Iraq OKs $468.5 Million Saipem Deal To Build Oil Export Unit-Spokesman

The Iraqi cabinet has approved a contract with Italy's Saipem SpA (SPM.MI) worth $468.5 million to build an oil measuring and control platform at the country's major export terminals in Basra, a government spokesman said Wednesday.

"The cabinet has approved a draft contract with Saipem to develop southern export facilities," Ali Al Dabbargh said in a statement.

In August a person at the state-run South Oil Co. told Dow Jones Newswires that Saipem was chosen ahead of Leighton Offshore Private Ltd., part of Leighton Holdings Ltd. (LEI.AU), National Petroleum Construction Co. and J. Ray McDermott, part of McDermott International Inc. (MDR).

Saipem should complete the engineering, procurement and construction, or EPC, of the project within 22 months, the person at SOC said.

Leighton last year signed a contract worth $733 million to build three single point mooring buoys and two sub-sea pipelines. Leighton was also chosen to build a fourth SPM and a third sub-sea pipeline costing around $500 million in the Gulf, which will be financed by a Japanese loan. These four SMPs would add around 3.5 million barrels a day of export capacity above the existing 1.8 million barrels a day.

The whole project is part of Iraq's efforts to ease bottlenecks at its export terminals at a time when Baghdad signed mega-deals with international oil companies with the aim of quadrupling its crude oil output, which currently stands at 2.7 million barrels a day.

-By Hassan Hafidh, Dow Jones Newswires; [phone]; [e-mail]