Aramco gives green light to Hawiyah, but no money

02 May 2003
Saudi Aramcois understood to have approved in principle the go-ahead of the estimated $900 million straddle plant and the $800 million expansion of the Hawiyah gas plant at a board meeting on 19 April.

The straddle plant is among the most eagerly awaited projects in the kingdom's oil and gas sector, but Aramco still has to decide whether it will pursue the project by itself or in co-operation with an international oil company (IOC). Industry sources say that no funds have been allocated for the scheme so far, indicating that the project is still considered to be a part of the gas initiative.

'The intention is still for the project to go with an IOC under the gas initiative,' says a foreign industry source based in the kingdom. 'The project has been approved three times before, but we think that this time it is serious. It is losing out on a lot of NGL [natural gas liquids].'

It is understood that Aramco has already prequalified at least four companies for the project's front-end engineering and design (FEED) package, with a tender expected to be issued later this year.

The straddle plant will handle mainly NGL from the Haradh and Hawiyah gas plants, and any gas produced in the concession area now within core venture 1 of the gas initiative. Should the straddle plant go ahead, companies will also be invited to bid for the estimated $800 million conversion of the kingdom's east-west pipeline, which is set to distribute some of the plant's output to the western region (MEED 21:6:02).

Aramco has also given the go-ahead for the expansion of its Hawiyah plant, but - as on the straddle plant - has not allocated any funding for the scheme. The expansion calls for additional gas-handling capacity of 500 million cubic feet a day (cf/d) to the existing capacity of 1,400 million cf/d. However, the timing of the project's implementation will also depend on progress on the gas initiative and the straddle plant, which is set to handle much of Hawiyah's new capacity.

Despite the unresolved issues, the project's FEED package is expected to be released within weeks. 'There will not be much work on that as it will be a very similar project to the existing Haradh plant,' says the industry source.

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