Aramco slows down Khurais expansion

13 January 2015

Oil major in talks with Saipem regarding cost-effective way to extend construction phase

Saudi Aramco is set to slow down the $3bn expansion of its Khurais oil field in a bid to manage the cash flow for the scheme more effectively due to the continued fall in oil prices.

The state-owned oil company is currently in discussions with Italy’s Saipem, the contractor that was awarded the $2bn deal for the main processing facilities at the project, regarding the most cost-effective way to extend the construction phase.

“The project has not been postponed or cancelled, and it is just a matter of extending the construction phase,” says a source familiar with the project. “This means it will add about 12 months to the completion date.”

The current completion date for the scheme is early 2018, but this is now likely to be stretched out to early 2019. Two other pipeline packages are included in the expansion and will be constructed by two local contractors.

The packages and the contractors are:

  • Mazlij-Abu Jifan pipeline – Saudi KAD Construction
  • Seawater pipeline – HAK Group

Aramco plans to add 300,000 barrels a day (b/d) to the field’s current capacity of 1.2 million b/d. Khurais is located adjacent to the Ghawar oil field, one of the world’s largest, in the Eastern Province of the kingdom. The field began operations in 2009 and produces 1.2 million b/d of light Arabian crude, 320 million cubic feet a day (cf/d) of gas and 80,000 b/d of natural gas liquids (NGLs).

The expansion at Khurais, as well as the planned increase of 250,000 b/d at the Shaybah field in the Empty Quarter, will ease production at other oil fields and will not increase the kingdom’s 12.5 million b/d capacity.

The move is proof that Aramco is looking at ways to better manage its huge portfolio of projects without causing any problems to its day-to-day operations.

MEED reported in early January that Aramco’s $3bn Ras Tanura refinery clean fuels rehabilitation scheme was being postponed for at least 12 months in order to prioritise other schemes.

The oil major is expected to cut back spending on non-essential schemes, but sources have indicated that spending on key sectors such as gas will not be affected by lower oil prices.

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