Aramco gas projects delays are cause for concern

19 October 2010

Delays in gas projects will have a knock-on effect on industrial schemes looking for feedstock

Not only is Saudi Aramco the world’s biggest oil company, with sway over global energy markets, it is a major source of work for the regional construction market.

When activity at Aramco slows, it is a cause for concern for contractors operating around the region.

No announcements are being made regarding major oil and gas projects in the kingdom and this is causing some concern among contractors. The $500m Wasit gas site preparation scheme is already slipping behind schedule, as are several other Aramco projects.

What is more worrying for contractors is that none of them seem to know the actual reason for the delays. Rising gold prices, the Eid holiday falling in late summer, declining materials costs, as well as good old fashioned procrastination, have all been cited as reasons from executives working in the kingdom’s hydrocarbons industry.

The period between now and the end of 2010 will be crucial as there are some large high-profile projects that are awaiting announcements on progress. If the winning bidder of the Wasit contract is announced and is then closely followed by the winners of the technical packages for the $6bn-plus scheme, then the current slowdown will be written off as a blip.

However, if the Wasit announcements run over into the first or second quarter of 2011, it will indicate a significant delay in the delivery of 2.5 billion cubic feet a day of non-associated gas into the kingdom’s network.

That will have knock-on effects for the industrial projects waiting to use that gas to continue Riyadh’s economic diversification plans. A quick award is needed for both Saudi Arabia and beleaguered contractors.

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications