Aramco may delay or retender pipeline project

25 October 2016

The state-controlled company is mulling changing technical specification on the estimated $300m pipeline deal

Saudi Aramco, the world’s top oil exporter, could delay the award of a $300m pipeline deal or retender the scheme as it mulls changing some of the specification of the project, according to people familiar with the matter.

Bids for the product pipeline, which will connect the kingdom’s Qassim area to its northwestern region of Hail, were submitted on 31 May, MEED reported earlier in the year.

The pipeline will run 220 kilometres to transport gasoline and diesel to the Hail, reducing the need for tankers to supply fuel via road. Five companies are thought to have been vying for the EPC deal from Aramco ,the Turkish contractor Tekfen was understood to have emerged as the frontrunner towin the contract.

One of the market source said the state-controlled oil and gas giant was expected to award the deal by mid-October but now may reduce the diameter of the pipeline. Aramco has yet to officially communicate with prequalified bidders regarding the project. However, if it changes the specification, the deal will have to be retendered.

Aramco, which plans to spend $334bn over the next decades across the value chain, plans to build several pipelines and storage facilities in the kingdom as part of efforts to improve its oil and infrastructure.

Among the plans is a new bulk plant at Hail with an estimated cost of $300m to store gasoline and diesel and distribute the products to the surrounding region. Several companies have been asked to submit bids for the main contract.

Tekfen is understood to have already bagged another $300m contract to construct pipelines, connecting Yanbu to North Jeddah on the kingdom’s Red Sea coast. The scheme includes two pipelines that will transport oil products including gasoline, diesel and jet fuel from the refining hub of Yanbu to Jeddah, Saudi Arabia’s commercial centre and the second largest city in the kingdom.

Several companies including the UAE’s Dodsal, Egypt’s Engineering for the Petroleum & Process Industries (Enppi), India’s Larsen & Toubro, local Nesma & Partners, Italy’s Saipem, had submitted bids for the (EPC) deal in May.

In January, Aramco awarded several EPC contracts worth a combined $1bn for pipelines on its Master Gas System Expansion. The contracts were secured by Al-Khobar-based Saudi KAD Construction.

A MEED Subscription...

Subscribe or upgrade your current MEED.com 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.