Firms line up for offshore work

15 May 2014

It is clear the next five years will be a busy time for offshore contractors, and a highly competitive bidding process is expected to follow

Saudi Aramco’s vast offshore operations in the Gulf have been producing millions of barrels of oil for decades. The oil major also now operates a large non-associated gas field with another two set to come onstream in the next three years.

Maintaining oil fields in the shallow waters of the Gulf offers up some unique challenges to Aramco, especially now that the oil giant imposes stringent environmental controls aimed at preserving coastal marine life.

Two long-term contracts deal with the engineering, project management and construction management of its offshore assets, but it is now apparent that in their current format they are not expansive enough. 

Italy’s Saipem and the US’ McDermott were previously contracted to carry out engineering, procurement and construction (EPC) for maintenance and upgrade work at Aramco’s offshore assets. However, there is a problem with having only two contractors bidding for the work. If one decides to decline to participate, which it is perfectly entitled to do, Aramco is extremely reluctant to award it to a single source without a formal tender.

2015 could start with six companies in place to service the kingdom’s offshore requirements

The proposed new long-term agreement will offer five-year contracts to four companies who will all bid for offshore upgrade works. By inviting four firms, Aramco will be able to keep the process competitive and ensure that all the work is completed without delays. More than 30 contractors have been invited to prequalify for the deal, many of whom do not have any current operations in Saudi Arabia.

The Maintain Potential Programme, the engineering and project management contract that concerns Aramco’s offshore operations, is also set to be awarded to two consultancies by the end of the year. This means 2015 could start with six companies in place to service the kingdom’s offshore requirements – double the current amount. 

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