Eni to Start Bids for FLNG Vessel - Analyst Blog

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Italian major, Eni SpA 's ( E ) share price rose by 0.3% on the news that it is preparing to issue bid documents relating to a multi-billion-dollar floating liquefied natural gas (FLNG) vessel within weeks. The vessel is likely to be employed in Area 4 off northern Mozambique.

A minimum of four consortia is likely to receive bid documents this month itself to take part in Eni's debut FLNG development. It will be the second to be launched in Africa after Ophir Energy's Block R project in Equatorial Guinea.

The definite set of contenders includes South Korea's three major yards and a Japanese yard. All these contestants will be linked to Asian, American and European engineering and construction companies. Per market sources, another consortium, probably Chinese, may also participate, but no confirmation has been received yet.

The bidding battle will be among Daewoo Shipbuilding & Heavy Engineering, which has linked up with KBR, Samsung Heavy Industries, which has teamed up with Technip and JGC, and Hyundai Heavy Industries with its allies Chiyoda and Saipem.

Sources revealed that the Japanese consortium is being led by Ishikawajima-Harima Heavy Industries, which has teamed up with Modec, Toyo Engineering and CB&I. The fifth consortium, as hinted by some sources, could engage all or some of Wison Offshore & Marine, Yinson and Offshore Oil Engineering Corporation.

Another source revealed that Eni's initial bid documents are likely to call for a front-end engineering and design competition, which would continue for a year before the operator invites at least two rival groups to tender price offers.

The winner of this prestigious contract would be well positioned to receive more work for Eni off Mozambique where the operator has recognized the need for two more FLNG vessels. Hyundai's group is considered to be at an advantage because partner Saipem performed early engineering work on Eni's FLNG concept, sub-contracting some work to Aker Solutions. This consortium is also performing pre-front-end engineering and design work for ExxonMobil Corp 's ( XOM ) difficult Scarborough project, off Australia.

The competition for Hyundai is expected to be severe from Samsung and Daewoo, which are working on FLNG projects in Australia for Royal Dutch Shell plc ( RDS.A ) and Malaysia for Petronas, respectively.

Eni carries a Zacks Rank #3 (Hold). A stock in the oil and gas industry looking good with the Zacks Rank #1 (Strong Buy) is Range Resources Corp. ( RRC ).



ENI SPA-ADR (E): Free Stock Analysis Report

ROYAL DTCH SH-A (RDS.A): Free Stock Analysis Report

RANGE RESOURCES (RRC): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: E , RRC , XOM , RDS.A

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