Sapura Energy in talks with clients to rescope existing EPCI contracts

Sapura Energy, which is in the midst of debt restructuring, is in talks with clients to rescope several key existing contracts – issues the Malaysian contractor said are due to changes made by the clients themselves during project execution.

Sapura’s engineering and construction (E&C) business segment team is negotiating with clients to rescope certain ongoing contracts, following clients’ changes during project execution, the company confirmed on Thursday.

Contracts under negotiation include that for the offshore facilities — the central processing platform and living quarters — for Indian state-owned giant Oil & Natural Gas Corporation’s Block KG-DWN-98/2 asset off India’s east coast, which was awarded five years ago.

A consortium of Sapura Energy and India’s Afcons won the engineering, procurement, construction, installation and commissioning (EPCIC) contract by ONGC for the CPP and LQ destined for the Block KG-DWN-98/2 Cluster 2 development.

The CPP jacket and flare jackets were installed by in 2021, but execution of other facilities has been delayed by more than two years due to the Covid-19 pandemic and modification orders.

Items still in the fabrication stage include CPP topsides, jackets, piles and topsides for the LQ platform and several other associated structures.

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Upstream had reported on 14 April that ONGC had launched a fresh tender for the transportation and installation scope of this EPCIC contract as Sapura was no longer able to complete the work.

Also being rescoped is Sapura’s engineering, procurement, construction and installation contract for Brunei Shell Petroleum’s Salman development offshore Brunei, which was awarded in 2019.

The contract is divided into two workscopes, the Salman greenfield scope and the Egret East greenfield scope.

The Salman greenfield job includes EPCI work and support for hook-up, pre-commissioning and commissioning of a wellhead platform and substructures, pipelines and umbilical, and water and chemical injection modules, together with a construction yard upgrade.

The Egret East greenfield scope covers front-end engineering and design services with an optional EPCI scope for wellhead platforms, substructures and pipelines.

Sapura is also in talks with operator Santos regarding the rescoping of the wellhead platform destined for the Dorado oilfield development offshore Australia.

The Dorado partners — operator Santos and Carnarvon Petroleum — last August suspended the US$2 billion project that had been moving towards the final investment decision in 2022 due to cost pressures and supply chain uncertainties.

The Malaysian contractor is also negotiating the rescoping of its EPCI contract for Shell’s SBM pipeline rejuvenation phase II project, which was awarded in 2020.

This contract scope comprises the repair of a nearshore pipeline and upgrading the SBM system at Shell’s Bukom refinery in Singapore. If warranted, the existing pipeline might be removed to ensure the crude offloading system is fit for purpose, Sapura earlier said. This contract was expected to have been completed by the end of December 2023.

Orderbook boost

On a brighter note, the Malaysian contractor has boosted its orderbook with 10 new contracts including from work in new regions and for new clients.

Sapura has secured work for its E&C, drilling, and operations and maintenance (O&M) business sectors in the Asia Pacific and Atlantic regions in the past six months, with more than 70% of the contracts coming from outside its native Malaysia.

“Deploying some of our assets to new regions enabled us to secure new clients as well as overcome limitations brought on by financial constraints,” said chief executive, Anuar Taib.

Sapura’s E&C segment accounted for the lion’s share of the prizes with contracts totalling 979 million ringgit ($304 million) of the overall 1.4 billion ringgit. The drilling segment’s wins amounted to 352 million ringgit while Sapura’s O&M segment secured work worth 34 million ringgit.

The contractor’s E&C business segment won an offshore transportation and installation services contract for Eni in the republic of Congo, while closer to home it has been awarded two contracts for Chevron offshore Thailand.

US supermajor Chevron has issued Sapura a year 2023 pipelines transportation, installation and removal campaign for its Thai assets. This workscope involves the EPC, installation and removal of wellhead platforms and pipelines. The second contract encompasses services such as engineering, procurement, prefabrication and removal of subsea pipelines, as well as wastewater management.

All these three contracts are targeted for completion before year-end.

Meanwhile, in Australia, North West Shelf operator Woodside has awarded Sapura a contract for the intervention and removal of a plug within the wellbore of the Tidepole TPA03 subsea well.

This workscope comprises the supply of an offshore vessel, equipment and personnel to undertake the planning and execution of the intervention and removal works. The project is project is expected to be completed by the third quarter, pending on the necessary approvals.

Sapura’s E&C business continued to strengthen its decommissioning portfolio with the award of a contract from New Zealand’s Ministry of Business, Innovation and Employment for the Tui field decommissioning campaign.

This contract entails the recovery of four mid-water arches, gravity bases and tethering chains from the Tui field, which will be offloaded to a laydown area at Port Taranaki for processing and removal. The project is scheduled to take place over two weeks within the December 2023 to March 2024 window.

Sapura Drilling has too won multiple contracts to provide tender-assist drilling (TAD) rig services in Malaysia. Vestigo Petroleum has chartered the contractor’s rig Sapura Berani for the Larut Complex late life redevelopment project, which has an estimated seven-month duration.

Shell has chartered the Sapura Esperanza TAD rig to drill two wells at its Timi sweet gas development and another well as part of its F14 field infill campaign.

Sapura has also secured work offshore Malaysia this year for its TAD rigs Sapura Alliance and Sapura Pelaut.

The company’s O&M business segment has won contracts including an award from Petronas Carigali for additional field service engineer services for the commissioning and start-up of the Kinew compressor upgrading project at the Erb West platform offshore Malaysia.

Sapura Nautilus, a wholly owned subsidiary under the O&M business segment, was contracted to supply a dynamic positioning accommodation workboat vessel for an estimated 19 weeks plus options for the E11R-B host platform tie-In modification works.

The same subsidiary won a contract from Malaysia’s national upstream company Petronas Carigali for the provision of anchor handling and tug supply services.