Saipem, McDermott win EPC work on Mozambique LNG project

Italian, American EPC giants to work with Japan's Chiyoda Corp to build two 12.88 MTPA trains in East African nation

Saipem will work on an LNG project [representational image].
Oil & Gas Middle East
Saipem will work on an LNG project [representational image].

Italian engineering, procurement, and construction (EPC) contracting giant Saipem, in a joint venture with America's McDermott International and Japan-headquartered Chiyoda Corporation, has reached an agreement with Area 1 Concessionaires – a wholly owned subsidiary of Anadarko Petroleum Corporation – for a contract to engineer and construct an onshore liquefied natural gas (LNG) project in the East African nation of Mozambique, with its share as leader of the JV accounting for $6bn, and McDermott's making up $2bn.

The CCS JV has been incorporated in Italy to implement the project backed by Anadarko Petroleum Corporation, which operates Offshore Area 1 and is also front-runner of a venture including ENH subsidiary, ENH Rovuma Area Um; Mitsui E&P Mozambique Area 1; India-owned ONGC Videsh; Beas Rovuma Energy Mozambique; BPRL Ventures Mozambique; and PTTEP Mozambique Area 1 Limited.

McDermott said the CCS JV had previously delivered front-end engineering design services for the project.

Saipem's contract with McDermott and Chiyoda covers the construction of two LNG trains with a total nameplate capacity of 12.88 million tonnes per annum (MTPA), as well as all necessary associated infrastructure, storage tanks, and export jetty facilities.

The EPC contract is subject to a full notice to proceed, which Anadarko Petroleum Corporation is expected to issue after the final investment decision, which McDermott said is expected in June 2019. 

McDermott and Saipem have established a new office in Milan, Italy, where a team from both companies will lead the project management, engineering, and procurement in advance of sharing on-site construction management responsibilities.

In a statement, McDermott said it would perform engineering from both London and Gurgaon, India, while Chiyoda would only provide advisory services for the JV.

Commenting on the contract in a statement, Saipem's chief executive officer, Stefano Cao, said: “After many years of dedication to this project, we are very happy to announce that we have reached full agreement for the contract.

"We congratulate Anadarko and its co-venturers for the achievement and grateful for the confidence demonstrated toward our CCS JV, and look forward to mobilising our teams to site after Anadarko issues notice to proceed.

"A project of such a scale will contribute significantly to the economic growth of Mozambique as a new pole in the west-east energy routes and, as Saipem, we are proud of our substantial contribute to these future developments,” Cao added. 

McDermott's group senior vice president of projects, Samik Mukherjee, said: "The Area 1 Mozambique LNG project will build on McDermott's industry-leading experience and demonstrate our ability to deliver comprehensive EPC solutions globally for world-scale LNG developments."

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