The $15bn Saudi Aramco petrochemicals joint venture with the US’ Dow Chemical at Jubail has opened talks with contractors regarding prequalification for the engineering, procurement and construction (EPC) contracts for the project.   

Aramco has made it clear that local companies will not miss out on the opportunity to bid for contracts

Local contracting source

The state-owned Aramco has been meeting with contractors on an individual basis to discuss costs and to map out a strategy for the construction phase of the mega project, sources in Saudi Arabia tell MEED.

“Contractors have been meeting with Aramco and the prequalification process will begin when they send out the SOI (solicitation of interest) forms for around 37 packages in December or January,” a local contracting source says.

The source adds that the joint venture has allocated around 30 per cent of the project budget that will definitely be awarded to local contractors.

“This is good news for the local companies and means around $4bn worth of construction work is up for grabs,” the source says. “Aramco has made it clear that local companies will not miss out on the opportunity to bid for contracts and it is a positive step that a percentage of the work has been allocated to them.”

The non-technical packages for the project that local contractors will be bidding on are likely to include the offsites and utilities, marine facilities, a pipeline network and a tank farm.

Tenders for the EPC packages will be sent out towards the end of the first quarter of 2011 with bids expected to be in June or July with awards by the year end. Construction work is due to start in early 2012 and the project is due to be completed and commissioning due to start in 2015.

The exact mix of chemicals and scope of works for the project will not be known until the tenders detailing the works have been sent out. In early November, Dow’s Middle East president Markus Wildi told MEED that the decision had yet to be taken on the exact chemical mix that the facility was going to produce (MEED 5:11:10).

When the scheme was first mooted in 2007 proposed units included a mixed-use ethane/naphtha steam cracker to produce 1.2 million tonnes a year (t/y) of ethylene and 400,000-t/y of propylene, an aromatics complex to produce 400,000-t/y of benzene and 460,000-t/y of paraxylene and a mix of specialty products.

The front end engineering and design (feed) work is being carried out by the US’ Foster Wheeler, Jacobs and KBR with France’s Technip carrying out the engineering work for the cracker design.

Another contracting source says that around $1bn has been spent on the feed with Foster Wheeler carrying out around 1 million man hours of work, Jacobs doing around 500,000 man hours and Technip carrying out 300,000 man hours. KBR has been looking after the project management.

“After all the delays Aramco and Dow are serious this time,” the source says. “Although the company has spent a lot of money on the feed the move from Ras Tanura has saved them a lot [of money] too.”

MEED reported in March that Dow and Aramco were planning to move the project to Jubail due to issues relating to high costs at the original site (MEED 18:3:10). Now the complex will be constructed at Jubail Industrial City 2 in the Eastern Province of the kingdom. A lease has been signed and the new location is around 1 kilometre away from the Saudi Aramco Total Refining and Petrochemical Company (Satorp) project.

The contracting source says that the major saving moving the project brought was that the partners did not have to build a new port at Ras Tanura as well as pay a higher premium for land in the area.

“The port contract alone was around the $2bn mark,” the contracting source says. “The big losers in moving the project to Jubail were the companies looking to bid for that contract.”

Aramco and Dow have an equal 50:50 share in the project.