Shell Awards Subsea 7 With Penguins Engineering Contract

Royal Dutch Shell plcRDS.A recently awarded Subsea 7 S.A. SUBCY with an engineering, procurement, construction and installation ("EPCI") contract for the Penguins redevelopment project, located in the North Sea. In mid-January, Shell announced its plan to redevelop the Penguins oil and gas field, located around 150 miles northeast of the Shetland Islands.

Subsea 7's Role

The contract requires the oil field service provider to deliver two Pipeline Bundles, which will include pipe-in-pipe production flowlines as well as gas lift flowlines, and control systems. Moreover, the Luxembourg-based Subsea 7 will supply a nine-kilometer long gas pipeline along with flexible riser system, dynamic umbilical riser system and subsea tie-ins related to the project. Primary work related to the engineering contract will start right away in Aberdeen, Scotland and will be supported by the company's Glasgow pipeline group. In 2020 and 2021, offshore operations of the contract will be performed. The contract is expected to be in the range of £35-£110 million, per Energy Voice.

Project Update

Shell made a final investment decision for the redevelopment project in January. Shell has plans to build a floating production, storage and offloading vessel (FPSO) for the field, the contract of which has been given to Fluor Corporation FLR . Shell had awarded Sevan Marine a contract for providing technological support for the FPSO vessel, which will be transferred to the Singapore-based Sembcorp Marine, once the latter acquires the related business from Sevan.

The Penguins oil and gas field is currently using the Brent Charlie platform, operated by Shell, which is expected to retire in the near future. It has four wells at present tied back to it. The new FPSO vessel is expected to take its place. Eight new wells will be tied back to FPSO vessel production source. Notably, Penguins oil and gas field - a joint venture between Shell and Exxon Mobil Corporation XOM - represents a priority holding in Shell's North Sea assets portfolio.

Price Performance and Zacks Rank

Headquartered in The Hague, Netherlands, Shell's stock has gained 29.3% in the past year, outperforming 19.5% rally of the industry it belongs to. Currently, Shell carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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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 Nasdaq, Inc.

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

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