Aramco faces fresh delays as contractor capacity dries up

20 June 2008
Slippages at high-profile oil projects threaten to derail production increase plan.

Saudi Aramco is facing a fresh series of delays at some of its most high-profile oil projects as contractor capacity dries up and high material prices threaten to derail its plan to hit 12 million barrel-a-day (b/d) capacity by 2009.

The most startling lapse is at the 500,000-b/d Khursaniyah oil field development, which was originally due on stream in December 2007. It is now running nine months behind schedule.

Significant delays have also crept into the schedule for the 1.2 million-b/d Khurais field, in addition to slippages on the Shaybah and Nuayyim fields and the Hawiyah gas plant expansion. Projects are now running several months beyond their original completion deadlines.

One senior source at Aramco tells MEED the state-run company is no longer immune to the twin effects of rising cost inflation and labour scarcity.

“All firms are suffering,” the executive says. “We are affected by the same issues of cost escalations and delays. [There are] limited resources and high prices for materials and engineered equipment.”

The executive reveals the most recent delay on the central gas processing facility being built by US-based Bechtel and France’s Technip at the Khursaniyah field was caused by labour shortages. “We could not find welders for our pipe,” the executive says.

Another executive working on completing the plant confirms that a shortage of skilled labour, in addition to a lack of corrosion-resistant materials, has hindered progress. “The plant will not fully complete until near the end of this year but some output should come on line before then,” he says.

The central gas processing components at the field were one of the first to be awarded by Aramco on a convertible lump-sum turnkey basis, in 2005.

Bechtel and Technip took longer than expected to reach agreement with Aramco to convert the largest contract on the development to a lump-sum turnkey basis (MEED 7:3:08).

The Berri gas plant, which handles output from the Qatif field, with capacity to process 1.24 billion cubic feet a day (cf/d) of gas, could be used to process gas from Khursaniyah, but Aramco is not expected to make a last-minute switch because of the delay.

The Hawiyah gas plant has also been considered as a back-up but its own expansion to 2.4 billion cf/d from 1.6 billion cf/d is running behind schedule, according to the Aramco executive, with a July deadline set to be missed.

Attention is now turning to delays on other projects, including Khurais. Two of the most recently awarded contracts, covering pipeline installation and the reinjection of seawater into the onshore field, are thought to be running significantly behind schedule. The full increment of Khurais is now not expected to come on line until December 2009, compared with a mid-2009 target.

The 100,000-b/d Nuayyim field development is also experiencing delays because of labour shortages, while 250,000 b/d of capacity at the Shaybah oil field is expected to miss a revised deadline of February 2009 set by Aramco last year.

Saudi Aramco was unavailable for comment.

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