Aramco selects contractor for Hasbah gas field expansion

26 April 2016

Low bid for project off kingdom’s Gulf coast came in at $1.5bn

Saudi Aramco has selected India’s Larsen & Toubro (L&T) to carry out the expansion of its Hasbah offshore gas field, according to three sources familiar with the project.

L&T emerged as the low bidder for the engineering, procurement and construction (EPC) tender after state-owned Aramco asked contractors to resubmit prices. The joint bid by L&T and its Singapore-based consortium partner Emas came in at just under $1.5bn.

The second-lowest bidder, the US’ McDermott, submitted a price of about $1.8bn, the sources told MEED.

A fourth source familiar with the project said Aramco is still assessing bids and has yet to select a company to carry out the scheme.

The EPC bids were originally submitted on 29 November 2015 by the four groups that are part of Aramco’s Long-Term Agreement (LTA) programme for offshore oil and gas projects.

These companies are:

Aramco subsequently asked the companies to submit new prices for the tender, deeming the original bids too high as it attempts to cut costs amid the current low-crude-price environment.

The Hasbah project will expand the production capacity of the gas field by an additional 2 billion cubic feet a day (cf/d), which will be piped to the onshore under-development Fadhili gas plant.

Saudi Arabia recently started the first production of gas from the Hasbah field. The new facilities have a capacity of 1.3 billion cf/d and are now piping gas to the Wasit processing plant, which was built as part of the same project.

The Hasbah expansion deal follows the four smaller Contract Release Purchase Orders (CRPO), worth more than $1bn combined, awarded to LTA companies earlier this month, MEED revealed on 21 April.

McDermott was awarded contracts for work on the Safaniyah and Berri fields, and a project on the Marjan and Zuluf fields. Saipem’s CRPO covers brownfield work on the Abu Safah field. The CRPO contracts are understood to be worth between $150m and $700m.

The first contract in the new LTA was a lump-sum deal won by McDermott in August 2015, just two months after Aramco brought in the four companies.

McDermott said the contract was for “brownfield work in various fields in offshore Saudi Arabia” and represents the largest single award in the Middle East in the US-based company’s history.

The LTA agreement covers six years, with options to extend the period for two additional three-year periods.

According to two sources, Aramco has invited a fifth company to join the LTA programme. The sources corroborated a report in oil and gas newspaper Upstream that this company is UAE-based National Petroleum Construction Company (NPCC).

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