Aramco shortlists firms for Jubail work

20 June 2008
Four deals with combined value of $3bn follow $6bn worth of contracts announced in early June.

Saudi Aramco has shortlisted companies for nearly $3bn worth of construction deals at its planned 400,000-barrel-a-day (b/d) Jubail export refinery, on the eve of a formal agreement to launch the $10bn project.

Sources close to the state-run oil giant tell MEED that in addition to the five main construction packages revealed earlier this month, worth $6bn, Aramco has prequalified companies for a further four contracts at the refinery, valued at $2.96bn in total.

Aramco and its joint venture partner on the refinery, France’s Total, are expected to sign a formal agreement for the Jubail venture in Jeddah on 22 June, the same day as Saudi Arabia’s hastily arranged summit to investigate the causes behind record oil prices.

One package, worth $1.3bn, covers the interconnection, gas flaring and electrical systems. Prequalified bidders include Foster Wheeler, Bechtel and Fluor, all of the US, Canada’s SNC Lavalin and Italy’s Technip in partnership with Taiwan-based CTCI.

Another $360m contract covers plant utilities, and prequalifiers are Italy’s Saipem, South Korea’s SK Engineering & Construction, CTCI, Italy’s Techint and Egypt’s Engineering for the Petroleum & Process Industries (ENPPI).

Seven contractors are bidding for the $1bn tank farm package, including India’s Larsen & Toubro, Saipem, China’s Sinopec, Petro Steel, which is a 50:50 joint venture of the local Rafid Group and Singapore’s Rotary Engineering, South Korea’s Hyundai Heavy Industries (HHI), and CB&I Eastern Anstalt, the Middle East subsidiary of the US’ CB&I and ENPPI.

The final package, covering another tank farm at the port costing $300m, has attracted interest from South Korea’s Daelim Industrial Company, Larsen & Toubro, Saipem, Pakistan’s Olayan Descon, India’s Punj Lloyd, Sinopec, Petrosteel, CB&I and HHI.

Aramco is expected to issue bid invitations to companies ahead of meetings in Rome on 20 June and 10 July to explain the project in more detail. Contractors are expected to bid for the work on a fixed-price or traditional lump-sum turnkey basis, where the contractor carries almost all of the project risk.

The refinery, which is expected to process Arabian Heavy crude and a new grade of crude from the offshore Manifa field, will be split between Aramco (62.5 per cent) and Total (37.5 per cent). It is expec-ted that Aramco will later offer 25 per cent of its shares to the public, giving the two firms equal stakes.

The firms are expected to sign agreements for the structure of the Jubail joint venture at their Jeddah meeting, with the company to be formally established by the third quarter. Construction contracts are expected to be awarded by the first quarter of 2009.

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