EXCLUSIVE: Saudi Aramco set to increase offshore contractor pool

08 February 2018
Saudi state oil company moving ahead with plans to expand the number of offshore contractors with which it has exclusive arrangements

Saudi Aramco is considering plans to increase the number of engineering, procurement and construction (EPC) contractors signed on long-term agreements (LTA) to provide offshore asset maintenance and field services.

The state-owned oil company currently has LTAs with five local and international firms but is said to be keen to increase its pool of contractors capable of providing offshore services because of the high volume of work that it has planned.

Aramco is understood to be reviewing proposals from several local and international companies although it is not known how many companies it expects to sign agreements with.

Local candidates are said to include, Riyadh-based Mohammed Ali Al-Swailem Group (Masco), and the recently formed joint venture (JV) of local engineering firm Arkad and Swiss industrial giant ABB.

International contractors include France’s TechnipFMC, which has a strong track record of working on oil and gas projects in the kingdom, and which after the acquisition of Houston-based FMC Technologies last year has strengthened its subsea capabilities.

Spanish EPC contractor Dragados Offshore has also confirmed being invited by Aramco to bid  for being considered for inclusion in the group.

The UK’s Wood Group and US’ KBR are said also be among the international contractors seeking inclusion on Aramco’s LTAs.

Dubai-based Lamprell, China’s Offshore Oil Engineering Company (COOEC), are also thought to be bidding along with several South Korean players.

Existing LTAs

The five incumbent firms that have the exclusive right to bid for the state oil giant’s ambitious offshore projects are:

  • Saipem (Italy)
  • Larsen & Toubro Hydrocarbon Engineering (India)/Subsea 7 (from the UK, which acquired the Saudi Arabia unit of Singapore’s EMAS Chiyoda)
  • Dynamic Industries (Saudi Arabia)
  • McDermott International (USA)
  • National Petroleum Construction Company (UAE)

Aramco is thought to have been considering broadening its pool of LTA contractors for some time, with MEED reporting on it early last year.

“There are signs that Saudi Aramco has been trying to extend its pool of LTA contractors," says one source. "In the fourth quarter of 2017, some megaprojects (outside the LTAs) were signed with new contractors."

Saudi Aramco, which is preparing to publicly list up to five per cent of the company in the second half of the year, has not confirmed that it is planning to add new companies to its LTA pool. But industry sources say that the company is keen to ease the load on its current LTA contractors, to increase competition and to boost localisation efforts.

“It is possible (for Aramco) to at least double the number of contractors," the industry source says. "But the number will depend on their previous experience with other NOCs as well as their expertise (working on regional offshore projects).”

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