Four leading international offshore contractors or consortia are said to be battling it out to land a prized contract tied to the giant Hai Long offshore wind project in Taiwan.
Jockeying in the contest to build a pair of sea-based substation platforms for the 1GW-plus Northland Power development, sources tell Recharge sister title Upstream, are a tie-up between Vietnam’s Petrovietnam Technical Services and Denmark’s Semco Maritime, a consortium of Malaysia’s Sapura Energy and Danish contractor Ramboll, Singapore’s Keppel Offshore & Marine, and US-based McDermott International.
The big-name bidding highlights the growing efforts that global engineering, procurement and construction contractors (EPC) are making to break into the fast-growing offshore wind sector as their core oil & gas market declines.
“We are forecasting total global offshore wind capacity to expand from the current 35GW to over 200GW by 2030, so there is massive growth potential for EPC players globally, especially in US, Europe, and Asia,” said Robert Liew, a principal analyst with Wood Mackenzie.
Gigawatt-scale projects like Hai Long – increasingly common it every major international offshore wind play in a market that is expected to see 240GW turning globally by 2030 – will be critical to Taiwan’s wind ambitions as it will showcase offshore wind’s commercial viability in the region despite the technology’s higher costs when compared to onshore projects, he said.
Traditional oil & gas EPC players are drawing on synergies from their existing work profile as they expand into the potentially lucrative offshore wind market.
The EPC contract for the Hai Long, widely thought to be valued between $200m-$250m, is for two steel structures similar to offshore ‘riser’ platforms, commonly used for oil & gas infrastructure development.
The workscope of the most recent Hai Long tender involves the EPC of topsides and jackets comprising the two substations meant for the Hai Long 2 & 3 development, but the scope does not involve the installation, one Upstream source said.
“We have just submitted the second round of bids and the operator is expected to award the EPC contract by middle of this year,” another source said.
South Korean player Daewoo Shipbuilding & Marine Engineering is also believed to be among the interested players, but its participation could not be confirmed.
The Hai Long project owners include independent power producer Northland Power with a 60% stake, with Asian-based Yushan Energy and Mitsui, each on 20%.
“The development of Hai Long 2 & 3 is progressing well,” a Northland Power spokesperson said in an email reply to Upstream queries. “Project commissioning is expected by the end of 2025 and 2026 with [final investment decision] in the course of 2022.”
In addition to the ongoing development of Hai Long, Northland is continuing to develop other offshore wind projects including the Chiba project in Japan and the Dado Ocean project in South Korea, and it has announced early stage works for Round 3 projects in Taiwan, Northland said.
“We continue to look at new opportunities across the region, but for now our focus is on these activities," the spokesperson said.
As multiple engineering giants seek to diversify, they are now banking on new offshore wind projects to boost their order books, which have dwindled due to reduced contracting activity in the oil and gas markets.
As well as those still vying for the Hai Long EPC prize, other contractors are said to have shown initial interest in the project, but did not progress to the next stage, Upstream understands.
UK’s Petrofac, Italy’s Saipem and Singapore-based Sembcorp Marine were thought to be among the interested players at the initial stage, but they are unlikely to remain in the fray.
The Hai Long projects are part of Taiwan's plan to establish itself as the dominant offshore wind hub for East Asia, with the country’s government last year committing to develop an extra 10GW offshore wind capacity between 2026 and 2035, adding to 5.5GW already allocated.
Not all has been plain sailing, though, and companies at times have to work in a tough political and regulatory environment on the island. German developer Wpd in January was shocked as authorities have denied it a final ‘establishment permit’ for its 350MW Guanyin nearshore wind project on aviation safety grounds, even though the island’s economics ministry awarded the area to the German developer in a 2018 tender for grid-connection capacity.
Global offshore wind champion Orsted in 2019 had even paused all of its offshore wind development activities on the island after permitting challenges impeded the signing of power purchase agreements for 2.1GW of projects from various developers.