Aramco may retender Hail Bulk Plant project

27 October 2016

The state-controlled company is considering changing the technical specification of estimated $300m storage facility

Saudi Aramco could delay the award of estimated $300m bulk plant construction deal or may even retender the project as it considers changing the storage capacity of the facility in the kingdom’s northwestern region of Hail, according to people familiar with the matter.

Aramco, the world’s top oil exporter, had received the engineering, procurement and construction (EPC) proposals from contracting firms on 4 September, however, it is now considering to reduce the storage capacity of the plant, sources said. The company has yet to officially communicate its plans to prequalified bidders, but if decides to change the specifications the project will have to be retendered, they added.

The bidders prequalified by Aramco were understood to include:

The scope of work on the project includes construction of storage facilities for diesel and gasoline of up to 300,000 barrels, and building associated infrastructure and support buildings for the scheme. Presently, the Hail region acquires its gasoline and diesel requirement from the Qasim bulk plant, situated about 300 kilometres away.

Aramco is already mulling plans to change the technical specifications of the product pipeline from Qassim area which will connect with the the bulk plant in Hail, MEED reported on 25 October. The bids for 220-kilometre line were submitted on 31 May Turkey’s Tekfen was understood to have emerged as the frontrunner for the EPC contract.

Aramco, which intends 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.

Demand for diesel and gasoline in the Hail area is forecast to rise by 3 per cent a year, which convinced Aramco to revive the project in 2014 after it was put on hold for several years.

Aramco had invited interest from contracting companies in late January 2014, and was expected to award the main contract in July the same year. However, it was delayed again due to market conditions. Interested bidders were invited to submit bids this year again as oil prices have stabilised around $50 a barrel and the government has finalised the details of its National Transformation Plan, which has reviewed and identified the projects that will proceed in the kingdom.

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