ADNOC Calls for 18 Engineering and Construction Bids for Sulfur Granulation Plant

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Researched by Industrial Info Resources (Sugar Land, Texas)--The state-controlled Abu Dhabi National Oil Company (ADNOC) (Abu Dhabi, United Arab Emirates) has invited 18 companies to submit bids to construct a sulfur-granulation plant as part of the Shah natural gas project.

As domestic gas demand increases, many Middle East oil producers, such as Kuwait and the United Arab Emirates (UAE), have turned to imported gas as supply struggles to keep up with demand. According to government forecasts, Abu Dhabi's energy demand is expected to double by 2020, and gas is already being imported from neighboring Qatar.

ADNOC is seeking to develop its reserves of high-sulfur content gas, also known as sour gas, to alleviate the supply-demand imbalance. However, sour gas is more expensive to process, because the potentially lethal sulfur content must be removed before the gas can be used for power consumption.

The proposed sulfur-granulation plant will be at Habshan, some five kilometers from the main gas-processing plant at Shah. Liquid sulfur will be removed from the sour gas and will be transported to the granulation plant through two specially built sulfur pipelines.

When fully in operation, the plant is expected to produce up to 20,000 tons of sulfur granules each day. The granulated sulfur will then be transported by a 264-kilometer rail link to the port facilities at Ruwais on the Persian Gulf coast. The rail link will be constructed by the recently formed, state-owned Union Railways Company as part of the 1,100-kilometer network planned for the state.

The original plan was to transport the liquid sulfur through pipelines from Shah to Ruwais, making it the world's longest sulfur pipeline. However, this plan was dropped following a lack of feasible engineering bids for the groundbreaking project. The granulated sulfur will be exported for use as a building material or for use in fertilizers.

The front-end engineering and design contract for the sulfur-granulation plant has been awarded to the Australian engineering and project services company WorleyParsons Limited (ASX:WOR) (Sydney, Australia). ADNOC hopes to receive bids for the construction of the plant this month, with the contract to be awarded in the last quarter of this year.

The Shah gas project is the first sour gas field development project in the UAE and originally was planned as a joint venture project between ADNOC and the international energy company ConocoPhillips (NYSE:COP) (Houston, Texas), at an estimated project cost of $10 billion.

However, ConocoPhillips pulled out of the project in April this year, the second such move by ConocoPhillips in the Middle East. Earlier in April this year, ConocoPhillips pulled out of a $12 billion joint venture with Saudi Aramco (Dhahran, Saudi Arabia), the state-owned national oil company of Saudi Arabia, that was set up to construct a 400,000-barrel-per-day refinery in Yanbu, Saudi Arabia.

The UAE owns the world's fifth-largest gas reserves, although much of it is in the form of sour gas. The Shah gas project is expected to extract about 1 billion cubic feet each day of sour gas from the field, which will provide about 540 million cubic feet of useable gas each day.

ADNOC already has awarded contracts worth up to $5.6 billion for the Shah gas processing plant, with Saipem SpA (BIT:SPM) (Milan, Italy) winning contracts worth about $3.5 billion for gas processing and sulfur recovery at the gas field.

The local private construction company Al Jaber Group LLC (Abu Dhabi) won the first construction contract and has built the necessary roads to the desert site for the plant. Samsung Engineering Company Limited (SEO:028050) (Seoul, South Korea) has won a $1.5 billion contract to provide utilities and off-site facilities, while a group comprising Tecnicas Reunidas S.A. (MCE:TRE) (Madrid, Spain) and Punj Lloyd Limited (BSE:532693) (Gurgaon, Haryana) will construct the gas-gathering facilities.

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