Deals worth more than $5bn awarded in Saudi Aramco offshore programme

26 March 2017

Larsen & Toubro and McDermott have largest workload from contracts signed in 2016 and 2017

Saudi Aramco has awarded more than $5bn-worth of deals on offshore oil and gas projects since the start of 2016 as part of its Long-Term Agreement (LTA) programme of work, according to industry sources.

The state oil and gas producer has awarded an estimated 14 contracts to five international contractors with exclusive rights to bid for tenders related to the kingdom’s offshore fields.

Out of the contracts tendered to the five groups, the joint venture of India’s Larsen & Toubro and Singapore-based Emas has picked up the most in terms of contract value. The consortium has won an estimated $2.2bn worth of contracts including the largest single deal – a $1.6bn award for the second phase of development at the Hasbah gas field.

US-based McDermott has won the most contracts, picking up five awards since the start of 2016 worth an estimated $1.34bn combined. This included the second largest deal, an estimated $640m contract to install nine slipover jackets and decks at the Safaniya field. McDermott was also awarded a major contract thought to be worth over $2bn in mid-2015 for various works across offshore fields, but this was not open for other LTA contractors to bid on.

Italy’s Saipem has picked up about $1.09bn worth of contracts since the start of 2016, including a $570m award to install jackets and decks at the Safaniya field. Saipem also won a contract to develop the Karan gas field but this was a negotiated contract outside the LTA bidding process.

ContractorEsimated award value ($m)Date of awardCompletion dateProject/field
L&T/Emas1600Q1 2016Q3 2019Phase 2 expansion of Hasbah gas field
McDermott185Q2 2016Q3 2017-
Saipem165Q2 2016Q2 2017Abu Safah field
McDermott243Q2 2016Q4 2017Safaniya field
McDermott145Q2 2016Q1 2017Installation of jackets
Saipem571Q3 2016Q3 201810 jackets, decks and pipelines at Safaniya field
Saipem355Q3 2016Q2 2018Seven platform decks with pipelines and cables at Marjan and Zuluf fields
L&T/Emas350Q1 2017Q3 2018Installation of four wellhead decks at Safaniya field; upgrades on 17 platforms at various fields
L&T/Emas250Q1 2017Q2 2018
Dynamic Industries209Q4 2016Q2 2018Intallation of pipelines at Berri field
McDermott130Q4 2016Q4 2017Four jackets and three observation platforms
McDermott640Q4 2016Q1 2018Nine slipover jackets and decks, subsea pipelines and cables at Safaniya; observation platform at Zuluf
NPCC77Q4 2016Q3 201717 jackets at Berri and Marjan fields
NPCC107Q4 2016Q3 2017

US-based Dynamic Industries and the UAE’s National Petroleum Construction Company (NPCC) have picked up respective workloads of $209m and $184m, according to sources.

There are over $800m worth of contracts that have been tendered to the five companies but not yet awarded, including two deals to install jackets at various offshore fields.

The awards under the LTA are contract release purchase orders (CRPO) and cover the engineering, procurement, construction and installation (EPCI) of facilities located off the coast of Saudi Arabia.

MEED revealed in February that Aramco is looking for additional companies to join the LTA programme due to the large volume of work it plans to award over the coming years.

LTA awards by company

LTA awards by company

LTA awards by company

The LTA deal was initially signed in 2015 with Dynamic Industries, a joint venture of Larsen & Toubro and Emas, McDermott, and Saipem. NPCC became the fifth LTA contractor on 13 October 2016.

Aramco is thought to have requested a number of additional companies to submit prequalification documents to be added to the LTA as either main contractors or sub-contractors.

The largest project to be tendered to LTA companies over the coming year is expected to be an estimated $3bn-$5bn scheme to develop the Marjan field, MEED reported last month.

Earlier in March, the five LTA contractors gave presentations to Aramco to propose how the work for the project should be broken down into separate packages.

Aramco does not release official figures for the capacity of its oil fields. Safaniya is one of the kingdom’s three largest fields with an estimated capacity of 1.2 million barrels a day (b/d). Abu Safah and Zuluf have capacities estimated in a range of 750,000-850,000 b/d, while Marjan is estimated to be able to produce up to 500,000 b/d.

Aramco is the sole producer of oil and gas in Saudi Arabia with a crude production of capacity of over 12 million b/d. It is also the world’s largest exporter of crude oil.

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