Fluor and Daelim win first major packages at $18bn Aramco Dow project

18 July 2011

Fluor wins utilities and offsites while Daelim picks up mixed-feed cracker

Saudi Aramco and the US’ Dow Chemical are to award two major packages at their $18bn petrochemicals joint venture in Jubail to the US’ Fluor and South Korea’s Daelim Industrial.

Fluor beat off stiff competition to secure the engineering, procurement, construction and management (EPCM) contract for the utilities and offsites package.

The contract is believed to be worth in excess of $2bn due to the highly technical nature of the work involved (MEED 8:7:11). The exact value of the contract to Fluor is unclear, but it amounts to 5.6 million man hours of work.

The scope of works for utilities and offsites includes a 6 kilometre piperack interconnecting all the facilities within the complex. This will mean that the piperack has to be aligned to more than 20 process units, each of which could conceivably be built by a different contractor. 

Dow Chemical sales by region
North America36%
Europe, Middle East, Africa35%
Asia Pacific18%
Latin America11%
Source: Dow Chemical 

Fluor will have to oversee the construction of several difficult-to-execute packages, all of which will be tendered on either a cost reimbursable or lump-sum turnkey (LSTK) basis.

“Fluor winning this project has surprised a number of people because [the US’] Foster Wheeler carried out the design work and was expected to roll over and carry out the EPCM,” says a source familiar with the project.

The joint venture partners behind the petrochemicals scheme have also awarded the engineering, procurement and construction (EPC) contract for the mixed-feed cracker package to South Korea’s Daelim. The company beat off a fierce challenge from fellow South Korean firm GS Engineering & Construction, but in the end its lower bid secured the deal.

“Daelim has managed to win a lot of work in Saudi Arabia over the past couple of years and this is just a continuation of that trend,” says an EPC contracting source based in the Eastern Province of the kingdom. “I wouldn’t be surprised if they picked up a couple more packages on this project.”

The mixed-feed cracker will be built using ethane and naphtha and produce 1.2 million tonnes a year (t/y) of ethylene and 400,000 t/y of propylene.

Daelim will work alongside France’s Technip, which is providing the technology for the scheme and will oversee construction. Technip was also a bidder for the EPC (MEED 1:7:11).

Aramco and Dow are 50:50 partners in the project. A final investment decision is expected by the end of July.

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