Oil major ExxonMobil Corporation (XOM) and Russian oil giant Rosneft have chosen engineering firms CB&I UK and Foster Wheeler Energy for the initial phase of front-end engineering and design (FEEDQ) relating to a proposed Russian Far East liquefied natural gas project.
The project design, which includes front-end engineering and design documentation for the LNG plant, associated facilities and gas pipeline, as well as engineering studies and environmental impact assessment, is likely to be finalized by ExxonMobil and Rosneft toward the end of 2014.
Two separate contracts will be awarded to the duo for the initial phase front-end engineering and design. The scope of work comprises a conceptual project together with deciding details for an LNG plant site, gas liquefaction technology and construction method.
The award of contract for the second phase of FEED will be decided by ExxonMobil and Rosneft only after CB&I UK and Foster Wheeler Energy submit their respective concepts and design and their work product is assessed.
The plant is designed to have a capacity of about five million tons per year, which may be expanded in the future. The natural gas feedstock for the liquefaction plant will be sourced from Rosneft’s reserves in the Far East and Sakhalin gas reserves.
ExxonMobil and Rosneft have attained several milestones under their 2011 Strategic Cooperation Agreement. So far, the achievements of the duo include the formation of the Kara Sea and Black Sea joint venture as well as exploration of seven other licenses in the Russian Arctic.
ExxonMobil’s joint venture with Rosneft will also allow joint development of mature oil fields in Western Siberia as well as gain access to the know-how for developing unreachable resources. With the latest development, both the companies have also moved on to the next planning phase for LNG development in the Russian Far East. These developments will boost Exxon’s earnings in the near future.
ExxonMobil carries a Zacks Rank #3 (Hold). However, Zacks Ranked #1 (Strong Buy) stocks – China Petroleum & Chemical Corp. (SNP), Stone Energy Corp. (SGY) and Dril-Quip Inc. (DRQ) – are good buying options for the short term.