Saipem in pole position for pipeline contract

Italian player offers lowest bid of $550 million to Petrobras for gas export installation in Santos basin

Italian subsea manufacturer Saipem is in pole position to secure another major contract off Brazil, after presenting the lowest bid in a tender covering a key pipeline installation campaign for Petrobras in the Santos basin.
Fabio Palmigiani Rio de Janeiro 23 December 2011 02:39 GMT
According to a source, Saipem has submitted an offer worth approximately 1 billion reais ($550 million) for the gas export pipeline venture.

This will link five floating production, storage and offloading vessels to be installed in ultra-deep waters in the pre-salt province to a new onshore facility in Cabiunas.

The proposed Cernambi-Cabiunas project calls for the supply and installation of a giant 373-kilometre, 24-inch pipeline in water depths ranging from 100 metres to 1800 metres.

Bids were opened last week. It is understood that Saipem is already in negotiations with Petrobras in an attempt to sign the definitive agreement at the beginning of 2012, said one source. The Technip-Allseas consortium also participated, but finished a distant second place with a proposal of about 1.7 billion reais.

Other groups such as Global Industries, Heerema and Subsea 7 were invited but declined.

The pipeline will be able to transport 13 million cubic metres per day of natural gas and is expected to be operational by mid-2014.

At full capacity, the pipeline will offload gas from FPSOs that are due to be moored in five accumulations in the Santos basin pre-salt zone - Guara North, Cernambi South, Lula Alto, Lula Central and Franco-1..

The latter is part of the oil-for-shares agreement signed between Petrobras and the Brazilian government last year. Petrobr as is also building a new plant in Cabiunas, in north-east Rio de Janeiro state, to expand its terminal processing capacity from 20 MMcmd to 33 MMcmd. Separately, Petrobras has awarded Saipem an engineering, procurement, construction and installation contract for a 19-kilometre, 18-inch pipeline that will connect Cernambi South to a central manifold in the Lula field.

The work will be carried out in 2200 metres of water by the vessel Saipem FDS 2 in the second half of 2013, and will be the third such job to be executed by the unit after installing the export flowlines from the Guara and Lula North-East floaters. This contract covers the ultra-deep-water section of the pipeline, meaning that Saipem will likely be responsible for the whole pipelaying campaign of the huge 392-kilometre Cernambi-Cabiunas route.

Petrobras will share part of the financial costs of the pipeline with the UK's BG Group, Portugal's Galp Energia and Spain's Repsol YPF, its main partners in the Santos basin pre-salt area.

The Cernambi-Cabiunas pipeline will be bigger than the Lula-Mexilhao project, which cost around $800 million and has capacity for 10 MMcmd, easily becoming the largest offshore natural gas pipeline in the country. The 216-kilometre, 18-inch Lula-Mexilhao pipeline, laid by Technip-Allseas back in 2009, started shifting gas from the Lula field three months ago.