Saudi Aramco is in talks to bring in a second contractor to work alongside the US’ KBR on one of the largest ever project management consultancy (PMC) contracts awarded in the Middle East: project managing the $26bn Ras Tanura refinery upgrade and integrated petrochemicals complex.
The Ras Tanura project will upgrade the refinery to produce almost 1 million barrels a day (b/d) and integrate it with a petrochemicals facility.
The complex is being developed by Aramco and US firm Dow Chemical Company.
KBR beat Fluor Corporation and Foster Wheeler, both of the US, to win the $140-150m consultancy deal for the project in July 2007 (MEED 13:7:07). Aramco has begun talks with rival firms to take on some of the work, although no new contract has been signed.
One executive close to the talks tells MEED Aramco is expected to award a section of the original PMC deal to one of KBR’s rivals to help it hit pre-agreed deadlines.
“As this project has gone on, there has been more work than KBR initially realised,” says the executive. “Aramco has taken the view that if the project is going to be completed in the two-year timeframe, it will need additional help to get that done.”
|RAS TANURA KEY NUMBERS|
|Cost of refinery upgrade and petrochemicals complex||$26bn|
|Value of project management consultancy deal||$150m|
|Financing needed for project||$10bn plus|
Aramco is expected to ask KBR to hand over work covering utilities, offsites and several of the aromatics units. Foster Wheeler is understood to be front runner for the work.
The size of the Ras Tanura project has prompted fears that it could fall victim to the substantial escalation in capital costs in recent years.
In addition, the tightening of the global credit markets has sparked concerns over raising the huge amount of cash required to finance the project.
The scheme is set to be one of the largest ever in the Middle East, and is expected to require more than $10bn in project financing.
Aramco and Dow are scheduled to make a final investment decision in mid-2009, following the completion of the two-year front-end engineering and design process by KBR (MEED 6:6:08).
The scheme will use several different feedstock streams including natural gas, sourced from the Juaymah gas processing plant, and crude oil from the refinery itself, which will be upgraded by Aramco alone.
The move by Aramco to bring in a second contractor comes after KBR pulled out of the bidding for the $2bn upgrade of the 400,000-b/d oil refinery at Yanbu earlier this month.
The facility, run by Saudi Aramco Mobil Refinery Company (Samref), is expected to be one of the largest awards made in the kingdom this year, but KBR says it has decided to focus on other opportunities instead.
The US office of Australia’s Worley-Parsons and the London branches of the US’ Bechtel and Foster Wheeler are still in the running for the Samref award, which is expected by the end of this year.
The refinery is being upgraded to meet US environmental regulations (MEED 20:3:08).
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.