EXCLUSIVE: US firm eyeing Aramco-Sabic oil-to-chemicals project

14 May 2018
The joint owners have already awarded two Feed and PMC contract for the $25bn project

US oil and gas engineering contractor McDermott is “gearing up” to bid for the main contract to build a crude oil-to-chemicals (CTC) com– a joint project of Saudi Aramco and the Saudi Basic Industries Corporation (Sabic) – at the Yanbu refinery complex in Saudi Arabia.

Saudi Aramco and Sabic signed the MoU in November 2017 for the proposed project, estimated to be worth $25bn, to convert the 235,000 barrels a day (b/d) Yanbu refinery into an integrated refinery and petrochemicals complex.

The tender for the main entire engineering, procurement and construction (EPC) contract for the megaproject is expected to be issued in June 2020, with commercial bid submissions slated to take place in September that year.

Conventional offshore contractor McDermott, which became an integrated engineering company catering to the full spectrum of the energy sector following its acquisition of US onshore-focused Chicago Bridge and Iron (CB&I) on 10 May, has “an edge over others” with regard to the contract for “the massive downstream project”, a senior McDermott executive has told MEED.

In January, Aramco signed a three-party agreement with CB&I and Chevron Lummus Global (CLG), a joint venture between CB&I and Chevron, to combine and commercialise the firms’ CTC technologies.

The executive said by way of the merger, Houston-based McDermott is “inheriting” CB&I’s involvement in Aramco’s CTC drive, which “puts us in a good position” for the Yanbu project. “Since it’s a technology-led project, we feel quite good. The strength of the Lumus technology is quite strong,” the official said.

Aramco-Sabic awarded two front-end engineering design (Feed) and project management consultancy (PMC) contracts for the project to the UK’s Wood Group in March and US firm KBR in April.

Given the enormity of the project, and the splitting of the feed and PMC work by the project owners, MEED understands it is unlikely that a single firm will be awarded the entire EPC job.

In February, responding to an investor’s query during the conference call to discuss McDermott’s 2017 financial results, CEO David Dickson had said he had held discussions with Aramco, its biggest regional customer, to explore “onshore opportunities worth billions of dollars”, in an apparent reference to the Yanbu project.

Dickson said he had explained to Saudi Aramco’s senior management, led by CEO Amin Nasser, in a meeting on 13 February how the integration with CB&I will diversify McDermott’s capabilities to execute petrochemical projects.

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