the third major infrastructure project secured by ABB in the past three weeks, following power-transmission contracts worth $550 million in Ireland and $400 million in Kuwait that were awarded to the firm. Despite an impressive order book for the first quarter of 2009, ABB forecasts an overall bleak market that will make it challenging to secure more business. The company has reported a decrease in orders from last year and expects fluctuating global commodity prices and a high volatility in exchange rates to negatively influence its operating income for the current quarter.

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