Australian junior producer Perdaman Chemicals and Fertilisers Pty Ltd., Perth, said it has signed a revised Engineering, Procurement, and Construction (EPC) contract with Perth-based Clough Group and Italy’s Saipem SpA for its urea project northwest of Karratha on Western Australia’s Burrup peninsula.
The agreement replaces the one previously announced in late December 2020 (GM Dec. 31, 2020). The new total EPC price is US$2.7 billion, a 12.5% increase on the original contract price.
Perdaman cited changes in market conditions and logistical challenges faced in recent times as behind the upward revision of the contract price. The revised contract also includes further risk and reward provisions to provide flexibility to manage any potential further deterioration in market conditions.
Clough and Saipem, as part of an equally shared joint venture, reached an agreement for the development of Perdaman’s urea project in December 2020, having signed a binding Heads of Agreement in July of that year (GM July 2, 2020).
Perdaman will invest a total of A$4.5 billion to develop the plant. It will have capacity for up to 2.3 million mt/y of granular urea, with first production targeted for the fourth quarter of 2025.The project has been supported by the Western Australian government, being allocated Project of State Significance status.
The company last year secured a 20-year offtake agreement with Australia’s Incitec Pivot Ltd.’s (IPL) wholly-owned subsidiary, Incitec Fertilizers Pty Ltd. (IPF), for up to 2.3 million mt/y of granular urea (GM May 7, 2021).
The deal remains subject to certain conditions precedent, with a primary one relating to Perdaman obtaining financing for construction of the new plant, which in turn depends on the junior producer finalizing gas supply arrangements and obtaining various environmental and other regulatory approvals for the plant.
Perdaman has a 20-year natural gas supply agreement in place with Woodside Energy signed in November 2018, but the agreement remains subject to a number of conditions (GM Nov. 21, 2018).
An application by Traditional Owners this past March to halt construction of the project on concerns about damage to the nearby ancient rock art (GM March 18, p. 30) was knocked back by the Federal Environment Ministry in April. A spokesperson for Federal Environment Minister Sussan Ley said the application had been denied because Ley did not believe the area was under immediate threat.