McDermott-Sinopec consortium wins LoA for Tilenga EPCC services

US-based McDermott International has formed a consortium with Sinopec International Petroleum Service Corp. (SIPSC), a subsidiary of China’s Sinopec, to provide support services at the Tilenga oilfield in Uganda. The group has received a conditional letter of award (LoA) from TotalEnergies (France), the operator of Tilenga, and hopes to sign a contract once all the partners in the project reach agreement.

In a statement, McDermott estimated the value of the proposed deal at $2bn. It explained that LoA covered an engineering, procurement, construction and commissioning (EPCC) contract under which the consortium would establish an onshore production complex capable of extracting up to 200,000 barrels per day (bpd) of crude oil from the Tilenga field. When finished, it said, the complex will consist of 31 well pads linked to a central processing facility (CPF).

Work on the project is already underway and is being led from McDermott’s offices near London and SIPSC’s office in Yangzhou, the statement noted. Team members will shift to a field office in Uganda later to launch construction, it added.

Tareq Kawash, McDermott’s senior vice-president for Europe, the Middle East and North Africa, commented: “This is a first step which allows launching the detailed engineering and procurement activities before the final approval by the partners. This prestigious project demonstrates the continuity and strength of our business relationship with TotalEnergies and their partners CNOOC International of China and Uganda National Oil Co. (UNOC).”

Kawash also said he expected McDermott’s work to contribute to economic development in Uganda. “This is a momentous and essential project for Uganda for the development of its national companies and citizens, and as we continue to grow our footprint in Africa, we are committed to expanding local content opportunities in the communities in which we operate,” he said.

McDermott and SIPSC will be working at the Tilenga field, which straddles Blocks 1 and 2 in western Uganda. TotalEnergies intends to establish six production hubs at the field and will eventually drill 426 development wells there. It will use underground pipelines to pump what it extracts to a treatment facility in Kasenyi so that associated gas and water can be separated out of the oil.

In turn, water will be re-injected into the field, while gas will be used to generate electricity for the treatment facility. If there is surplus electricity, TotalEnergies will use it to power the East Africa Crude Oil Pipeline (EACOP), which will carry oil from the Tilenga and Kingfisher fields to Tanzania’s coast, and to supply Uganda’s national grid.

Total Energies is serving as operator of Tilenga and has a 56.67% stake in the project. The remaining equity is split between CNOOC International, a subsidiary of China National Offshore Oil Corp. (CNOOC), with 28.33%, and UNOC, with 15%.