Saipem wins $3.5bn Abu Dhabi contracts - sources

Saipem, Europe’s biggest provider of oilfield services by market value, won about $3.5 billion in contracts for gas processing and sulfur recovery at a field in Abu Dhabi, a person familiar with the situation said.

The company won three contracts with Abu Dhabi’s state oil producer said the person, who asked not to be identified because he wasn’t authorised to speak.

Samsung Engineering Co. secured a separate contract for $1.5 billion, the company said on Saturday.

Saipem’s contracts are for $1.9 billion for gas processing, $1.45 billion for sulfur recovery and $196 million for product pipelines, according to the person. Samsung will build utility and offsite facilities needed for the project.

Abu Dhabi National Oil Co., the state-owned oil and gas producer known as Adnoc, is pressing ahead with the Shah sour- gas project after ConocoPhillips pulled out of the joint venture this week. Abu Dhabi needs to develop its sour, or high-sulfur, gas reserves as domestic power consumption soars.

Development at Abu Dhabi’s Shah field is estimated to cost $10 billion, Saif Ahmed al-Ghafli, chief executive officer of the project, said in March. Shah will process 1 billion cubic feet (28 million cubic meters) of sour gas, or natural gas containing significant amounts of hydrogen sulfide, a day into more than 500 million cubic feet of fuel and 10,000 tons of sulfur, he said.

Saipem rose 0.6 to 28.23 euros in Milan, the third-biggest gainer on Italy’s benchmark FTSE MIB index and second on the Bloomberg EMEA Oil and Gas Services Index, which dropped 1.8 percent. Samsung Engineering gained 1.4 percent in Seoul.

A group made up of Tecnicas Reunidas SA and Punj Lloyd Ltd. also won a joint award of $463 million for gas gathering in the project, according to the person.

A spokeswoman for Saipem in Rome declined to comment.

Fluor Corp. and CH2M Hill Cos. unit Veco Corp. signed project management contracts for the Shah project yesterday, the person familiar with the situation said. Fluor did not have an immediate comment on the contract pending an official statement, spokesman Brian Mershon said.

ConocoPhillips, which would have been a 40 percent stakeholder in the Shah venture, withdrew April 28. It’s the company’s second exit from a Middle East project this month, as it seeks to curb investments in refining and processing and focus on oil and gas exploration. The company also backed out of a partnership to build a refinery in Saudi Arabia this month.

Abu Dhabi, the largest sheikhdom in and capital of the United Arab Emirates, imports gas from Qatar and is developing nuclear reactors to meet energy demand, which is expected to double by 2020, according to government studies.