QatarEnergy is progressing with a multibillion-dollar redevelopment of the Maydan Mahzam oilfield, located approximately 100 kilometers east of Qatar's coastline in the Persian Gulf. The project, known as the PS2 Life Extension Project, aims to extend the field's production potential for another 30 years, addressing declining output from this legacy asset that has been producing oil and associated gas for over 50 years. The existing facilities have exceeded their design life, yet significant oil and gas reserves remain recoverable.

Bidding Process and Timeline

The bidding process for two key engineering, procurement, installation, and construction (EPIC) packages has been delayed by several months due to ongoing disruption at the Strait of Hormuz. Commercial offers are now expected to be submitted in early June, with a likely deadline of June 7. Technical offers were submitted last year, and QatarEnergy is keen to fast-track the process, aiming to award the contracts later this year. The project is already delayed, but sources indicate it is getting back on track.

Package Details and Valuations

The two packages, EPIC-1 and EPIC-2, are potentially valued at close to $4 billion, though rising insurance and logistics costs could further increase project expenses. EPIC-1 is the largest package and includes work on several offshore structures: a new compression and process platform (PS2K) with a 10-legged jacket, a new utilities and living quarters platform (PS2L), a large riser platform (PS2R), and a single wellhead jacket with 16 production slots, all equipped with gas lift. EPIC-2 comprises the installation of over 100 kilometers of subsea pipelines, 28 kilometers of umbilicals, and nearly 20 kilometers of power cables, along with associated facilities.

Bidders and Competition

Technical bidders for EPIC-1 included China's Offshore Oil Engineering Company (COOEC), India's Larsen & Toubro (L&T), Italy's Saipem, South Korea's HD Hyundai Heavy Industries and Hanwha Offshore, and a consortium of Singapore's Seatrium with Vietnam's PTSC. For EPIC-2, technical bidders included Saipem, COOEC, L&T, US-based McDermott International, and European player Allseas. A similar set of players is expected to submit commercial offers, though sources suggest there could be surprises. QatarEnergy follows a two-stage bid submission process, with technical bids followed by commercial offers.

Additional Context and Challenges

A third package for brownfield modification works is also available, but its bidding stage could not be confirmed. The project has faced disruptions due to regional instability, including drone attacks that hit Qatari energy facilities in late February, leading QatarEnergy to declare force majeure on LNG buyers in March. The shallow-water field lies in water depths of 12 to 40 meters. Qatar's oil production capacity is between 500,000 and 600,000 barrels per day, with most projects aimed at sustaining and expanding output from major fields. Last year, QatarEnergy awarded $4 billion in contracts to COOEC for the Bul Hanine offshore oilfield development, highlighting its commitment to strategic oil projects.