Clough-Saipem JV secures $2.7bn contract for WA Urea Project

Perdaman Industries as well as the joint venture between Clough and Saipem have reached a new agreement for the development of the former’s urea plant in Western Australia. 

The Clough-Saipem joint venture has signed a new contract valued at US$2.7 billion. The revised engineering, procurement and construction (EPC) contract is the result of changes in market conditions and logisitical challenges faced in recent times. 

According to a statement by Clough: “The agreement replaces the one previously announced on 30 December 2020 – which was removed from Saipem’s backlog at the end of March 2022 – and reflects the changed market scenario which has developed globally in recent months. The new contract value is around 2.7 billion USD (share of each JV participant at 1.35 billion USD) with further risk and reward provisions to provide flexibility to manage any potential further deterioration in market conditions.” 

The revised contract is subject to a Full Notice to Proceed which is anticipated following the closing of the Project Financing. 

The joint venture’s scope of works will include the delivery of a water treatment plant and a 100MW power plant along with urea storage, loading and unloading facilities. The project will also feature a seven kilometre closed conveyor to transport urea directly to Pilbara Ports Authority for shipping to local markets and export to global markets – with an anticipated 50 to 100 shiploads annually. 

For this project, the joint venture partners will also collaborate with Haldor Topsoe, a leading technology provider that will utilise its cutting edge SynCOR^TM technology in the construction of the world’s largest single-line ammonia plant. In addition, Saipem will use its proprietary Snamprogetti Urea technology to produce urea. 

The project developer, Perdaman, will continue acknowledging and paying its respects to the traditional custodians of the land as well as to past, present and emerging elders. The company also anticipated that the Urea Project will provide a significant boost to the State economy through jobs generation. 

The Urea Project is expected to create an average of 2,000 jobs during its three-year construction phase and 200 permanent jobs once up and running. 

“The coronavirus pandemic and latest war in Ukraine has taught us an important lesson about the food security of our society and our over-reliance on imports. 

“The company is pleased to be part of job creation for the State and is privileged to be a part of the manufacturing initiative project in WA again, and we are very thankful to the federal government for the continuous support,” Perdaman Chairman Vikas Rambal said. 

Perdaman has invested approximately US$4.5 billion towards the development of the Urea Project in Karratha. Once operational, the plant will transform natural gas secured from Woodside – under a 20-year Gas Supply Agreement – into urea, which is a widely used form of fertiliser used in the production of food. 

Earlier this year, the Northern Australia Infrastructure Facility (NAIF) has committed a $255 million funding for the development of the Urea Project. You can read more about the NAIF funding here. 

Source: Clough; Saipem; Perdaman (1, 2)