Good deals on Wasit gas project secured

01 March 2011

By combining packages, Aramco has reduced the budget for the Wasit gas project by more than $1.4bn

Now that it appears all of the packages for the Wasit gas development are in place, it is worth taking a look at the job Saudi Aramco has done in fast-tracking this project.

With Aramco looking to Italy’s Saipem to carry out the engineering, procurement and construction for the offshore segment, only three contractors will execute what started off as six packages.

Awarding multiple packages to South Korea’s SK Engineering & Construction, as well as combining the two offshore packages that Saipem will be awarded, has allowed Aramco to shave off more than $1.4bn from the initial budget.

The bidding process on Wasit has been aggressive and the reduced budget reflects this. What has also helped Aramco is that SK has been looking to win work in Saudi Arabia for some time, so obviously targeted Wasit as a project in which it had to be involved. 

Saipem’s award has also broken the impressive winning streak that the South Korean contractors were enjoying during the first quarter of 2011.

The Italian company is regarded as one of the world’s best subsea pipeline specialists and has executed a number of successful projects in Saudi Arabia for Aramco. However, Hyundai Heavy Industries was believed to be the lowest bidder and must be disappointed to miss out.

With raw material costs on the rise, the Wasit scheme and the upcoming Shaybah natural gas liquids project may well be the last time Aramco gets such a good deal from contractors.

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