Aramco set to award $3bn Manifa work

25 April 2008
Snamprogetti, JGC Corporation and TR in line to win engineering, procurement and construction contracts.

Three international contractors have emerged as frontrunners to win more than $3bn worth of engineering, procurement and construction (EPC) contracts on Saudi Aramco’s 900,000-barrel-a-day (b/d) Manifa oil field.

The firms understood to have submitted the lowest bids for the three main packages are Italy’s Snamprogetti, Japan’s JGC Corporation and Spain’s TR, following commercial evaluation by Aramco.

The first package, worth about $1.8bn, covers the construction of central processing facilities including a gas-oil separation plant. Snamprogetti is in pole position for the package, edging ahead of JGC, TR, South Korea’s Hyundai Engineering & Construction Company, France’s Technip, Japan’s Chiyoda Corporation and Italy’s Techint.

JGC is favourite for the second package, worth $800m, covering utilities, storage and shipping at the central processing facility. It is thought to have won the deal over Techint, Snamprogetti and Hyun-dai Engineering & Construction.

TR is expected to take the $500m final package, covering power generation and the main substation, from South Korea’s Hyundai Heavy Industries and Italy’s Technimont.

Aramco is expected to finalise its technical evaluation of bids and issue the contracts by mid-May.

The latest bidding activity caps a frantic few months for Aramco. The development of Manifa is regarded as crucial for Riyadh to hit its target of increasing production capacity from 10.8 million b/d to 12.5 million b/d by 2009.

The oil giant pumped about 9.2 million b/d of crude in March, according to industry data.

Global US oil service giants Schlumberger and Halliburton have been awarded separate drilling deals on Manifa worth up to $1bn in total, covering horizontal drilling, stimulation and cementing (MEED 7:3:08).

The state-run oil firm also confirms that production at its 500,000-b/d Khursaniyah oil field commenced in early April, about four months later than expected.

The delay was partly due to difficulties on one of the central gas processing components at the field, which was one of the first to be awarded by Aramco on a convertible lump-sum turnkey basis, in 2005 (MEED 7:3:08). US-based Bechtel and Paris- based Technip took longer than expected to reach an agreement with Aramco to convert the largest contract on the development to a lump-sum turnkey basis (MEED 27:7:07).

It is not yet known if Aramco plans to sign fixed-price deals with contractors for the Manifa packages. The firm was unavail-able for comment.

A 1.2 million-b/d capacity boost is expected from the Khurais field in 2009, along with a further 250,000 addition from the Shaybah field located deep in the Rub al-Khali (Empty Quarter) by the end of 2008.

Aramco is investing heavily in oil production and refining over the next five years, with much of that spending expected to consolidate existing fields and more effectively develop downstream production opportunities.

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