Frontrunners emerge for long-term Aramco deal

19 April 2015

Four contractors vying to be awarded engineering, procurement and construction contract

  • Decision expected in first half of 2015
  • US company surprise frontrunner
  • Local fabrication capabilities essential

Four contractors have emerged as the likely signatories for Saudi Aramco’s long-term contract, which is focused on carrying out engineering, procurement and construction (EPC) work on the state-owned oil company’s extensive offshore facilities.

There has been no indication from Aramco exactly how many contractors it wants to sign deals with, but sources in the kingdom’s hydrocarbons sector understand that four contracts will be awarded.

The companies leading the chase for a deal are:

“[Aramco] is taking its time with the decision on this one and none of the contractors are expecting an announcement until the end of May at the earliest,” says an oil and gas source based in Saudi Arabia. “The one surprise is the possible inclusion of Dynamic Industries.”

The US’ Dynamic Offshore is a New Orleans-based offshore services company and has not operated in Saudi Arabia prior to bidding on this particular contract. It is not yet known whether the company will have to set up a local fabrication facility if they are awarded a deal.

“Aramco is very focused on creating jobs wherever possible, so I wouldn’t be surprised if part of the bid process involves stating a commitment to using local resources wherever possible,” says the oil and gas source.

The contract will run alongside the Maintain Potential Programme (MPP), which is Aramco’s long-term contract for engineering, design and project management of its offshore operations.

Aramco will want a pool of contractors because it feels that two is not enough to ensure a proper bidding process for each piece of work. The company does not like to award on a single-source basis for any of its operations. McDermott and Saipem are the current signatories of the contract. The deals will last for five years with an option of a three-year extension.

Aramco awarded the MPP to three international engineering consultancies in March. The three companies are the US’ KBR and Mustang Engineering, and Australia’s WorleyParsons.

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