ADGAS Awards $1 Billion EPC Contract to Hyundai Heavy Industries for IGD Project on Das Island

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Researched by Industrial Info Resources (Sugar Land, Texas)--Engineering and manufacturing company Hyundai Heavy Industries Company Limited (SEO:006540) (HHI) (Ulsan, South Korea) has been awarded a $1 billion engineering, procurement and construction contract by Abu Dhabi Gas Liquefaction Company Limited (ADGAS) (Abu Dhabi, United Arab Emirates) for setting up one of the components of an integrated gas development (IGD) plant on Das Island.

ADGAS is a subsidiary of state-run Abu Dhabi National Oil Company (ADNOC) (Abu Dhabi), which has a 51% stake in the company. The other shareholders with varying stakes in ADGAS are trading company Mitsui & Company Limited (TYO:8031) (Tokyo, Japan), oil company BP plc (NYSE:BP) (London, England), and integrated oil and gas company Total S.A. (NYSE:TOT) (Paris, France).

The $1 billion IGD project is slated to be completed in August 2013. According to Fahim Kazim, the general manager of ADGAS, the project will include several onshore and offshore sites. Kazim added that the aim of the IGD project, which is one of the world's largest, is to process and supply gas to meet the increasing needs of Abu Dhabi. The project to be undertaken by HHI will process 1 billion cubic feet per day of natural gas that will be transported under high pressure to the ADGAS facility from the offshore Umm Shaif natural gas fields. The gas fields are operated by the oil and gas exploration company, Abu Dhabi Marine Operating Company (ADMA-OPCO) (Abu Dhabi). ADMA-OPCO and liquefied gas company Abu Dhabi Gas Industries Limited (GASCO) (Abu Dhabi) are involved in the IGD project. Both ADMA-OPCO and GASCO are operated under the ADNOC banner.

A major challenge facing the IGD project is the limited availability of land area on Das Island. Kazim said that ADGAS reclaimed 108,000 square meters of land to accommodate the project facilities and a 100-meter-long jetty that will be capable of handling 1,500-ton modules. HHI has subcontracted the detailed engineering and civil marine works on the reclaimed area to specialized consulting company MAPES (Seoul, South Korea).

The existing ADGAS-owned liquefied natural gas (LNG) plant on Das Island has three process trains, and the plant can process both natural gas and associated gas. While natural gas is extracted as a free product from gas reservoirs, associated gas is a byproduct of oil extraction operations. The feed gas for the plant is procured from the offshore fields of Abu Dhabi. The 8 million-ton-per-year Das Island plant produces LNG, liquefied petroleum gas (LPG), pentane, and liquid sulfur. About 85% of the LNG is purchased by Japanese electricity company Tokyo Electric Power Company, Incorporated (TYO:9501) (TEPCO) (Tokyo). TEPCO has been associated with the Das Island plant since the 1970s, when it was hired to build the plant, and since then, the company has been involved in all the expansion projects of the plant. TEPCO signed two purchase agreements with ADGAS, whereby it agreed to purchase a major part of the LNG produced for a period of 20 years under the first agreement signed in 1977, and for a period of 25 years under the second agreement signed in 1994.

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