By Our Analysts
The Tilenga project is very important for Uganda. It is the flagship of oil developments projected to bring investments of over US $10 billion (between Uganda and Tanzania). The project will be the centre of visual impact for success and excellence in Uganda’s oil investment. How it comes to life will shape the narrative and perceptions of the country’s nascent oil industry. The Infrastructure Magazine’s analysts in this article examine the gravitas of the two partners that form the consortium that has been entrusted with the responsibility of bringing the multi-billion dollar project to life.
TotalEnergies, the majority shareholder of the Tilenga Project in mid-western Uganda, announced that it was proposing to award the contract to undertake the engineering, procurement, construction and commissioning of the project to a consortium comprising CB&I ( a UK affiliate of the US McDermott International), and Sinopec International Petroleum Service Corporation, of China. This is the major of the five contracts that TotalEnergies has issued following competitive tender processes. The others being: Schlumberger Oilfield Eastern Limited for three well engineering packages; Vallourec Oil and Gas (France) for one well procurement package and ZPEB Uganda Co. Limited for one rigs package.
If approved by the rest of the project partners (the Government of Uganda through the Uganda National Oil Company (UNOC) and CNOOC) – as is likely to happen- the McDermott-Sinopec consortium will take the US$ 2 billion job to provide engineering, procurement, construction and commissioning (EPCC) services for the development of an onshore oil field that will generate up to 200,000 barrels per day (BPD). It will consist of 31 well pads connected to a central processing facility (CPF) via buried flow lines. Tilenga includes six oil fields and will feature 426 oil wells at full production.
Who is CB&I/McDermott?
Samik Mukherjee, McDermott’s Group Senior Vice President for Projects said of the award, “(their selection) further strengthens years of successful collaboration with TotalEnergies on a wide portfolio of world-class projects in the Offshore, Petrochemicals and LNG segments—where TotalEnergies is a major stakeholder.”
Indeed the choice of McDermott International by TotalEnergies seems to be based on past experience and expertise of the former in delivery of complex oil projects around the world.
Founded in 1923 in Texas by Ralph Thomas McDermott, the company has over its close to 100 years registered several engineering firsts around the world; from building fractioning towers in 1924 to building floating roof oil tanks to different offshore floating engineering, storage and pipelines including building the world’s longest offshore oil export terminal in Saudi Arabia.
Listed on the New York Stock exchange in 1959, McDermott merged with CB& I in 2018, to form one of the largest integrated engineering outfits specialized in oil and gas.
Going by its profile, McDermott is a global company with a footprint on every continent on the globe. Headquartered in Houston, Texas, in the United States, the company has over 10 offices located in different states within the US. In the US, North and central America, McDermott has years of experience in developing upstream offshore oil & gas facilities, developing downstream oil & gas facilities, building gas-fired power plants, Liquified natural gas import and export terminals, atmospheric and refrigerated storage vessels and terminals, water storage and treatment facilities and pipe and module fabrication.
The company is known as a fully-integrated provider of engineering and construction solutions to the energy industry. They have over the years gained trust for their technology-driven approaches that are engineered to harness and transform global energy resources. The entity boasts of executing projects from concept to commissioning of global energy infrastructure.
The Infrastructure Magazine understands that McDermott has operations in over 54 countries, McDermott employs some 30,000 people, a diversified fleet of specialty marine construction vessels and fabrication facilities around the world. Like in the US, in Canada they have a presence in several states including Alberta, Ontario. In central and South America they have undertaken projects in Mexico, Venezuela, Brazil and Panama.
Closer home, and of specific interest and experience on the African continent, is that McDermott International has executed some world class projects in Ivory Coast, Angola, Mozambique and Equatorial Guinea. They developed the Baobab FPSO project in Ivory Coast which is an offshore project pumping some 70,000BPD, with a floating production unit of 6,500 metric tonnes.
They were also responsible for the development of the floating upstream facility pumping some 250,000BPD where they were responsible for engineering, procurement, execution, supervision and commissioning in Angola. In Equatorial Guinea, they developed storage facilities for the EGPetro LNG facility for the Government of Equatorial Guinea, Mitsui and Co and Marubeni Corporation.
McDermott also has footprints in Australia, the Middle East, Asia and Europe. Initially, the Tilenga project will be managed out of McDermott’s (CB&I) offices in West London, United Kingdom and Sinopec’s office in Yangzhou, China, before transitioning to Uganda for the construction activities, when works begin later this year, with the first oil expected in 2025.
Who is Sinopec?
Established in 2001, Sinopec International Petroleum Exploration and Production Corporation (SIPC) is part of the Chinese state owned SINOPEC Group that specializes in international oil and gas investment and operation. SIPC has undertaken upstream, midstream and downstream integration projects around the world.
Ranked among the top three in the Fortune Global 500 for several consecutive years (2020,2019, 2018), the company has undertaken projects in more than 70 countries. Currently, SIPC boats a total of 49 oil and gas exploration and development projects in 26 countries.
The company within its first 10 years of existence had acquired oil and gas assets in Kazakhstan, Angola, Ecuador, Colombia and Russia. In 2007, SIPC signed the Yada Oilfield Development Operation Service Contract; Block 18 in Angola was put into production. In 2010, SIPC acquired the oil and gas assets in Brazil and Argentina, and further expanded the scale of its assets in Kazakhstan.
In 2011, SIPC acquired the Daylight Project, Canada and the APLNG Project, Australia. In 2013, it acquired a project in Egypt. By the end of 2019, the company had 51 overseas oil and gas exploration and production projects in 25 countries. In the same year, it accomplished test on 61 exploration and evaluation wells, among which, 35 wells harvested commercial oil and gas flow with 66 per cent success rate.
Further it made nine oil and gas discoveries in the Wapiti area in Canada, Angola, Cameron and Egypt. They also have major projects in Qatar, Russia and the US while expanding their market presence in key oil markets such as Saudi Arabia, Kuwait, Ecuador and Algeria. By the end of 2019, SIPC had executed 507 upstream service projects in 43 countries, with a total contract value of US$ 19.946 billion.
Besides exploration and engineering, SIPC has also established refining and chemical business as well as storage and logistics investment projects in a number of countries; YASREF in Saudi Arabia, Sibur in Russia, Krasnoyarskiy NBR JV in Russia, the lubricants plant and supporting jetty in Singapore, the Fujairah storage project in United Arab Emirates, and VESTA storage project in the Netherlands.
They have also gone into chemical engineering – with projects in Oman and Uzbekistan. They also run multi-billion dollar projects in crude , petrochemicals export and imports business.
Going by their international business profiles, portfolios and experience in oil and gas infrastructure development, the McDermott-Sinopec consortium has the gravitas to deliver Tilenga.